Moving to a new country can be an unpleasant process. There are lots of things to organise, and a lot of bureaucratic hurdles to get over. There can be lengthy processes and complications, whether it’s organising visas, paperwork, storage, luggage or importing a car. At the top of the list of annoyances though, can be sorting out your money. Both opening a new bank account in a new country and transferring money overseas are no small feat.
Opening a bank account will mean sifting through the choices until you settle on a reputable and appropriate bank, and then the red tape that follows… Having to get the documentation, citizen number, identification and a lengthy meeting is usually the minimum amount of headaches you’re looking at.
At least this just eats into your time though, and not your wallet unlike transferring your money. Unfortunately, despite the globalised world we live in, transferring money overseas remains to have a fair amount of friction to it. Not only do some overseas transactions take days, but it costs… A lot.
Quite incredible in this day and age is the amount of resistance you face when trying to transfer your money to your new overseas bank account, which proponents of cryptocurrency will love to mention.
The costs of transferring money
The cost of transferring money abroad is usually for two reasons: transfer fees and exchange rate margins. A typical transfer fee for a commercial bank might be around 2.75%. However, there can also be another cash fee on top of the transaction fee when withdrawing, which can really add up. As they explain in the Co-operative bank example when £1 = €1.284, a €1000 withdrawal abroad could leave you with a huge £36.98 in total fees. That’s hundreds of pounds if you withdraw €10,000.
Transferring money from anywhere in the world is expensive, with exchange rate margins also taking a hit to the amount you’re left with. For example, when moving to New Zealand from the UK, upon transferring your savings through a bank you will likely have a currency rate that is 2 or 3 percent worse than it really is. This is because the middleman wants a cut, and the bank will likely make a profit on the difference in margins: the difference between the market rate and the rate they offer you.
Without a background in currency transfers, you can end up losing thousands of dollars when moving country. When moving abroad, savings are everything, and this can seriously damage your opportunities in your new home country. Even worse, many people don’t even realise they have just lost out on thousands in charges and exchange margins, because they assume the currency being offered by the bank is the standard rate.
Being aware of transfers times and how to reduce the amount you lose upon exchanging is the minimum we should strive for. There are many money transfer companies that are offering better rates and a better service than traditional banking methods. For example, the average money transfer company proves to be around 8 times cheaper than banks when sending money abroad.
Because the barriers to entry are lower than in banking, there are plenty of money transfer companies. Many companies means a lot of competition and pressure to offer the best service. Because they are plentiful, comparison websites exist to summarise which is the best. They give us an overview of the various online providers and their features and exchange rates, for example when handling GBPNZD transfers.
Whilst almost any money transfer company will be cheaper than almost any bank, we still need to decide which company to chose. To help us compare the providers, comparison websites tend to detail: credit ratings, reviews of their trustworthiness, exchange rate offered and minimum transfer amount so we can minimise our losses when transferring.
Additionally, the services themselves usually provide fast and easy transfers whether it be over the phone, on an app or online. Unlike banks though, there is often a minimum rate (for example £100). This isn’t usually a problem when moving country though, as you are better off committing to large single transactions than many small ones in order to minimise fixed fees.
What else do I need to know?
Fortunately, there is a lot of information online and layman reviews surrounding sending money overseas. There are still some small but important banking tasks to remember, however.
It will be worth remembering to delete your old banking app and replace it with your new one. Online banking is much more efficient than going to a branch, and banking apps take the accessibility even a step further. It can be viewed anywhere with internet and often it is only your fingerprint that is necessary to access the app, instead of remembering all those passwords.
It is crucial to remember that moving country away from your debts does not mean they will disappear. Paying off previous debts when in your new country will mean having to exchange currency for every debt payment. In conjunction with the interest on the debt, this will be money down the drain.
Nowadays getting a new chequebook doesn’t require going to the branch. If you haven’t received one when opening your new bank, it may be worth getting one via online banking or a quick phone call. It is usually under the ‘customer services’ or ‘products and services’ page on the online banking home page.
You can often redirect payments to a new bank, but given that you have gone overseas, this may be more trouble than it’s worth. Instead, be sure to cancel the Spotify subscriptions and direct debits with your old bank and attribute them to your new bank. This might be a good chance to assess some of your spending habits, too.