Transferwise - painless and cheap FX and overseas purchases

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Forums › Bargains and Deals › Transferwise - painless and cheap FX and overseas purchases

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#2402632 20-Jan-2020 18:17

dunnersdude: Keen to know some more details about how this works/usage cases

I think these are the main uses cases:

Going overseas on holiday. Put money into transferwise. Buy things overseas using the transferwise card. Profit.

Buying things off Amazon\ebay. Put money into transferwise. Add transferwise card to Amazon billing and Paypal. Buy thins in USD. Profit.

Receiving money from overseas. Have overseas person put money into overseas transferwise account. Either withdraw money or leave it there and use it for your USD purchases. Profit.

gmball

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#2402637 20-Jan-2020 18:32

I think all of the ANZ credit cards offer overseas conversion @ 1.8% margin, and as sbiddle has pointed out they either offer 1% cash back or 1.3% in airpoints dollars. So makes the actual cost negligible.
Plus as a frequent traveller I don’t have to worry about planning in advance to have cash available in various ‘wallets’.
I also like the fact that the card provides complimentary travel insurance at no cost when I pay for my trip using my card, and have often been phoned by ANZ when they detect transactions which may be fraudulent, plus peace of mind knowing that if my card was used fraudulently, ANZ would in most cases reimburse any losses.

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#2402638 20-Jan-2020 18:33

sbiddle

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#2402677 20-Jan-2020 20:00

traderstu:

sbiddle: Others may see a point in the card, but as a frequent traveller I just don't see any.

There's your answer - not everybody is a frequent flyer.

You're missing my point - if I see no value as somebody who is out of NZ normally a dozen times per year I really struggle to see how somebody who goes away once or twice a year would get any value at all from it.

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#2402683 20-Jan-2020 20:05

landcruiserguy:

dunnersdude: Keen to know some more details about how this works/usage cases

I think these are the main uses cases:

Going overseas on holiday. Put money into transferwise. Buy things overseas using the transferwise card. Profit.

Buying things off Amazon\ebay. Put money into transferwise. Add transferwise card to Amazon billing and Paypal. Buy thins in USD. Profit.

Receiving money from overseas. Have overseas person put money into overseas transferwise account. Either withdraw money or leave it there and use it for your USD purchases. Profit.

But the first two are only profitable if the NZ$ drops between topping it up and you actually buying it though. If it goes up you're losing money. And since we never know if the $ is going to rise or drop there is a 50/50 chance of losing on the deal. If you'd topped up in October and are spending it now you'd be 4% worse off than just using a NZ credit card.

For sending and receiving money from people overseas (or other uses such as a UK pension) it's an amazing product and a lot cheaper than the banks.

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#2402685 20-Jan-2020 20:08

gmball: I think all of the ANZ credit cards offer overseas conversion @ 1.8% margin, and as sbiddle has pointed out they either offer 1% cash back or 1.3% in airpoints dollars. So makes the actual cost negligible.
Plus as a frequent traveller I don’t have to worry about planning in advance to have cash available in various ‘wallets’.
I also like the fact that the card provides complimentary travel insurance at no cost when I pay for my trip using my card, and have often been phoned by ANZ when they detect transactions which may be fraudulent, plus peace of mind knowing that if my card was used fraudulently, ANZ would in most cases reimburse any losses.

Fraud is the key thing with a debit vs credit card.

If my credit card has fraudulent transactions on they don't affect me in any way. I never in effect "pay" for them because they're wiped before the end of the month.

With a debit card (or debit Mastercard like Tranferwise) if fraudulent transactions appear they're sucking your money which may mean you end up with no balance on your card until they're resolved the issues and credited back.

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#2402687 20-Jan-2020 20:09

sbiddle:

But the first two are only profitable if the NZ$ drops between topping it up and you actually buying it though. If it goes up you're losing money. And since we never know if the $ is going to rise or drop there is a 50/50 chance of losing on the deal. If you'd topped up in October and are spending it now you'd be 4% worse off than just using a NZ credit card.

For sending and receiving money from people overseas (or other uses such as a UK pension) it's an amazing product and a lot cheaper than the banks.

I'm an expat so get very interested in FOREX rates and generally my credit card is fine for travel. As you say for sending money the non bank products are far better. I use currencyfair as they are better for larger sums (flat fee rather tha % based) but transferwise are very good as well.

sbiddle

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#2402698 20-Jan-2020 20:27

landcruiserguy:

What kind of card give you that low conversation rate? I am an ANZ customer so keen to know more.

Personally, I have tried doing multiple transactions with letting Amazon, ANZ and Paypal do the FX and reverse engineering the rate from the final amounts. It's all about the same. Using transferwise I save 4%.

I think you overrate the ANZ fraud analytics. I was in Oz on holiday at the same time as someone in Paris was using my CC number to buy croissants and coffee. The ANZ\Visa geniuses didn't pick that up.

I am also an ANZ customer and when using a ANZ ATM in Oz I got charged a overseas ATM fee so not sure why you don't get that. ANZ charge you 1.8% (plus the overseas ATM fee), transferwise charge you 2%. It's basically the same. Nobody really needs cash while on holiday any more so the answer is to just use the transferwise card for your holiday purchases.

So I think the reason why everyone thinks it's great is that we are all paying more fees than you. Let us know what kind of credit card you have with the low conversion rate.

ANZ's Visa rate has been 1.8% since probably early 2019 or maybe even late 2018 when Visa slashed it. All other banks have dropped their rates but there some better than ANZ - one of the big banks is only 1.6 last I looked but I can't remember who it was.

ANZ haven't charged an ATM fee in other ANZ ATM's (so that's ANZ Australia + other ANZ entites) for maybe 6-7 years. They then culled the ATM fee for every foreign ATM (ie all banks) in March 2018 with the only fee being 2.5% conversion. This 2.5% then dropped to 1.8% at the same time the credit card rate dropped. It is important to note you will still pay private fee surcharges at private ATM machines overseas (and even in NZ) and even with a Transferwise card you'll also be paying these surcharges. These ATM's have to clearly show these fees.

I have zero idea how you could be paying a foreign ATM fee at ANZ because I'd use an ATM on most trips to Aussie and have never paid this since they scrapped it 6-7 years ago (it was so long ago I actually don't remember the exact date). If you are paying this there is clearly something wrong with your account. Cash is still huge in many countries particularly the US and in Australia you'll find cash is still king and essential because so many retailers (cafes in particular) still impose minimum amounts of around $20 for card purchases.

And my card is just a regular ANZ Platinum Visa so with the 1.8% fee and 1.3% Airpoints cashback (+ status points so I'm actually doing far better than Transferwis who don't offer these) I'm only paying an effective 0.5% or fractionally more since Visa update rates in realtime but these can be fractionally more than the midmarket rate. I really don't understand how you could be saving 4% with Transferwise.

And as for ANZ's analytics having had my card compromised probably 4 times over the last 7 or so years I rate it as very good. Clearly analytics can't pick up everything that's wrong but I highly rate a system that can automatically block my card for a purchase from a Coke machine in the US (which was not me) that would have occurred about an hour after I left the US on a stopover back from London where I used my card for a single purchase in the US.

landcruiserguy

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#2402720 20-Jan-2020 21:47

I think this all comes down to the actual FX rate as a lot of fees are buried in a crap rate.

Transferwise uses a margin on the mid rate. Are the people with the ANZ cards saying that ANZ also charges the mid rate or are we all assuming that they charge us the sell rate of that currency?

Edit: Some example numbers. I brought an Oculus Go just before the GST hit. $149 + $13.21 shipping in USD.

With Amazon doing the conversion it would have cost me $262.53 NZD.

Charging it to USD using my transferwise card it cost me $253.88 NZD.

262.53 - 253.88 = $8.65

I realise that the Amazon rate isn't the ANZ rate but in a previous exercise of comparing the two they turned out be use almost the same FX rate.

ANZ don't provide a easy calculator that tells you how much your purchase will be in your currency. At least not that I have found.

Handle9

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#2402724 20-Jan-2020 21:58

I have no idea for ANZ but kiwibank seem to use the mid market rate. Same for Citibank in the uae

sbiddle

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#2402731 20-Jan-2020 22:19

Visa / Mastercard convert at their rate (which is identical to or very close to the mid market rate). Once it's in NZ$ the bank then adds their margin which is 1.8% in the case of ANZ.

Visa provide a calculator on their website to see their rates. https://www.visa.co.nz/travel-with-visa/exchange-rate-calculator.html

Much of this thread has already been discussed in the existing big thread about Transferwise.

The banks have nothing to do with the foreign currency - > NZ$ conversion.

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#2402744 21-Jan-2020 06:40

sbiddle:

Visa / Mastercard convert at their rate (which is identical to or very close to the mid market rate). Once it's in NZ$ the bank then adds their margin which is 1.8% in the case of ANZ.

Thanks sbiddle. The way you have broken this down and explained it was quite informative to me. I completely forgot about the airpoints aspect as I've got the same ANZ Platinum Visa as you.

I've been using transferwise to transfer funds to my overseas bank account regularly and I do save quite a bit compared to the banks + the transfers are done almost instantly i.e in under a minute. When they launched their travel card, I just "assumed" that the same savings can be achieved.

But yea I now think using a credit card is a much wiser option - especially since it's also got the added benefit of charge backs which the Transferwise Master debit card does not.

I'll do a bit more reading on what problem this card is trying to address as surely there has to be a need for a product like this 🙂

landcruiserguy

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#2402747 21-Jan-2020 07:08

@sbiddle thanks for posting the calculator as it adds some hard data into the debate.

ANZ with a 0% fee to show the fx rate

Transferwise fee is included in this rate (actual rate 1.49)

ANZ with the normal 1.8% fee

Summary

Transferwise excluding fee 1.490

ANZ excluding fee 1.514

Transferwise with fee 1.500

ANZ with fee 1.541

As I said, a lot of fees are hidden in a crap FX rate.

sbiddle

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#2402751 21-Jan-2020 07:35

I've just spent probably 5 mins on the Transferwise site and can no longer see their pricing for loading currencies. When you look at the card page it very clearly shows the rate is between 0.37% - 2.24% across the ~40 currencies but appears they no longer list them individually on a page like they used to do which makes comparing Transferwise quite difficult.

Doing some quick maths it looks like the Transferwise US$ may have dropped from 0.49% to 0.37% but there is no way to confirm this since they're not being transparent with their fees. Some countries are up to 2.24% which is very clearly a lot worse than the ANZ 1.8% rate, and clearly a lot worse than the effective 0.5% rate from ANZ fee after the 1.8% less 1.3% Airpoints cashback.

sbiddle

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#2402753 21-Jan-2020 07:42

FWIW it's also worth factoring in the ANZ / Westpac / Kiwibank status point earn as well for the few hundred thousand people in NZ like myself obsessed by chasing points.

1 Air NZ SP has an effective face value of around NZ$8ish or so (which is the cost of acquiring points by flying) so if you are to translate this with the Kiwibank card earning 1 SP for every $200 and ANZ earning 1 SP for every $250 you are looking at up to 4% effective discount which means a bank card suddenly goes from being slightly more expensive than Transferwise to being significantly cheaper.

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