Monday, December 16, 2013

How to save money on currency exchange as an expat

Despite base in Perth and working for the Australian entity of my company I am paid in Canadian dollars into a Canadian bank account in you guessed it....Canada.  This is compounded by the fact that upon arrival we didn't just have standard expenses....we needed to buy some significant items including a car for Angela.

The policy of the company I work for suggests writing yourself a cheque from your home bank account and cashing it in your working country bank account.  A quick review of the costs related with doing this (can be as high as 6% of the amount being transferred) made me think just maybe this was a bad idea. 

The banks in general while advertising "No fees on currency exchanges" will eat you alive in the rates you will pay.  A quick review of my Canadian bank shows they are charging over 5% to convert Canadian dollars to Australian dollars.


Foreign exchange (Forex) services to the rescue.  I'm not sure where I found out about these companies but suffice to say there are tonnes of them out there and the rates they charge are a fraction of what banks charge and they handle the transfer activity for you as long as you're in a country they can work it.

I signed up with CanadianForex, which is really just a branch of Ozforex based in Sydney, Australia.  I later also signed up with  Needless to say there are scads of companies that do this but I'm going to talk about CanadianForex / Ozforex and my general love affair with them and their services and how much money they have saved me.

How it works...

  • You sign up for an account...this is all done on-line and is pretty basic.  I did it while still in Canada
  • They do and ID check.  For me it was providing a bank statement with my name on it less than 3 months old.
  • You set up beneficiaries for your transfers (in this case I set up myself and my banking details in Australia)
  • You book a deal.  You can set the currency you want to buy and the currency you want to buy it with and the size of the transaction.  (If you are willing to move 25K you can use limit orders where you set your price and wait for the currency in question to hit that level)
  • You fund the deal.  This can be done a number of ways.  When I started with them I could do it with a bill pay but that option has been removed for my Canadian bank.  With a few forms you can set up an auto withdrawal from your bank of choice.
  • A few days later the money shows up in my Australian account and I'm ready to go.  Westpac does not charge me any fees coming in.

Ok so what's the big deal, right?   The big deal is that forex services charge around 1.5% (it's inside the rate and it goes down as the transaction size goes up) of the transaction plus a 15 dollar service fee (which is waived above 10K)  

See below chart based on todays rates:

As it shows in the chart if you move $10K Canadian dollars the difference between my forex service and my Canadian bank is $459.  If you moved a concervative $40000 in a year this is nearly $2K difference.

I should mention...I have no affiliation with any of these companies.  I work in the Oil and Gas industry and was not smart enough to make a boatload in the banking industry.  It just really pains me to talk with expats who are constantly throwing money out the window with forex costs.

Interested to do you do it?  Do you get paid in home country or working country?


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