How to Get the Best Exchange Rate on Every Money Transfer

Information verified correct on December 5th, 2016

exchange-rateCompare a range of transfer options to find the best exchange rate when you want to send money overseas.

When you need to send an international money transfer to Australia, the UK, India or anywhere else around the world, finding the best exchange rate is crucial. The better the exchange rate, the better value for money you get and the more cash arrives into your recipient’s wallet.

But if you’re using your bank to send an international money transfer, chances are you won’t be getting the best exchange rate available. Shopping around and comparing the services of specialist money transfer companies will help you find a better deal.

What is an exchange rate?

The exchange rate details the value of one currency relative to another. You’ll probably have seen the exchange rate mentioned in the finance news, when the value of one New Zealand is expressed in terms of a range of other currencies. For example, one New Zealand Dollar might equal 70 US Cents. Exchange rates are affected by a wide range of factors, including the supply and demand of each currency, the performance of national economies and even the level of trade between two countries.

When you want to send money overseas, you’ll need to convert your New Zealand Dollars into the local currency at your money transfer destination. If you want to send money to France, banks and money transfer companies will convert your New Zealand Dollars into Euros at a specified exchange rate.

How does the best exchange rate work?

The exchange rate you see reported on financial news bulletins is the wholesale or mid-market exchange rate. Banks and other financial companies make money on international transfers by purchasing currency at this mid-market rate, and then offering a lower rate to you on your transactions.

That’s why it’s always a good idea to shop around for the best available exchange rate. While banks usually offer low exchange rates, many specialist online transfer companies offer far better exchange rates to their customers — and this can mean much better value for money for you.

What are the benefits to getting the best exchange rate?

Finding the best exchange rate means that you will get the best deal on your international money transfer. A higher exchange rate means more money arriving into your beneficiary’s bank account or wallet, and means that the bank or money transfer provider is taking a lower cut from your transaction. If you need to send a specified amount of money in a foreign currency, you’ll have to hand over fewer of your New Zealand Dollars to ensure that your beneficiary receives the correct amount.

How do I compare exchange rates?

  • Look online. Start researching online to see what exchange rates are available from the banks and different money transfer providers. It’s also a good idea to see what the wholesale exchange rate is so that you have a baseline to compare those rates against. It won’t take long for you to work out which companies offer the best rates.
  • Make sure you know what rate you’re getting. Many transfer providers offer money transfer cost calculators on their website, but some will include what they refer to as an ‘indicative’ rate rather than the exchange rate you will actually receive. When you get a quote, make sure the quote includes the exchange rate you will be given.
  • Watch out for fees. Exchange rates are only one half of the puzzle when it comes to determining the cost of your transfer. Most providers also charge transaction fees, so remember to take these into account as well.
  • Consider other factors. Some companies offer flexible options to help you get a better exchange rate, such as placing a limit order. Other companies may offer fast cash transfers that can be processed in as little as a few minutes, but these often attract lower exchange rates.
Case study: International money transfer service vs bank

benWhen Ben wants to send $1,000 from New Zealand to his brother Hamish in Italy, he decides to shop around for the best possible deal. Hamish is currently on holiday in Europe but unfortunately has had his wallet stolen by thieves in Rome and is running short of funds.

Ben decides to compare his bank’s exchange rate and transfer fee with those offered by a specialist transfer company online.

As you can see below, Ben can send an extra €16 just by using a money transfer company instead of a major bank, while he will also save NZD $25 in transfer fees.

BankMoney transfer company
Exchange rate1 NZD = 0.563 EUR1 NZD = 0.579 EUR
Transfer fee$30$5
Transfer methodBank account transferBank account transfer
Processing time1-3 days1-3 days
Amount received (in EUR)€563€579

How do I know if my international money transfer service is giving me the best rate?

The best way to ensure that you are getting a great rate from an international money transfer service is to compare the exchange rate with the rates offered by other providers. You can also check the mid-market exchange rate to get a better idea of whether or not you are getting value for money.

Many specialist transfer services also offer flexible options to help you lock in a better exchange rate. For example, you can place a forward contract to lock in an exchange rate now for a transaction that will take place months into the future, or place a limit order so that your transfer is automatically executed when your desired exchange rate becomes available.

What are the risks to using an international money transfer?

The main risk when sending an international money transfer is failing to do your research before you part with your money. Researching and comparing your options will not only allow you to find the best exchange rate, but also work out the full cost of a transaction before you commit. Make sure to review all the details of a transfer before you agree to anything, while you should also make sure that you are dealing with a reputable transfer provider.

Frequently asked questions

Where can I find a trusted money transfer company?

You can search from our list of reputable online transfer companies.

Why do specialist transfer companies offer better exchange rates than banks?

While banks offer an extensive range of products and services, money transfer companies specialise in moving money overseas and trade large volumes of foreign currency. This enables them to operate with tighter margins and therefore offer better rates.

Will I always have to pay an international money transfer fee?

No. Some companies waive their fees on large transfers.

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