Banking when abroad long term
Replies: 28 - Last Post: Oct 5, 2012 6:43 AM Last Post By: rayinkrabi
Aug 20, 2012 1:45 PM
Aug 20, 2012 2:03 PM
Aug 20, 2012 4:05 PM
17I think I mentioned several times that I spend the money ONLINE and therefore are not paying any fees for and not 'loading' any money. I send money back to cover costs of things such as flights and hotels, which are often charged in the currency that I pay for them. So, I'm not really losing that much.
Aug 20, 2012 4:07 PM
18Looseleaf, I just edited my last comment, in the last paragraph at the same time as you were responding. There is a better way and you have now been told that it exists. You can learn or you can keep losing money. You send back Thai Bhat, you lose 3%. You pay for a ticket in Euros you lose 3%. Anything you do using your card that is not in pounds costs you 3%. It doesn't matter to me at the end of the day.
Aug 20, 2012 4:14 PM
Aug 20, 2012 11:29 PM
Aug 21, 2012 12:43 AM
21In my situation I live in Japan and earn in JPY. With the current exchange rate being very favourable at the moment for GBP (as in my JPY buys a lot of GBP) then I want to send back as much as I can right now and pay off my mortgage. I send about £1000 home each month and pay only 2000 JPY (about £15) in fees total. Yes, that's a fee, but I'd love to know of a way to transfer money between countries that doesn't involve a fee. I get close to the spot rate when I transfer the funds and am always happy with the amount that ends up in my account in the UK.
Whilst I'm spending money here in Japan from my UK account it certainly isn't near what I'm sending back. I earn more than enough to live on, the excess is sent home and any time I need to pay for things online I use my GBP credit card. The only sort of shopping I do online is for hotels and flights, which are often quite expensive. I don't pay any fees on these types of costs and so not losing any money over paying for them in JPY.
If the exchange rate isn't so good between JPY and GBP then I might not send money home, however, getting an exchange rate of 125 to 1 on JPY to GBP is worth the cost of sending that money back. Especially when you consider the rate used to be (and could easily be again) over 150 to 1.
I don't actually give any money away to Lloyds using my UK account, however, they own the company that I use to send the funds back to the UK....so I kind of do anyway, lol. But someone's going to take it for transferring that amount of cash each month.
TravelInstyle4 - before you go off and criticise everyone I really wish you'd read other people's posts first - it might save you time and stop you looking like a munchkin.
Aug 21, 2012 12:43 AM
Aug 21, 2012 3:37 PM
23Wooky, the Caxton FX pre-paid card is currently the second best card for a UK resident who cannot get a credit card. http://www.moneysavingexpert.com/travel/cheap-travel-money#prepaid
Aug 21, 2012 4:24 PM
24Looseleaf, I have NO difficulty with reading or comprehending what someone writes. I understand exactly what you are doing and what it is costing you. Like many people, you seem to equate criticising what you are doing with criticising YOU as a person. They are not one and the same. I don't know you personally and have no reasonable basis on which to criticise you as a person. The same however is not true of knowing how you are handling your money as you have written how you are doing it. It's costing you more money than it needs to.
All currency exchange is done for profit. That is why there is always a difference referred to as 'the spread' between the buy and sell prices quoted. No one sells a $ for what they paid for that $. (or YPY or Euro or Pound or whatever). So what that tells you is that every time you exchange money you LOSE something.
Saying you get 'close to the spot rate' is not the same as saying you get the spot rate. Close means you LOSE money. I would suggest that using Lloyds means you probably lose 3%. Then you add your 15 pound fee on top of that. It isn't just the fee you pay that matters. In fact what you lose on exchange is obviously more than the fee.
As I have already written, there is no way to transfer funds for free. Having to pay anything means to me there is no cheap way. However, there is always a cheapest way. That is to use a forex company of which there are many. Google Moneycorp for an example. They will transfer your money for a 15 pound fee plus 1% on the exchange. Probably 2% better than you are getting now. And yes I know the 15 pound fee is the same if you transfer 2k. In fact the way to make it far less signifigant at all is to not transfer less than say 10k. But even if you transfer 10K you will still lose at least that 1% (better than the 3% you are now losing of course).
But better still is to transfer no funds at all and many people do that. I have accounts in 3 different countries. I rarely transfer funds from one to another. When you transfer money to the UK and then use that money to pay for anything in other than GBP you lose a second time on the exchange, which is even worse.
Suppose you buy a ticket that you have to pay for in Euros. You sold JPY to buy GBP and now you are selling GBP to buy Euros. Exchanged twice and lost money twice. If you had paid for your ticket using a card from a Japanese bank you would have only exchanged once from JPY to Euros and if the Japanese bank also charged you 3% on exchange would have only lost 3% instead of 6%.
If you continued to transfer funds as you are now doing but used a UK credit card that charged no exchange loading you could at least reduce that 6% you are losing buying the ticket to just 3% you would still lose using Lloyds for the transfer. If you used a UK card with no loading and a Forex company that charged you only 1% for the transfer you could go from losing 6% to only losing 1%.
It may be that you cannot get a credit card in Japan and so have no choice but to transfer funds. If so then all you can do is look for the cheapest way to transfer them. Whether the exchange rate is 125 or 150 is irrelevant. You aren't making money, you are only getting the rate you should be getting. What matters is how much of it you end up giving away to your bank!!! You shouldn't be happy with the amount that ends up in your UK account UNLESS it is the maximum it can be.
Whatever the exchange rate is does not make it "worth the cost" of transferring it. How can it if you are losing money? Suppose I show you an item and say it is worth 125 JYP if bought in Japan or 1 GBP if bought in the UK. (lets say a pint of beer). Now you say, 'OK, I want to have some money in the UK to buy a beer (or make a mortgage payment) so I will transfer 125 JYP to the UK. What happens? ONLY 97p ends up in your UK account! Not enough to buy that beer. You lost in transit on the exchange. So how can it ever be worth the cost of transferring it? What you end up with is worth LESS than what you started with. WORTH is measured in what can be bought.
I'm not the munchkin here looseleaf, I am in fact pretty much an expert on handling money between countries. I have a close relative who is an Associate Vice President with HSBC and he consults me on how to handle money when travelling. The munchkin is the person who takes crticism of what they are doing as criticism of their person. You are not handling your money in the most cost effective way.
Get a better UK account and cards (I've already provided a link to the best) and open a Forex account to transfer money when and if you must. You can go from 6% to only 1% loss when you buy that ticket online and pay in Euros. If you can get the Aqua card which not only charges no fees or loading but gives you 3% cash back (up to 1000 GBP) guess what. You an even make a profit believe it or not.
Aug 21, 2012 10:59 PM
Aug 22, 2012 1:19 AM
26Wow, I never knew about transferring money across borders before and I realise now what I'm doing is so wrong. I'll chuck my Masters degree in Economics (with distinction) in the bin and follow your wise words from now on.
Actually, I understand fully well the costs and economics of sending and using money in various countries.
Whilst you say that it doesn't matter what the exchange rate is now you seem to miss the point of sending money back to the UK now. As I mentioned, the exchange rate is very favourable for the UK and it only costs me 125-130 yen to buy £1. Considering that rate was closer to 230-240 only 5 years ago that's certainly an important difference.
Why is it an important difference? Because I own property in the UK. I use the money I earn here to pay off the cost of that property. I can't simply 'not transfer' it. Nor do I want to wait until I've saved 10k and then transfer it because exchange rates are volatile things - if you perceive it to be good then transfer it straight away, if you think it's too high then hold on to it. As I mentioned, it's good and therefore I transfer the money. I also use it (again, mentioned) to clear off any credit card costs.
It costs NOTHING for me to clear the credit card beyond the actual balance. It's a UK account and a UK credit card. The only costs I'm incurring are the fees in sending the money back to the UK and any difference between the spot and given exchange rate. I can't get a credit card here in Japan (I'm an untrustworthy gaijin! lol) so what else should I use to make a booking on, for example, expedia.co.uk? A british card is best as I'm not paying any fees for using it.
If I transfer 1,000,000 YEN now at 125 or 1,000,000 YEN 6 months later at a rate of 150 then that's a big difference in the amount of GBP that I get - about £1,333.33. That seems a lot compared to those £15 fees every month!!
The opposite happened in Australia where I could see the Aus $ slipping against GBP and so I held on to my money for 6 months and made an extra 20% on the exchange rate. If I thought the exchange rate in Japan was going to get any better than it was last christmas (around 120) then I might hold on to it, however, it's likely to rise further and therefore reduce the amount of money that I save here. I would be throwing money away by keeping it here and I believe that transferring it every month, despite the £15 cost each time, is letting me avoid the risk of a currency change, especially as Japan keeps trying to intervene in the money markets and raise the value of the yen artificially.
Yes, I'm incurring costs to reduce risk - it's something the world needs to consider doing, especially the finance industry.
I had a look at moneycorp, out of curiosity, but I can't see where they state you get a 1% difference between the spot rate and their offered rate. They just claim to be cheaper than banks....but then doesn't everyone? I can't check the exchange rate for JPY to GBP.....because they don't have one. That's not very useful, is it?!
I wonder if they can also offer the same services that I currently get? It takes 2 hours to transfer money from my Japanese account to my UK account and I have a card that I just put in the ATM which is preloaded with my account info. I type in my pin and how much I want to transfer and then it's done. Why would I also want to sort out trying to open up various accounts while I am not living in the UK - is that even possible?
Don't worry, I'm not taking any personal offence by any of this, so you can stop using that tired line of yours. I just disagree with what you're saying and trying to make you understand that maybe other people are doing things their own way and maybe it's the best way for them - or the way they've chosen that is most appropriate to their situation.
Aug 22, 2012 6:40 AM
Oct 5, 2012 6:43 AM
28In my opinion, I reckon Travelinginstyle has it pretty well worked out but if I may just add my 10 pence worth to help any future travellers on this subject...
Whereas the Nationwide Debit Card used to be the one to have abroad as they were famous for not charging for ATM withdrawals (and you always got the best exchange rate), this changed some time ago and they now charge a standard 2% fee plus 1 pound for each withdrawal..
The Nationwide is still better than most but Travelinstyle's advice about the Metro Bank and Norwich & Peterborough Building Society is much better..as far as I know (after extensive research) they are the only ones in England who do not charge at all for foreign atm withdrawals (don't know what their exchange rates will be tho I assume them to be as good as most).
The main difference between these is that the Metro currently only have a small number of branches in and around London and insist on personal applications only. The Norwich & Peterborough allows you to apply online and automaticaly gives you internet banking (an absolute 'must' when travelling). So I guess opening an account with the N & P should be your first priority while you are still resident.
Another useful tip is to also have another bank account and debit card (with online banking of course) and split your money between them (you never know when your card may be lost or damaged) plus a good credit card as 'back ups'.
The Nationwide also now do a credit card with no charges abroad for purchases..but not for cash from an atm of course as that costs a lot with a credit card (bear in mind that the retailer will probably charge extra for you using a credit card). Needless to say, it's a good idea to keep the cards in separate places, this way, should any be lost or stolen then you still have a back-up!
I should add, since you say Thailand is one of your destinations, that here, the atm's also charge a further 150 baht (around 3 pounds at todays rate) for each withdrawal regardless of amount withdrawn! This can only be avoided by using the AEON atm machines which are mostly sited at Tesco or Big C supermarkets.
I hope this is of use to the OP and I wish you good luck and safe travelling. Cheers, Ray.
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