Hello!

Overseas shopping sprees either online or in person have been wonderfully affordable over the past couple of years, thanks to the strong Australian dollar making US and European prices seem really cheap. But now the Aussie is weakening those prices may not stay a bargain forever.

To shop smarter overseas, consider these points:

1. “Free” postage

There’s really no such thing as free postage. The cost has to come from somewhere. So what you’ll often find is that prices on free shipping sites are higher than on sites that charge for shipping, or there are last minute “handling” charges that creep in. Another thing to watch out for is volume, as some courier services will charge based on the size of your package, rather than its weight.

2. Poor rates

One thing to bear in mind is that when you’re shopping online with your credit card, you’re almost certainly not getting the best rates.  Even when the Australian dollar was above parity with the US dollar, most banks were exchanging for less. The “Interbank” rate that you’ll see quoted is the rate that banks use amongst themselves: the rates they’ll offer you will be far less competitive.

3. Hidden fees

International transaction fees are often applied when paying for goods in a foreign currency, which in some cases can exceed 3% of the purchase cost. On top of this can be an additional conversion fee, of around 1%.

4. PayPal peril

PayPal may seem like a safe and convenient way to pay, but its fees can be among the highest, depending where you shop and if you use your credit card or funds already in your PayPal account. When a credit card is involved, Cross-border Personal Transaction fees can be as high as 7.4%, plus a fixed fee, plus a currency conversion fee.

5. Locking in

One better value option for buying online is to use a travel card that lets you store different currencies on it. You can load it up when rates are good, and then spend directly in that foreign currency, not having to worry about further conversion fees, or paying any more if the exchange rate continues to fall.

6. Looking ahead

No one has a perfect crystal ball to predict where the dollar is headed. But overwhelming market consensus suggests it will go down rather than up. That means the current rates may be the best for a while, so if you’re planning future overseas purchases, or an overseas holiday, it might be worth buying your currency now.

The good news is that with US prices so much lower than Australian prices, the dollar has some way to fall before overseas bargains are gone altogether. The mark up on items such as Nike shoes can be so high (over 50%) that they’ll still be cheaper than local items for some time to come.

Natalie Truong is head of the private dealing desk at international money transfer service OzForex. Natalie joined OzForex in 2005 as its first foreign exchange dealer. She recently spent 3.5 years heading up OzForex’s Toronto office, before returning to her home town of Sydney. An expert in forex and money transfers, Natalie has access to OzForex’s market leading research and insight into currency movements and international payments.
  • I buy from a few overseas companies but have never had any issues

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  • Great! Really good knowledge to know! Thanks for sharing this!

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  • Good information to remember when shopping from overseas sellers.

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  • i think that there are probably bargains that can be gained by shopping like this but i still prefer the good old fashioned way of going into a shop and seeing what i want to buy. also any returns are quick and hassle free!. i also love knowing that i am helping to keep aussies in jobs, especially the younger ones that work in these shops, and i would like to say that i like to keep my money in australia but these days, aussies seem to be owning less and less companies here. that also brings me to the point, that i love to support the local aussie small business, even if it costs a bit more, i know that while they are providing me a great service, i am helping support their family!

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  • I’ve been buying alot from memebox http://us.memebox.com?acc=dba31bb5c75992690f20c2d3b370ec7c
    and the conversion rate is crazy however I have compared all my banks and paypal and paypal does work out slightly better but definetly check out all hiudden fees and charges not just byu the seller but by your bank also.

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  • Interesting article with lots of great hints and tips

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  • Excellent information, particularly regarding PayPal.

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  • Great tips and advice, also the pre-paid credit cards are great, you don’t worry about fraud on your personal bank account.

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  • Good points that we might not consider when purchasing.

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  • very valid points. it does pay to shop. and it make sense that it costs more if its from far

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  • Its so much easier to compare prices, including overseas prices for various goods thanks to the internet. I don’t feel comfortable spending too much over the internet but I have bought a significant amount of products from overseas. I feel a bit guilty about this but I need to consider my budget.

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  • I like to try and buy local.

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  • as long as you purchase In Au dollars to avoid the dramatic increase in price for conversion then shopping overseas can save you a small fortune of the little things

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  • those hidden fees can be a bit of shock if you have not accounted for them either

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  • Interesting news, thanks for sharing.

    Reply

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