When travelling overseas, currency exchange can be a confusing prospect. With so many different ways to convert your money out there, it is hard to know where the best deal is. This article will break down several methods and cut through the marketing to give you a better understanding of getting the best exchange rate in Australia.
The goal when converting currency is to get the closest to the market price. For this article I will reference XE, a website dedicated to live exchange rates. At the time of writing this article, the XE exchange rate for Australian Dollars (AUD) to United States Dollars (USD) was $1 AUD = $0.684 USD.
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The most common way I see people converting their money is through currency conversion retailers. But do they offer the best conversion rate? Quite simply, no, they don’t. You pay for convenience with these stores, and your wallet will be lighter because of it.
I compared some of the bigger competitors in the retail space on their prices:
Travelex was offering an exchange rate of $1 AUD to $0.665 USD, a 2.8% reduction on the market rate of XE.
Travel Money OZ
Travel Money OZ offered an identical rate to Travelex with $1 AUD to $0.665 USD.
Australia Post had an even worse rate at $1 AUD to $0.646 USD, a 5.55% loss of your money for converting.
One thing to add is that these were the online prices. In my experience the retail store fronts had even worse rates. However you can often order online and pick it up in store for the online rate. Sometimes there are fees attached as well which brings the money received as well so ensure you factor that in.
Retail currency converters are only good if you are in a pinch, and are still better than converting at the airport. Make sure to shop around if you need to use a retail converter as there is a large variance of prices. However there are other methods that will yield a better result if you can be planned.
I’m only going to briefly go over travel cards, as they have very similar rates to the retailers cash conversion rates.
Travel cards are a good way to hold your foreign currency on a single card with a PIN rather than holding bundles of cash.
Airport Currency Converters
Quite simply, converting your money at the airport will give you the worst rates due to the convenience. There will often be fees as well on top.
Airport currency conversions simply prey on the unorganised and unplanned. Be planned and save a lot of money.
Bank Accounts With No International Fees
Setting up a bank account with no international fees is the best way to maximise your money overseas. This method is often unknown to a lot of travellers I speak to.
Withdrawing money from an overseas ATM is the best way to get a great rate. VISA and Mastercard provide rates only a fraction lower than the market rate, and a much better rate than the currency converters.
At the time of writing this article, the VISA exchange was $1 AUD = $0.682 USD. This is a 2.5% better rate than the Travelex rate which was the best of the online rates. Not bad to have an extra 2.5% money for free!
Several bank accounts offer refunds of any fees incurred from overseas ATMs or terminals. However there are often terms and conditions attached with them.
ING Orange Everyday
The Barefoot made the ING Orange Everyday account popular. However it still stands today as a great travel banking account. By meeting the terms and conditions, the card becomes a superior travel card with all ATM and international fees refunded.
From the ING website:
- Deposit at least $1,000 from an external bank account to any personal ING account in your name (excluding Living Super and Orange One)
- Also make at least 5 card purchases that are settled (and not at a ‘pending status’) using your ING debit or credit card (excluding ATM withdrawals, balance enquiries, cash advances and EFTPOS cash out only transactions).
However with the popularity of the card and its success through the Barefoot Investor book, the cards features have slowly gone down over the past few years. Before signing up, do your research to ensure the features you want are still there.
HSBC Everyday Global Account
HSBC has a great alternative to the ING Orange Everyday account. The Everyday Global Account offers some great extras on top of the 0% international transaction fees.
From the HSBC website:
- $100 Bonus when you deposit $2,000 or more each month for 3 consecutive months, within 6 months of opening your Everyday Global Account.
- Earn up to $50 cashback each month on eligible purchases when you tap and pay with Visa payWave, Google PayTM or Apple Pay under $100.
As well as offering the 0% transaction fees the HSBC option is a fantastic account for travellers.
Being planned and ready for travel will save you a lot of money on fees and get your more money to spend on your adventures!