There are hundreds of ways to transfer money between the US and Australia, but how do you know you’re getting the best deal? When you’re exchanging between US dollars and Australian dollars, you want to keep your money transfer fees as low as possible. In this helpful guide we’ll cover everything you need to know about money transfers between Australia and the US and give you the guidance you need to keep your currency exchange costs to a minimum.
You'll find advice on:
- Why you might want to transfer money between the US and Australia.
- How international money transfer works.
- The main factors that impact the fees you will pay.
- Examples of actual fees for money transfers.
- Why using your bank or PayPal isn’t a good idea.
- Dedicated currency exchange providers and the benefits they offer.
- Using a currency provider to send money to the US or Australia.
- Advice on transferring money between the US and Australia.
Let's get into it:
Why you might want to transfer money between the US and Australia
We’ve never been more mobile. With the advent of fast, inexpensive travel, and opportunities around the world, more of us than ever are taking advantage and broadening our horizons. You might be moving between Australia and the US for a variety of reasons:
- You work for an international US organisation and have been asked to work from the regional office in Australia.
- You live in Australia but want to buy investment properties in California.
- You’ve emigrated from the US to Australia and you’re travelling home to see friends and family.
- You’re relocating from Sydney to San Diego, or Melbourne to Miami.
- You’re studying overseas.
- Although you are based in the US, you’ll be spending the next four years completing a degree in Adelaide.
- You have an Australian business and you’re expanding into the US market.
- You need to collect money from US customers and pay US suppliers.
- Perhaps you’re having a wedding in the US, or retiring to Australia.
Whatever your reason, it’s vital to get your money to stretch as far as possible. That starts by minimising your currency transfer fees. Before we look at the best way to do that, let’s explore how fees are charged in the first place.
How international money transfer works
Currency exchange is the process of converting money from one currency to another. It uses an exchange rate to determine exactly how much the recipient will receive, based on the amount you are transferring. This amount will be subject to certain fees and exchange rate commissions.The amount the recipient receives depends on several factors:
- The prevailing, interbank, baseline exchange rate.
- How much you are transferring.
- How you are paying for your transfer.
- The variation between the baseline exchange rate and the exchange rate you are offered.
- How the recipient is receiving their money (e.g. local pickup or transferred into a bank account).
- Various other fees and factors.
The main factors that will impact the fees you will pay
There are several areas that have a big influence on how much you will pay for your money transfer.
The Rate Providers Offer You to Transfer Between US and Australia
Currency transfer providers come in many shapes and sizes, from your bank and PayPal to Western Union or MoneyGram, to dedicated currency exchange businesses like World First or OFX. One of the biggest differences between these providers is how much the exchange rates they offer you differ from the interbank, or mid-market, baseline rate. Any difference between those rates directly translates to the amount you pay.
Here's an example of converting US dollars to Australian dollars:
- Interbank, mid-market rate for transferring USD to AUD (baseline) — 1.34479 AUD per USD.
- PayPal exchange rate for transferring AUD to USD — 1.31026 AUD per USD.
- CommBank exchange rate for transferring AUD to USD — 1.29282 AUD per USD.
- OFX currency provider exchange rate for transferring AUD to USD — 1.33677 AUD per USD
- Difference between PayPal and baseline rate — 2.5% worse.
- Difference between CommBank and baseline rate — 3.5% worse.
- Difference between OFX and baseline rate — 0.6% worse.
These exchange rates are correct as of early June 2017. The exchange rate you are offered may vary depending on multiple factors including date, time, amount you are transferring, and various other areas.
Commissions or Extra Fees for Money Transfers
In addition to making money on exchange rates, some providers charge additional fees, either as a fixed fee, or as an additional commission percentage. For example, Commonwealth Bank charges a varying fee of around $10 – $20 for currency transfers. These can really add up, especially if you make a number of smaller value currency exchanges.
Payment Fees for Deposit and Withdrawal
Some banks and other payment providers charge an additional fee for sending and receiving money into an account. This might be as an “international wire fee” or some other charge. Picking money up in cash from a local agent can also incur additional fees.
Some providers do charge other fees for transfers, either as a fixed fee or as commission. Additionally, if you are funding your transfer using a credit card you may be charged a higher rate by your credit card company as a “cash advance.”
Examples of Actual Fees for Transferring from Australian Dollars to US Dollars
Our money transfer and currency exchange comparison tool takes into account exchange rates and fees to accurately show you how much money you could save. Here’s how much you would get from various providers if you were converting 1,000 Australian dollars to US currency.
|Provider||AUD to USD Exchange Rate||Transfer Fee||Total USD for 1,000 AUD||Difference to Baseline|
As you can see, using a dedicated currency provider like World First, HiFX or OFX can save you a significant amount.
Why Using Your Bank Isn't a Good Idea
As you can see, using your bank isn’t a great idea if you want to get the best value for money. They often charge a fee on top of the poor exchange rates they offer to their customers. It could be up to 60 AUD more expensive to send 1,000 AUD via your bank instead of using a dedicated currency provider.
Why Using PayPal Isn't a Good Idea
Although PayPal is popular and easy, it certainly isn't cheap. As we mentioned in our guide to using PayPal to send money overseas:
- You might pay a small fee (of 2.4% + $0.30) if: You’re transferring money within the same country and you make the payment from your Australian bank account that is not linked to your Paypal account. This includes debit and credit cards.
- You will pay a moderate fee (of 0.5% – 3.3%) if: You’re transferring money between countries and you use money from your PayPal account or a direct debit from a bank account linked to your Paypal account.
- You will pay a higher fee (of 3.9% – 7.4% plus a fixed fee) if: You’re transferring money between countries and you use a debit or credit card to fund your transfer.
These costs are all more expensive than using a dedicated currency provider.
Using Currency Exchange Providers and the Benefits they offer.
Fortunately, there are some really good alternatives when you want to exchange money between Australia and the US. Dedicated currency providers like OFX, World First, and HiFX provide low-cost, competitive options for transferring money quickly and easily.
They have several benefits including;
- Lower fees than PayPal or banks.
- Fast transfers, money can sometimes be transferred within one working day.
- Dedicated customer support and advice.
- Online options for sending money through their website or app.
- Forward or limit orders to manage risk and reduce market fluctuations.
- Mobile apps and other tools to manage the money transfer processes.
- In some cases, local pickup is available for the recipient.
How to Find the Cheapest Way to Transfer Money Overseas
Compare The Total Cost
The total cost of the transfer comes down to 2 things:
1. Transfer Fees
Every Australian bank and money transfer company will charge you a different fee to send money overseas. Usually it’s between $10 and $32.
2. Exchange Rate Margin
There is no “standard” exchange rate. Each bank will offer you a different exchange rate based on the currency you want to send overseas and the amount you need to send.
Using a Currency Provider to Send Money Between Australia and the US.
It's easy to set up an account with a currency provider to transfer money. Here's how you go about it.
- Use our comparison tool to see who can offer you the best deal.
- When you’ve decided on a provider, just visit their website directly from our tool.
- Create an account with the currency provider — you will generally need a proof of identification and a proof of address.
- Get an up-to-date quote for transferring between US dollars and Australian dollars.
- Arrange your transfer using their online service or over the phone.
- Provide details of the person receiving the money — you will generally need their IBAN or SWIFT number.
- Send money to your currency provider by funding your account, normally by bank transfer or debit card. (We do not recommend funding by credit card as you may be subject to additional fees).
- Your currency provider will make the exchange and deposit funds into the recipient’s bank account or make them available for local collection.
Advice on Transferring Money Between Australia and the US
Here are a few tips on getting the most value out of your international currency exchange.
- The best provider for transferring from US to Australian dollars may not be the best one for transferring from Australian to US dollars. Use our quote tool to find the best value in every circumstance.
- Check with the sending and receiving bank to see if they charge any fees for sending or receiving funds.
- If you are transferring a large amount, give your currency provider a call as they may offer more competitive rates.
- Don’t pay by credit card — you will have to pay higher fees.
There you have it, a complete guide to transferring money between the US and Australia. We hope the extra money you save means you can treat yourself in two of the most beautiful nations in the world!