We found that you could lose up to AUD $206.50 when exchanging cash at a money changer in store.
For most people going on a trip, getting currency exchange in cash is typically the most common method to take money overseas. But what if you have a bank account in the country of your destination? Whether you are going overseas for a long holiday, or you are planning to spend a couple of months traveling, this article will help you discover which option will help you save money.
Table of contents
- Which option is cheaper?
- Who will benefit from a money transfer?
- How to get the most out of money changers
Which option is cheaper?
Exchange rates compared
It is cheapest to transfer money overseas using an online money transfer specialist like OFX or Transferwise. No other way beats spending money like a true local.
Here we compare the exchange rate for AUD $5,000 to USD. The AUD/USD mid-market rate was 0.77 on the day we compared.
|Money Changer In-Store||Money Changer Online||Online Money Transfer||Bank Money Transfer|
|How much you receive for AUD $5,000||US $3,691||US $3,721||US $3,850||US $3586.65|
The best exchange rate was offered by online money transfer specialists. Companies like TorFX, OFX, World First and Transferwise take lower margins than companies like Western Union, Paypal and the banks.
Based on the information above, you could save AUD $206.50 if you send money through an online specialist rather than exchange cash.
It's important to note that though some places do not charge fees, their exchange rate margins are higher.
Money changer fees in-store vs online
|Money Changer In-Store||Fees||Money Changer Online||Fees|
Online money transfer specialist fees vs banks fees
|Online Money Transfer||Fees||Bank Online Money Transfer*||Fees|
*ANZ, CBA, Westpac and NAB in branch fees range between $18 to $32 per transaction.
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Who will benefit from a money transfer?
Although it is cheaper to transfer money overseas than exchange foreign currency in cash, this method may not benefit everyone. You will benefit from a transfer if you are:
- Traveling with AUD $5,000 or more
- Have a bank account in the country of destination you can transfer funds into
James and Kristy are from USA. They moved to Melbourne three years ago and left their bank account active back home. Every year they take a trip back home to visit family and need to exchange AUD to USD.
Recently, they discovered that they received more US dollars if they used an online provider like OFX to send money to their US bank account.
How to get the most out of money changers
If transferring money abroad is out of the question for you, here are some tips that will help you get the most out of money changers.
- To get a better rate, order your currency online and collect in person
- Money changers tend to sell popular currencies at a better rate. These include US dollars (USD), Euros (EUR), Japanese Yen (JPY) and New Zealand Dollars (NZD)
- If you are buying more than AU$5000 worth of currency, you can negotiate a better rate
- When buying a exotic currencies like AED, FJD, MYR, etc, be sure to call and check if they have stock
- Try and avoid exchanging currency at the airport
See also: 7 Simple Tips to Buy Travel Money
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