Thursday, October 14, 2010

How To: Get the Most Out of the Strong AUD

There's a lot of chatter about our strong Aussie dollar against the US dollar in recent weeks. With the AUD hovering above US98c most days, there's no time like now to make online purchases and save a bundle, especially when you can find great US brands retailing their products at half the price of what it costs in Australian retail stores.
There is no clearer example than with the fashion and beauty industry - hello: why is BareEscentuals mineral foundation US$25 but A$70 here or Jag jeans US$50/A$100?. I don't understand why electronics, which are also imported, would fall in price whenever our currency rises but my beloved beauty items won't (market monopolies sheesh). It seems that the beauty industry is recession and currency fluctuation-proof, all to the consumers' detriment unfortunately.

So today I thought I'd share with you my best insider tips to make the most of the strong currency.

1. Get a foreign currency transaction fee-free credit card
Yes - I know it's a mouthful, but if you stay with me for a minute, I promise to make it worth your while.
When you buy items that are not in AUD with a credit card or even Paypal for that matter, your bank or financial institution will hit you with a 'foreign currency transaction fee' (FX for short). This is usually 2.5% of the purchase price after converting at the prevailing exchange rate of the day, so that strong dollar doesn't look that strong after factoring this fee or the Paypal exchange rate and could drop that US98c down to US94c - definitely not as good of a bargain anymore.

But fear not, there are credit cards that actually don't charge this fee so your dollars are converted at the true exchange rate to give as close to US98c as possible for your hard earned Aussie dollar (there is still an unavoidable teeny cut the credit card companies take which they like to call 'the spread' ). The credit card I most recommend is the Wizard Clear Advantage Mastercard 28 Degrees Mastercard because it comes with no annual fees. I use this card exclusively to buy from overseas sites and always get the best rates without any FX fees. This is also a great card to have when travelling and physically purchasing items overseas for the every same reason. So if you are eligible for a credit card, sign up for this one today.

2. The currency changes every half hour. Hit the Checkout button when the AUD soars to the highest point
Like the share market, there isn't just a single price for the AUD on a given day, it changes throughout the day and night due to overseas market movements and can go up in the morning and then drop down again in the evening with the market forces. When you see it rising high enough, lock it in and check your shopping cart out at that point in time to make the most of it.

3. Do not let Paypal convert USD to AUD for you
Why? because Paypal foreign currency exchange rates sucks. It already factors in the currency transaction fee. Instead, go get that Wizard Mastercard and link it to your Paypal account (see point 1). When you are confirming purchases, choose the credit card as your funding source and select the "Conversion options" link that allows you to change it to let your bank handle the foreign currency conversion process. I've now included screenshots for easy step-by step instructions.
You want to make sure the above selection are chosen. If not, change them
Paypal credit card conversion options. Select to have your card handle this

4. Use parcel forward services to shop at overseas online stores
The online store that sells your favourite brands don't ship international (I'm looking at you Sephora and Nordstrom Ulta). If you have family or friends overseas, beg them to allow you to use their address to buy stuff and get them to forward it to you. If that isn't an option, then just get sign up to a parcel forwarding service and you will be given an address in the USA to use as your shipping address. The service will then forward your packages to Australia. They even consolidate multiple purchases from different sellers and send it as a single package to you. Of course, all this is performed for a fee but with your favourite brands currently at prices at a big discount to that of Australian stores, even after including shipping and the forwarding service fee, you are still ahead of the game. There are many parcel forward services for American stores and is one of the most popular and reputable one. They even consolidate the first 3 purchases for you free of charge.

5. Combine all of the above to get the most of the strong Aussie dollar
This is very self explanatory. Combine points 1 to 4 and the power of compounding will work to maximise all the savings and give you the strongest rate with the greatest shopping options.

So there you have it - my shopping secrets are out. Happy shopping and may you find many good bargains all year round. No need to beat the crowd and wait for sales anymore. Everyday is a sale day from now on :)

What international online stores do you like to shop at? Do share and I'll do a post on the best places to shop online in a later post.

**Update 1**
A lovely reader informed me that Nordstrom does indeed ship to Australia. I remember visiting a while back and they only allow international shipping for very limited products. They've now opened up shipping for more products including that Longchamp tote I've been lusting for recently- yay!

**Update 2**
Travelling overseas? Want to use your own cash and not have to carry foreign currency?
Before leaving home soils, load your Wizard credit card up with your own cash so that your available credit is above your credit limit. When you go to overseas ATM and withdraw cash or make purchases, you will be withdrawing your own cash (as long as you don't dip below your credit limit). It will be converted to the Mastercard currency exchange rate at the time and there are no FX or cash advance fees. Too handy!

**Update 3 Nov 2010**
Finally uploaded screenshots for Paypal funding option changes.

**Update 4 Feb 2011**
The Wizard Clear mastercard has now changePublish Postd its name and is now known as the 28 degree Mastercard. It has the same features and like its predecessor, is supplied by GE Money. 


  1. Great write up! Certainly tips all online shopaholics could use!

  2. Great post! I've been checking out Hop Shop Go, but haven't actually used their services yet. I was looking at their shipping fees, which is quite hefty for purchases under 500g. I guess only makeup will do?

    Have you tried their services before? What do you think?

  3. Such a good write up, so useful! =D I have the same question was Tine, how do you personally find Hop Shop Go? I've never tried these sorts of services before, so curious to know how you find them :)

  4. Thanks ladies. We're fueling each others' shopping passion lately aren't we :p

    Tine, Celina - I would use a parcel service (and yes, HSG is very good, have used them once before. They were also on Today Tonight the other evening and got great reviews there) only if I was getting alot of things and at a significant discount to what is costs to buy in AU to justify the extra costs. eg. big ticket items like electronics and if I'm buying up big from one online store.

    I usually just put things I want on a list and then when the list is long enough, I make a group purchase of all the things so that the average shipping cost per item evens out. Oh and I wait for store sales to make it even more worthwhile. I'm impatient with everything except for online shopping :D

  5. Oh my gosh lilpil, you've got this all mastered! Great tips. I've always wanted a Wizard card, so think I'll have to get one before I make any overseas purchases. Just a small question RE point 2. Even on purchases I've made online in Aust before, sometimes I've noticed that even if I say put it through say Tues,the transaction doesn't go through on credit till say Wed. So I wonder if you would still get the highest AUD of the day if that was to happen, I guess not?

  6. Jessie - I believe there are 2 dates, the statement date and transaction date.

    The transaction date should be the the date of purchase while the statement date is when the transaction was finalised and fully processed by your banking institution.

    I'm not sure how all banks work butthe Wizard ones definitely records it as your transaction date so its whenever you actually purchased the item so you should still get the best rate. Since Wizard is a mastercard, it's whatever the Mastercard rate at the time you buy (which is slightly less than the quoted exchange rate).

    Hope that makes sense. If not, ask away more.

  7. Came across your site from FB girl. This post about the Wizard Mastercard is excellent, I've applied for one just now! - Juls

  8. Thanks Juls - glad it helped you.

  9. Thanks for that clarification lilpil. I'm thinking of purchasing a clarisonic with the great exchange rate (and your awesome review :D). Thanks for the info!!


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