By Amanda Morrall
Moving money from Australia to New Zealand?
The path of least resistance, or perhaps least effort, will see thousands of Kiwis living abroad head to their local bank branch, blindly agree to the exchange rate on offer (because they assume there's little differences among the banks) and agree to have the money converted on site and wired into an account back home.
The danger, in addition to not getting the most competitive exchange rate, is losing a chunk of your hard earned cash to something called a "retail spread" which in Australia happens to be worse than New Zealand.
Freelance writer Heather Ramsay, who chronicled her tale of currency woe earlier this week for interest.co.nz, said she learned the hard way that it is more economical, by far, to have the money transferred back to New Zealand in the form of a draft in Australian dollars, or through to a foreign currency account held in New Zealand after which the money could be converted to New Zealand dollars.
Fiona Whyte, a former foreign exchange (FX) sales agent for a large New Zealand bank, said unbeknownst to many Kiwis, Australian banks are taking a sizable helping hand for their part in the transaction, a more generous hand than banks here in New Zealand. Despite our market being smaller, and the parenting arrangements, banks on this side of the Tasman are more competitive when it comes to FX.
"What we've found is that over the last five to 10 years, is the New Zealand marketplace, particularly in relation to FX providers, is really competitive and certainly there is a lot of people playing in the space here and that's driven sharper pricing,'' said Whyte.
"In Australia, there's not as much competition and banks are quite happy to put wide spreads in there in particular for their retail customers."
Remittance economy
With record number of New Zealanders having quit NZ for Australia, and many of them sending money back home to pay off debts or help family out, these retail spreads could prove a costly contagion for unknowing Kiwis.
Whyte said New Zealanders sending money back home should make sure they do their home-work first.
To start, she suggests comparing the conversion rates on offer from the banks in Australia and in New Zealand by running the numbers on their on-line calculators.
For starters, check out the difference between ASB and Commonwealth.
An alternative to the standard foreign exchange transaction is either getting a draft in Australia dollars and having the money exchanged in NZ or having the money shifted into a foreign currency account in New Zealand held in Australian dollars.
Another option is going through a third-party, either an on-line currency exchange outfit or foreign exchanger dealer such as VelocityTrade or HiFX.
"What we've found is that over the last five to 10 years, is the New Zealand market place particularly in relation to FX providers is really competitive and certainly there is a lot of people playing in the space here and that's driven sharper pricing. In Australia, there's not as much competition and banks are quite happy to put wide spreads in there in particular for their retail customers.''
Whyte said third party outfits tend to be more competitive than the banks because they are leaner, only having to fund the cost of operation that makes up their specialist business in FX.
"If you are doing small volumes transactions the savings won't be as large but with people buying and selling property and you're getting into the tens of thousands of dollars, it's worth doing that exercise (running the numbers) and lot of people have a quite bit of debt to pay down.''
FX checklist:
1) Calculate the difference between buy and sell rates on offer in NZ and Australia.
2) Explore the rates through a third party
3) If you're using a third party find out their credentials and compliance.
You might also want to check out our currency section here which has calculators, news and analysis.
Compare rates on offer:
All bank offers are set out here for buying or selling.
Or you can go to each individual bank's website, like these:
ASB:
https://www.asb.co.nz/personal/international/foreign-exchange/foreign-e…
Commonwealth Bank
http://www.commbank.com.au/guides/personal/other/foreignexchangerates.a…
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4 Comments
Yah - as a migrant worker Ozforex beats the banks hands down.
For example,
comparing Comm bank to Oz forex
a) Comm bank charges International Transfer fee (22 AUD)
b) ASB (receiving bank) charges a fee (15 NZ)
c) Cross rate for the transaction is the worst of the 4 banks and much worse than Ozforex
In Comparison Ozforex takes a 15 AUD fee and the cross rate is much better. And no fee at ASB end.
On average, $100 NZD saving on a AUD2,000 transaction using Ozforex compared to Commbank....
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