If you are a frequent traveller, or are an Aussie living in a foreign country, then you are likely exchanging between one currency and another on a regular basis. But dealing in multiple currencies can be expensive if you aren’t thoughtful about how you send money overseas.
Everytime you transfer money overseas with your bank they are taking a hefty chunk of those funds in the form of transfer fees and exchange rate margins. To help make sure you aren’t needlessly overpaying for international money transfers here are some tips for managing your money from abroad.
Let exchange rates work for you
If you are getting paid in one currency but are operating in another, the exchange rate can be a real nuisance. If you are looking to transfer Australian dollars to a foreign bank account and the exchange rate drops (the Australian dollar loses value) than the amount of foreign currency you can buy decreases. Rather than accept the exchange rate your bank shows you, shop around for a better deal. You are likely to find that online money transfer companies generally offer you more competitive rates than your bank to transfer money overseas. FlashFX is an online money transfer company that charges zero transaction fees and guarantees a fair exchange rate.
Does it make sense to open a second bank account?
If you are planning to have an extended stay in a foreign country (a couple of months or more), or if you are already living outside of Australia, than you should look into opening a local bank account. Using your Australian debit or credit card overseas will incur unwanted foreign transaction fees (2-3%) in addition to an exchange rate margins (3-5%) with every purchase. Opening a local bank account is the first step in helping you minimise the costs associated with international money transfers. Once you are set up, use an online money transfer company like FlashFX to send funds between bank accounts and save on fees.
Tax may be boring, but you need to know your obligations
If you are earning income in a foreign country you are likely required to report this to the Australian tax authorities. This is true even if the income is paid out in a foreign currency or paid into a foreign bank account. Understanding your tax obligations as an expat or a temporary resident is critical in helping you make sure you stay compliant with Australian tax law. It is best to consult with a specialist tax consultant to better understand your status and reporting requirements.
A multi-currency account could be for you
Consider opening a multi-currency account at your local Australian bank if you are a regular traveller or have a job where you can get paid in multiple currencies. The benefits are that you can manage multiple accounts under a single account number. You will also save on transfer costs since the money is moving between accounts at the same bank. If you are looking to send or recieve money to an account outside of your bank, however, you will be subject to the same international money transfer fees as everyone else. In these cases it pays to open an account with an online money transfer company like FlashFX to save on these charges.