Currency Exchange

I have been watching the currency exchange market for about 2 months now, in anticipation of moving money from the US to Australia.  Currency exchange is not for the faint of heart. Depending on how much you want to exchange, the exchange rate can change by o.01 in a few seconds and you can suddenly be out by hundreds of dollars. The forecasting is worse than weather forecasting.  They say up, it goes down.

At this point I am signed up with three different currency exchange companies,  for several reasons, and the difference in quoted prices is quite marked.

When I first moved to Australia I signed up with HiFX because they offered a great rate.  It was super easy to transfer money from Australia to the US, because Australian banks allow you to do an electronic funds transfer online to any other banking account in the country.  But moving money from the US to Australia?  NIGHT.MARE.  Mostly because of the American banking system, and my American bank in particular.

A little background on how an exchange works, using an exchange broker:  You first set up an account with them, providing information about how much you expect to exchange in a year, the purposes of the exchange, and identity information.  Once the account is set up, you watch their exchange rate on their website until it is what you are willing to accept.  You either then lock in the rate on their website through initiating a contract, or you call and are quoted a rate, which is then locked in by contract.  You then have to deposit the agreed amount of money in the exchange broker’s account.  This is where it gets complicated, but more on that in a bit.  Some brokers have the ability to direct debit your checking account.  Most require you to deposit the money in their account via wire transfer, at least in the US where our antiquated banking system doesn’t have a true electronic funds transfer system in place.  The broker then makes the exchange and deposits the exchanged currency in your nominated foreign account.

Pretty straightforward, eh?  Not if you bank with my American bank.  They refused to do the wire transfer to my exchange broker’s account in New Zealand without also doing the currency exchange themselves.  There is NO point for me to transfer money to my broker’s account if my American bank does the exchange.  (And FYI, your bank is not going to give you a great exchange rate, that’s the point of exchange brokers). Apparently the $45 they were going to charge me just for the wire transfer wasn’t enough.  And by the way – to get the money to the exchange broker when transferring from Australia to America is free. I ended up having to use a different exchange broker (and why am signed up with three brokers) who doesn’t have as competitive of an exchange rate just so I could avoid the wire transfer.

I highly suggest Currency Online for exchanging money.  They have an American  bank account for wire transfers, they offer a better exchange rate than XE Trade, their website has a great exchange rate tracker and graphs, and it’s pretty easy to exchange (other than the whole not doing direct debit thing).  If you want direct debit capabilities, XE Trade does them for US accounts.

If you are looking for a bank in Kansas City, I highly recommend staying as far away from my bank as possible.  I’m not going to actually name them here, but let’s just say the initials they use as their name are in the word dUMB.