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Figuring out how to get the best available deal on your international money transfer can be a headache. There are different exchange rates out there - and they fluctuate constantly. But with the help of Google - and a couple of other smart online tools - you can cut through the noise, and find the real exchange rate, every time. Here’s how.
Before you get started, a word.
Banks and money transfer providers often don’t give you the Google exchange rate. Instead they give their “rate of the day” for example, to make extra profits.
Wise is different. Its smart new technology skips hefty international transfer fees by connecting local bank accounts all around the world. Which means you can save up to 8x by using Wise rather than your bank when you send your money abroad.
Check out how to make your first transfer with Wise. And give it a try.
Oh, and while you’re at it, check out Wise’s free borderless multi-currency account. Where you can manage and send dozens of currencies all from the same account.
Now, back to what you came here to read.
Currency exchange rates move up and down all the time, in line with global financial markets. That can make it very tricky to keep an eye on the exchange rate for the currency pairing you’re interested in. One common way to check up on the exchange rate is - simply - to Google it.
If you want to know the day’s rate for converting your Australian dollars to US dollars for an upcoming trip, just type AUD to USD in the search bar, and Google will work its magic. You’ll see a quick conversion showing how many USD you’ll get for your 1 AUD, and a calculator to work out larger amounts. There’s even a handy graph showing historical performance of the exchange rate, if you’re more of a visual type.
Yes. The information you’ll see on Google is drawn from publicly available data, and shows the exchange rate being used on global financial markets. That’s also known as the mid-market rate, spot rate, or interbank rate.
If you’ve ever bought foreign currency for a holiday, or sent a payment abroad, you’ll know that the bank doesn’t usually give customers the mid-market rate.
Instead, there are different rates depending on whether you’re buying or selling currency, which are set at a particular time every day, and then stay fixed, even if the spot rate improves. There may also be different rates depending on how you want to make an international payment, for buying foreign cash, or cheques. Westpac, for example, offer up to 7 different rates depending on exactly what transaction you want to make¹.
It’s normal practise for banks and foreign exchange services to markup their exchange rates, to protect their profit. This is often called a currency spread, or a currency conversion fee - but it means that customers pay more, as they’re not being offered the real, mid-market exchange rate. If you want to transfer money using the Google exchange rate, your bank is probably not the best place to go. More on that in a moment.
There are a few smart, and easy, tools out there to help you compare the exchange rates - and fees - from different banks and money exchange services. This is a great way to see exactly how much you can expect your recipient to end up with, after all costs are removed, if you make an international transfer.
Wise built a tool, which let you compare the exchange rates and costs of major banks and money transfer services, so you can see the true cost of your transfer every time.
You might also choose to use an online currency converter to find the spot rate, so you can compare it to the exchange rate your bank has offered. Just make sure you check the small print on the bank’s website. In some cases the exchange rate they publish reflects the mid-market rate - but isn’t actually the rate they give when you transfer with them. If the rate is described as indicative, or an illustration of the exchange rate, be wary. Ask bank staff the actual rate applied before you commit.
If you want the best exchange rate, you’re really looking for the mid-market or interbank rate. This is typically the best rate available - and certainly the most fair one - at any one time - but the interbank rate changes constantly as it’s dictated by market forces.
To get the best deal out there, at any particular time, you want to find a money exchange or transfer service which offers the mid-market rate - the one you’ll find when you Google your currency pairing.
As we mentioned already, most banks and payment providers don’t use the Google exchange rate. Instead, they add a markup to the spot rate, to increase the profit they make on each international transaction, on top of any upfront fees detailed. If you’re sending money through a traditional bank, you might also find that there are hidden fees added by intermediary banks which are used to deliver money via the SWIFT network.
But don’t panic. You can still get the Google exchange rate for your international money transfer, if you use a specialist in international payments, like Wise. You can send money to or from a bank account in Australia, with Wise, at the Google exchange rate, and with only a small upfront fee.
Or, if you need to make international payments frequently, you might be able to save even more time and money with a borderless multi currency account from Wise. This smart new account lets you keep your money in any of dozens of different currencies, all in the same account. You can then switch between them as and when you need to - using the Google exchange rate, of course. And because Wise use local transfer methods, there’s no need to worry about the hidden costs associated with payments sent using the SWIFT network. You’ll know exactly what your recipient will receive, and exactly what it’ll cost you.
Many banks and money transfer services make currency exchange sound complicated. But it doesn’t need to be. Use these tools to find the real exchange rate, and choose a provider like Wise, which will use the mid-market exchange rate every time, with no hidden costs or sneaky fees. Then you can relax, knowing you’re getting the best deal available.
¹https://www.westpac.com.au/personal-banking/services/currency-converter/ (June 27, 2018)
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This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
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