Bills are unfortunately an unavoidable part of life, but if you’re about to pay for overseas bills, there is an added level of difficulty. This article looks at the best ways to pay bills abroad.
If you’re looking at buying property overseas, you can read our article here.
What will we cover in this article?
Whether it be household bills in your overseas property, medical expenses, or school fees – paying bills abroad can be tricky business. Due to the regularity of some payments like household bills, we want to make sure that you can reduce the cost of these payments and reduce the stress involved wherever possible.
The Currency Shop aims to provide you with the most up to date information in a simple form, without any of the jargon. In this article, we will explore the best ways to pay bills overseas:
- Using Credit Card to pay overseas bills
- Making an International transfer to pay bills
- Paying overseas bills via Paypal
- Paying overseas bills via Western Union
- Setting up a local bank account
- What to consider when paying overseas bills
Paying overseas bills by credit card
Paying overseas bills by credit card can be a good option for smaller transactions (under $200NZD). This is because you will be charged a fee between 3%-8%, plus an unfavourable exchange rate. For smaller transactions this won’t have a huge effect on your overall amount, but exercise caution if you’re looking to transfer larger amounts via credit.
Paying overseas bills via international money transfer
One option is to pay into your biller’s bank account, if they have one. If so, then you can do this through an international money transfer. There are two methods for this transfer:
- Using a bank
- Using a money transfer company
There are pros and cons to each method, although it is dependent on how much money you are transferring. Some transfer companies have a minimum amount that you can send. You will generally get a better exchange rate through money transfer companies, and less fees but there is a lot more work involved than going through your bank. Your bank will allow you to do it all online conveniently, with many banks charging less for online transfers rather than in-branch. The charges from your bank are normally between $18-$32CAD, plus the exchange rate.
- TIP: Always check with your bank and compare their prices with money transfer companies such as OFX, TorFX, or HiFX. Dependent on the size of the transfer, both methods can be good or bad.
You can compare banks and money transfer providers through our comparison table. It will allow you to see their rates and included fees.
Paying overseas bills via Paypal
You will have most likely heard of Paypal, and how convenient it is. It has a handy app, and all you need is an account with your email set up to your bank account, and you’re good to go. You can either choose to pay directly from your bank account via Paypal, or from your Paypal balance – essentially your own separate wallet that you can choose to fill from your bank. This is particularly handy and effective if you are paying smaller bills below $200CAD.
Be careful though, as convenience comes at a price. Paypal will charge you a flat fee and a percentage of that payment – not too much to worry about for smaller payments, but if they are regular or if they are larger payments then you could be losing out of some of your funds.
To read more about using PayPal, you can read our article here.
Paying overseas bills via Western Union
In terms of convenience and ease, Western Union probably isn’t the star player. However, with it’s 90,000 agents worldwide, it certainly is a global competitor. This can be particularly useful if you are sending payments to parts of the world without a big banking sector i.e. South America, Africa and parts of Asia.
The charges incurred via Western Union can, understandably, put you off. You are charged a transfer fee and an exchange rate. Although the exchange rate will likely be more favourable than your bank, the fees are not set. Unfortunately, they will fluctuate based on where you are sending the money to, how it is being received i.e. cash pick-up, online, and how much you are sending. The maximum amount via Western Union is $1000CAD online and there is no minimum. Anymore and you will have to visit a branch to make the transfer.
Setting up a local bank account
If the bills are regular, then we would recommend setting up a local bank account in the destination that the bills arise. For example, if you own a property in Italy and pay household bills monthly then it might pay to set up an Italian bank account when you are next in the country. This way, you can make an international money transfer of a set amount you think you might need, say for three months, and then pay in the correct currency with no hassle.
What to consider when paying bills overseas
Paying bills overseas can be a hassle. But thankfully, you now have a few options to consider which, although having both pros and cons to each, might help you decide dependent on your circumstances and reasoning behind your payments.
- How much are you paying? Paypal and credit cards are good for smaller transactions, but due to the fees and exchange rates, you can lose a lot of cash in transition if the sum is larger than $200CAD.
- How regularly are you paying? If it’s a regular commitment, then it might be worth setting up a local bank account and avoid the regular conversion and transaction fees.
- Consider the fees and charges involved with your chosen method of payment
- What exchange rate are you getting?
Susan and Harry have two daughters both studying at The University of Melbourne in Australia. As residents in Canada, they had to be clued up on how best to send their daughters money regularly. They did their research before their daughters left. They decided Paypal was their best option, knowing both daughters had a Paypal account. It also had lower fees than their bank, they decided to set up their own Paypal account. They found that they could complete the transfer and convert their CAD to AUD conveniently within 1-2 business days. This left their daughters happy but more importantly to them, warm and clean!
Planning an overseas wedding? You can read our article about financing it, here.