Our relationship with Australia is one that stretches back centuries. Ever since James Cook dropped anchor at Botany Bay, the UK has had a close connection with our Down Under cousins.
Even today, the flag of Australia still bears the Union Jack. Strong familial ties exist between our two nations, and often, our youth go on multi-year backpacking adventures in Oz.
From a business perspective, the UK is Australia’s fifth-largest trading partner. Goods and services worth billions of GBP move to/from Australia annually. Every day, we send millions of pounds to Australia. However, some of us spend more than we should in fees.
How can we send payments Down Under without wasting our valuable cash? In this blog, we’ll share the best ways to send money from UK to Australia.
Online Money Transfer Is The Best Way To Send Your Cash
For decades, many of us sent money abroad via our local bank branch. After waiting in a queue, the teller would walk us through the process. After a few minutes, off our money went.
My, how times have changed. These days, the COVID lockdown has made transferring money in-branch next-to-impossible. Even when retail branches re-open, people will likely be hesitant to do their banking in close quarters.
Many will turn to the internet for solutions. And in doing so, they will find a better way to wire cash internationally. Online transfer providers like Transferwise offer an easy-to-understand interface, top-notch customer service, and most importantly, huge savings.
Banks Offer Terrible Service And Are Too Expensive
Legacy financial institutions have had it so good for so long. Up until about a decade ago, the average person had no obvious alternative to the banks. If anyone wanted to send a wire transfer to Australia or elsewhere, they had to accept whatever fees their institution charged.
Not only did this maximise profits for the likes of NatWest, but it also encouraged a culture of indifference. When you think about excellent customer service, do you imagine your bank? Unlikely. Up until recently, they’ve had no incentive to treat retail clients well. Scores of intensively negative reviews online bear this out.
How Badly Am I Getting Fleeced By My Bank?
As bad as bank customer service is, the highway robbery they commit every day is worse. To illustrate how terribly they’re ripping you off, let’s assume you’re moving to Sydney, Australia. As part of the process, you have to send 50,000 GBP (your life savings) to your Aussie bank account.
NatWest charges up to 15 GBP per international transfer. But, that’s not the only way they make money – they also profit off their exchange rate. Here’s how – instead of charging the interbank rate (the rate brokers use), they offer a price with a 2-3% margin built-in.
In this case, let’s say NatWest is giving us a GBP/AUD rate of 1.77346. But, wait – there’s a catch. NatWest only processes 10,000 GBP at a time. This fact has significant implications, but we’ll get back to that in a second.
After deducting 15 GBP, we move 9,985 GBP at the price mentioned above. On the other end, 17,708 AUD lands in our bank account. After repeating this transaction four more times, we’d end up with 88,540 AUD.
88,540 AUD is a big number, which prevents many from realising they’ve been had. To uncover this larceny, let’s assume we could move money fee-free, and at the interbank rate. When we wrote this blog, the GBP/AUD interbank rate was 1.81830. 50,000 AUD moved at this rate would give us 90,913 AUD.
Thanks to their high margins/fees and their low send limits, NatWest would end up charging us over 2,400 GBP. If you’re wondering how banks remain profitable, this is just one way they do it.
How Much Can I Save Using An Online Money Transfer Provider?
Fortunately, more of us are waking up to viable alternatives. Online money transfer providers, from Transferwise to World First, offer low/no fee transactions and razor-thin margins.
Let’s revisit our hypothetical UK-Australia asset transfer. Let’s say that, instead of going through NatWest, we opted for Transferwise. After signing up for an account, you enter your origin and destination bank details. Then, you enter the amount: 50,000 GBP.
Transferwise is famous for processing transfers at the interbank rate. To make money, they instead charge a nominal fee on transactions. On large GBP/AUD transactions, it’s 0.37%. 185 GBP gets taken off at the start, leaving 49,815 GBP to convert at 1.81830. This conversion will give you 90,578 AUD, or a little over 2,000 AUD than your bank – incredible!
Save Thousands On UK To Australia Transfers
In such tough times, every quid counts. The banks aren’t nibbling around the edges – over time, their ridiculous rates can cost you thousands. By taking advantage of alternative money transfer options, you can keep more of your hard-earned money.