Imagine that you’ve just completed a foreign currency transfer.
Let’s say for the case of this hypothetical scenario that you’re a traveler, taking a trip to a foreign land with a wildly different currency.
If you’ve done any significant traveling in other countries you know that there are often banking issues ranging from expensive ATM fees to currency transfer delays.
Maybe you completed your foreign currency transfer online using your bank’s website or you used a site like PayPal to send or receive foreign currency to the other side of the world.
You put in all your information, carefully thought about exactly how much money you have budgeted for your vacation and what it should costs you roughly in fees. You push the button to complete the transaction.
What happens next?
Next is that split second flash of dread as you wonder how much you’re going to be charged for accessing or sending your own money.
Or stated a bit more crudely, you’re waiting to see exactly how screwed you’re going to get by the banks or PayPal!
What are Foreign Currency Transfer Fees?
You’re probably already aware of the transaction fees that go along with making a foreign currency transfer. Generally the transaction fee is a set fee of a certain amount such as $30. Most clients making foreign currency transfers assume that this is the only fee that they will be paying.
This assumption is wrong.
There is another hidden fee based on the foreign exchange rates which average banks in Australia are keeping very high. This fee is not set and instead is a percentage that the banks get to determine. The average the big banks charge can be in excess of 5.0%.
That’s a 5.0% charge on every single dollar you send on top of the 30$ transaction fee
This hidden fee works out to about $50 for every $1000 and often you have no idea that you are even being charged this fee at all as it is hidden in the exchange rate 'spread' charged by the banks and passed on to you the client (i.e. the real exchange rate is 0.7508 USD per 1 AUD, however you are offered 0.7150 USD per 1 AUD). Most clients just assume that the math is correct and that these fees are just a part of doing business when completing a foreign currency transfer, or even worse, they’re not even aware the charges exist! The best indicator of the 'spread' offered by banks or worse the foreign exchange cash booths in airport being unfavourable is the difference between the quoted rates you hear on the news (again 0.7508), and what you get at the teller window (0.7150).
Why don’t clients know about these fees?
The easy answer is that the banks don’t want you to know!
In fact the banks have gotten so good at hiding these fees that if you ask most people what cost them the most money when doing a foreign currency transfer, they’ll almost all say the transaction fee! They think this even when the transaction fee is several times smaller than the fee charged within the exchange rate.
The banks have so completely obscured the process of sending money around the world that the fees that you are mad about are not even the most outrageous fees you’re being charged!
The system is so messed up; it’s possible you don’t even know what to be mad about!
What’s really happening is that banks are bouncing your money all around the world using a complex relationship network where each time your money is passed forward a little bit more of it is taken in fees. This part isn’t mentioned though as they list the fee as one stand-alone charge, failing to mention exactly how it added up!
Good luck, if you want to get a detailed explanation from the big banks on how the system works!
What’s the solution?
The solution is simple, if you want to make foreign currency transfers without getting screwed by the average banks, you have to take the banks out of your foreign currency transfer and you need a way to track your money the same way that postal services sites like Australia Post or DHL allow you to track your packages when you make an order.
Furthermore you need a Foreign Currency Transfer solution that is customized to your needs, rather than a one size fits all cookie cutter solution.
That’s where we come in, we’ll be using this blog to educate you on exactly how this expensive shell game is costing you money and how we can help you save without compromising the safety or security of your transfers.
You’ve given away enough money to the big banks, so let's get started.
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