Currency Exchange

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Bank vs Currency Specialist?

As a migrant to Australia, you may be making your first International Money Transfer (IMT) of any real size. It can be a daunting prospect, entrusting the bulk of your personal wealth to a company that you may not have heard of previously.

It is tempting, then, to entrust this transaction to your own bank - the "High Street" bank that you have held your account with for years.

While your bank will, no doubt, get the job done, they may not necessarily give you the best exchange rates, the best technical tools or the best personal service that you could be getting.

Exchange Rates
We checked 2 "High Street" banks and 2 currency specialists to see what customer exchange rate they were offering via their websites for the internatonal money transfer of £100,000 GBP to AUD. The quotes were all obtained within minutes of one another on 17th March 2016, when the quoted interbank rate was 1.8714

The rates offered by the banks were 1.80148 and 1.81554

The rates offered by the currency specialists were 1.8584 and 1.8574

On the £100,000 exchange the DIFFERENCE between currency exchange specialist and bank equates to between $4185 and $5692 !!

Looking at the margins, the specialists operate on a margin around 0.7% while the banks apply a margin more like 3.5%, 5 times higher! So the banks appear to be making 5 times the profit for doing the same thing.

Why not try this yourself? Open a free account with a currency specialist like OFX and obtain a quote - and about the same time, call your bank and obtain a quote for the same amount, then do the comparison.

As discussed in the previous page, Forward Exchange Contract and Limit Orders can be very useful tools in getting you the best rate. A limit order is like having somebody working for you 24/7, checking the rates and alerting you when your target rate is achieved.

Most of the major currency specialists offer these services - so it's worth checking if your intended company or bank also offers them.

Online Quotes
Most of the major currency specialists have a realtime quote facility built into their website - not just a list of today's interbank rates, but a realtime conversion of the amount you intend to transfer, so you can see immediately how many Australian dollars you will end up with.

You may need to open an account before you can use this tool, but when you do open an account, there is not normally any obligation to trade immediately, or ever, in fact.

Personal Service
Your local bank may or may not have a dedicated currency team whom you can call directly to discuss your requirements. In these days of de-personalisation in banking, that may be unlikely, but give them a call, you may be pleasantly surprised. With a currency specialist, you are very likely to have a direct number to call a currency dealer - to discuss your transaction - you may even be assigned a specific dealer so you speak to the same person each time.