More and more New Zealanders are looking for a taste of the good life overseas as they head out into the world seeking pastures new. However, if you’re planning to make the break, there’s one thing you need to think about more than anything else – how you’re going to transfer money from one country to another.
Here are a few things to watch out for which will help you get the best deal possible.
The biggest killer is transaction fees. Banks have been known to charge up to $80 a shot to make a foreign transaction and over time that adds up. Imagine you make a couple of transfers each month – your annual costs can quickly top the thousand dollar mark. The solution? Try a specialist foreign transaction company. As well as having a bit more specialist expertise, they generally charge lower transaction fees.
Keep an eye on the exchange rate your provider offers. Banks can be pretty devious here too. Their exchange rates often differ to the ‘actual’ exchange rate – in other words the benchmark rate being offered.
Always make sure you know the actual exchange rate so you know how much of a mark-up your provider is adding. This is one of the easiest sources of hidden fees, so keep your eyes open.
Exchange rate changes
The global economy has been on a bit of a roller coaster ride over the last few years. As a result foreign exchange markets have been hard to predict, which creates winners and losers in the forex lottery. Transfer at the wrong time and your cash may quickly get sucked up.
One way to guard against this is to use a Forward Contract. These fix the exchange rate at a certain point. For example, imagine you’re changing Australian Dollars to UK Sterling. At the time you get an exchange rate of AU$1.7 to every pound. If you’re using a Forward Contract that rate remains even if exchange rates turn against you.
Dissatisfaction with the banks has opened the door to a whole load of new peer to peer lenders. With the aid of a lot of fun advertisements, they appear to offer a much cheaper alternative to foreign money transfer.
They aim to bypass brokers’ fees to provide a mid-market rate. However, these firms are mostly still small and developing. They lack the full range of services a more established provider can offer and may not include enough protection.
Some providers will be officially regulated, which means your funds are ring fenced, but others may not be. Check their accreditations and make sure you know what that signifies. You need to know that your provider is reputable and professional – and that your funds are protected no matter what happens.
Last but not least, remember to stay safe. There has been something of a gold rush in this area, with lots of fun advertisements promising low rates and great savings. Check what’s behind these promises. Make sure you have a provider who is professional, reputable and offers the range of services and safeguards you need. For all the new players coming into this market, it’s the experienced and reputable firms who will offer the best deal.