Taking £3000 to Australia

[dustofnations]

Hi there, in a couple of weeks I'll be heading out to Australia for several months on a working holiday. I intend to take with me the £3000 I have saved. What's the best way of doing this?

Cheers.

Open a bank account in Aus, use CurrencyFair.com to do a transfer.

Effectively it is a peer-to-peer service. People in Aus who want pounds (in a UK account, say) "swap" you for AUD. CurrencyFair then do local transfers at both ends, so there is no "foreign" transfer needed. Check out their site for details.

Their rates are the best I've seen anywhere, often at - or better than, interbank rate.

edit: listen to this podcast from TMF http://www.fool.co.uk/money-talk/the-new-way-to-transfer-currencies-6639.aspx

 

[MacRS4]

I'm beginning to sound like a broken record on this subject.

Leave it in your UK current account, take a Halifax Clarity credit card, set up a direct debit to pay the balance in full each month, spend on the card and use the card for cash withdrawls.

You'll get the best possible exchange rate, 0% charge on purchases and the only fee you'll pay on cash withdrawls is 1% or so max interest between withdrawl time and repayment time.

When I travelled Australia I landed in Melbourne Airport without a single AUD on me - I just used the best value UK credit card for everything.

Worked a treat, none of the cash machines charged me to use them either.

^^ This. Currently sat in Frankfurt trying to get back from Aus, and the above is exactly what I did. The Clarity card from Halifax is a great card for foreign exchange - good rates, and no fees for forex.

The only thing I'd add is tell them 24 hours before you go where you're going otherwise you may get caught (like I do, regularly) by their anti-fraud measures.

 

[MacRS4]

Oh, on the cash thing, having looked - I withdrew about 2k in the last month in cash and it's cost me 11 quid in interest fees. Happy with that, can't see many ways to do it cheaper.

 

[Smithy]

I then opened an account with ozforex.com.au and their exchange rates are *better* than the wholesale VISA rates - albeit very slightly. I transfered over my cash in one hit and paid a $10 fee and that's it. I then had a fully fledged, full Australian bank account (I used WestPac for their vast ATM network but there are plenty of other options). Ozforex.com.au took me less than 2 days to go from registering my account to confirming my first transfer. I used online banking to transfer the pounds from my UK account to their UK bank then the AUD appeared in my Australian account 2 days later. I've used them 5 or 6 times now to transfer money back and forth - they don't charge fees for transfers above $10,000.

Hi mate. Sorry, I didn't follow that... what exactly is ozforex? Do they act as a middle man for the transfer from one account to another?

 

[SPARC]

In £1 coins, gaffa taped to your legs.

 

[dowie]

You'll get the best possible exchange rate, 0% charge on purchases and the only fee you'll pay on cash withdrawls is 1% or so max interest between withdrawl time and repayment time.

How do you know you'll get the best exchange rate? Do you know how much margin Halifax charges above the prevailing interbank rate vs other banks? Also you're charged interest for cash on a credit card whereas you're not with debit cards - was this taken into account?

Seems to be a dubious assumption otherwise to say that they're 'the best'

 

[[TW]Fox]

How do you know you'll get the best exchange rate? Do you know how much margin Halifax charges above the prevailing interbank rate vs other banks?

Zero - because Halifax charge you nothing. You simply pay the VISA WHOLESALE RATE, as I have quite clearly explained in my posts.

Also you're charged interest for cash on a credit card whereas you're not with debit cards - was this taken into account?

Did you bother to read anything I wrote? Not only did I take it into account but I also roughly calculated the cost!

Seems to be a dubious assumption otherwise to say that they're 'the best'

Try actually reading my posts.

 

[dowie]

Zero - because Halifax charge you nothing. You simply pay the VISA WHOLESALE RATE, as I have quite clearly explained in my posts.

I think my question is still valid then - how much margin does this work out to be? Have you compared this to what you'd get charged at other banks using debit cards?

You're still making assumptions tbh...

 

[[TW]Fox]

I think my question is still valid then - how much margin does this work out to be?

Sigh.

The current spot rate* on AUD is 1.57027.

The current Visa wholesale** rate is 1.578297

The current exchange rate from popular high street exchange agent The Post Office is 1.5276.

* Source xe.com
** Source Visa

So actually, you end up getting an even better rate than the current spot rate. So a negative margin.

Have you compared this to what you'd get charged at other banks using debit cards?

Yes - almost all major banks with debit cards charge conversion rates of between 2 and 5%.

You're still making assumptions tbh...

No, I'm not. I've taken the trouble to provide factual information and advice and where applicable, I've shown my workings out to demonstrate my points.

What is your issue with this? The only assumption here is yours.

How about you tell us a cheaper and more convenient way of spending money abroad than my 'Carry one card' option, rather than trying to pick non existent flaws in the advice I have given?

 

[Morgoth]

I think you're best bet would be to spend the £3k on some drugs that sell for more in Australia than they do here, that way you can take your gear over and be in profit!

 

[dowie]

What is your issue with this? The only assumption here is yours.

I'm merely asking questions.

You're still making assumptions btw...

For the sake of argument I could just point to a nationwide debit card as an example that would be similar but slightly cheaper than what you're proposing as you'll not be charged interest and will be getting the visa wholesale rate.

With regards to your other point the visa wholesale rate is using a rate that they've probably obtained on Friday you're trying to compare this to a spot rate (for delivery in 2 days time) - your comparison makes no sense.

@OP I'd say that if you're out there for a while it might well be better to do as another poster has suggested - open an Australian bank account and do a transfer via an FX broker. You then don't have to worry about exchange rate fluctuations.

 

[[TW]Fox]

You're still making assumptions btw...

Not really, no.

For the sake of argument I could just point to a nationwide debit card as an example that would be similar but slightly cheaper than what you're proposing as you'll not be charged interest and will be getting the visa wholesale rate.

No it wont, because as of 1st November 2010 Nationwide withdrew the low-fee foreign spending on debit cards. This used to be the best option (and indeed is the option I took when I did Aus), but it is not any more.

The cost of withdrawing cash and paying it off at the statement date on a Halifax clarity is no more than Visa wholesale + 1ish%.

The cost of withdrawing cash from a Nationwide debit card is Visa Wholesale + 2% + £1 withdraw charge.

Please can you explain how the Nationwide debit card is cheaper?

With regards to your other point the visa wholesale rate is using a rate that they've probably obtained on Friday you're trying to compare this to a spot rate (for delivery in 2 days time) - your comparison makes no sense.

My comparison makes perfect sense - it is the rate given for a transaction made TODAY. Buy something in Australia on your Visa card *today* and that is the rate you will be charged.

Joe Public cannot acheive a better rate with less hassle than the Visa Wholesale rate. You can go to a lot of trouble to pre order cash for delivery in the future at a set rate, but thats hardly the same thing at all, and is hedging anyway.

@OP I'd say that if you're out there for a while it might well be better to do as another poster has suggested - open an Australian bank account and do a transfer via an FX broker. You then don't have to worry about exchange rate fluctuations.

Exchange rate fluctuations go up and down and are hardly a 'worry'.

I am amazed at your continued criticism of my suggested course of action.

Here is me suggesting a method of carrying money which involves simply using a cashpoint as normal and costs only 1% on top of the visa wholesale rate and you've dedicated several posts to rubbishing it whilst demonstrating you don't really know the facts.

I bet you wont be getting the same rate as Visa Wholesale by using an FXBroker and sending £3k - they'll want some profit!

 

[Totality]

I ordered a cash passport from Travelex (NOT the thomas cook one but directly from them). Was free to order online and I picked it up at the airport.

I went for the NZ currency version as that is where I used it. You transfer cash from your bank account online to it and it converts it to $NZ at that time. You aren't charged a fee.

It is then free to use it and withdraw cash from ATMs. I used it in the end to transfer money to my NZ account Transferred money from my account to the card and then withdrew the money from cash machines around town as you aren't charged a fee. I then paid the cash into my NZ account.

Here is the breakdown of fees list. They do an $AUD too:

http://www.cashpassport.com/1/PageF...assport Fees and Limits - MasterCard_Visa.pdf

If you use it for cash over the counter or go into negative balance there are fees, but I have found it really useful as I was with Natwest who charge stupid amounts for using it overseas. I was even able to order my stuff online using the cash passport whilst here which helped until I opened up accounts, etc.

 

[[TW]Fox]

I ordered a cash passport from Travelex (NOT the thomas cook one but directly from them). Was free to order online and I picked it up at the airport.

I went for the NZ currency version as that is where I used it. You transfer cash from your bank account online to it and it converts it to $NZ at that time. You aren't charged a fee.

But you ARE given a crap exchange rate, which keep constantly trying to explain!

The cashpassport you just recommended will exchange AUD today at 1.536010. Thats why it's 'free free' - they dont charge you a fee because they stiff you on the exchange rate.

1% interest charge + 1.578297 exchange rate is quite clearly a better deal.

 

[dowie]

My comparison makes perfect sense - it is the rate given for a transaction made TODAY. Buy something in Australia on your Visa card *today* and that is the rate you will be charged.

Yes, so comparing it to a spot rate on a Sunday evening doesn't make sense. Do you understand why?

Exchange rate fluctuations go up and down and are hardly a 'worry'.

erm why do you think forward markets exist?

I bet you wont be getting the same rate as Visa Wholesale by using an FXBroker and sending £3k - they'll want some profit!

You don't appear to understand how that rate works to begin with...

 

[[TW]Fox]

Yes, so comparing it to a spot rate on a Sunday evening doesn't make sense. Do you understand why?

Sigh, of course, but it's Sunday evening and I was picking a figure to make a point in a thread on a computer hardware forum therefore current spot v current wholesale was fine for the sake of argument, we can revisit this at 12:00pm tommorrow if you STILL require proof that the Visa Wholesale rate is as close to the spot rate as a member of the public is likely to get.

erm why do you think forward markets exist?

Forward exchange markets exist both to provide organisations and individuals with a method of hedging against currency valuation changes and cover themselves against exchange rate risk, and also to provide lenders with the reverse and thus the ability to make a profit, in its simplist terms. Both far, far too complex and irrelevent for a guy who wishes to go travelling in Australia and wants the best deal with the least hassle.

My suggesting puts a card in his pocket which he can use to buy things and withdraw cash at a rate as close to the spot rate as he is ever likely to get. It is therefore probably the best solution for him.

Even if he did place a forward contract for delivery in the future and ended up with £3k at a favourable rate (Which lets face it, for delivery in 2 weeks time probably isn't going to happen is it?) he's then got a massive pile of cash rather than a simple and easy to use card.

You don't appear to understand how that rate works to begin with...

You don't seem to understand quite how good the Visa Wholesale rate is. It's *very* close to the spot rate, whereas rates from 'commision free' currency exchangers are absolutely miles from it.

Frankly the fact you still thought a Nationwide debit card offered the most cost effective way of doing this demonstrates your knowledge is at best out of date. I notice you ignored the fact I've demonstrated you to be wrong with that.

 

[dowie]

Yes indeed - I'm by no means an expert on the various debit cards available which is why I was asking you questions in the first place. You're statement that that card was 'the best' seemed a bit dubious....

I do however know a bit about FX and you still don't seem to realise why your comparison is a silly one. (I'm not just talking about the wider spread at this time)

 

[[TW]Fox]

Yes indeed - I'm by no means an expert on the various debit cards available which is why I was asking you questions in the first place. You're statement that that card was 'the best' seemed a bit dubious....

I've done a lot of research into the most efficient way to take cash when on holiday etc - which is why I am confident that currently the Halifax Clarity *is* the best. The next best is the Santander Zero, the difference being that Santander has a higher typical APR (Which, as you know, is charged immediatly on cash so becomes an issue).

I'm closing my Nationwide current account now, because they no longer offer what they once did - it was the last debit card from a major bank you could use efficiently.

I do however know a bit about FX and you still don't seem to realise why your comparison is a silly one.

Would you feel better if we went back in time to Friday?

Friday's Visa Wholesale rate: 1.584464
Friday's mid market rate (xe.com): 1.5713942355

Surely you can see that regardless of how current the data is, the Visa wholesale rate is pretty damn good. Which is the point being made.

If you know about Forex, then you'l know that a rate of 1.584464 is damn good for a consumer to be able to obtain simply by visiting a cashpoint in a foreign country or swiping the card at a shop!

I am not a Forex expert (Heck, my Forex 'experience' amounts to a single module on my MSc, thats it!) but I am a massive tight-wad, so the fact I always make sure I have the best possible deal when travelling abroad means I've picked up whats hot and what isnt in the world of credit/debit cards and how they compare to prepaid cards and popping into Thomas Cook.

 

[Totality]

But you ARE given a crap exchange rate, which keep constantly trying to explain!

The cashpassport you just recommended will exchange AUD today at 1.536010. Thats why it's 'free free' - they dont charge you a fee because they stiff you on the exchange rate.

1% interest charge + 1.578297 exchange rate is quite clearly a better deal.

Not saying that the Travelex is better. The Halifax card is better if you can get credit, but I couldn't so went with the best thing that suited me at the time. Was planning to use the Natwest Visa debit till I noticed the fees so last minute the cash passport which could be picked up at the airport was the best option I had. Still worth knowing about if you can't get credit or don't have time to wait for the Halifax card to arrive before going.

 

[dowie]

Would you feel better if we went back in time to Friday?

Friday's Visa Wholesale rate: 1.584464
Friday's mid market rate (xe.com): 1.5713942355

Surely you can see that regardless of how current the data is, the Visa wholesale rate is pretty damn good. Which is the point being made.

You don't understand what you're comparing do you?

As I've already pointed out your comparison makes no sense, you're effectively comparing an overnight rate from Thursday with a spot rate (so for delivery next Tuesday).