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I am moving from Australia to the United States soon. Most of my cash is in AUD. When I arrive in the USA, I will be spending in USD. The AUD has been weakening substantially recently against the USD. To hedge myself against further drops in the AUD before I arrive in the US, I would like to convert some of my money to USD now. This way, when I arrive in the USA, I am guaranteed to have a given number of USD.

What is an easy and affordable method of achieving this objective? From the research I have done:

  1. Banks in Australia will sell you USD, but usually have a terrible bid-offer spread.
  2. Opening a US bank account while residing in Australia seems to be tricky. I'm guessing I would have to jump through a lot of hoops to do this and am best off waiting until I arrive in the USA before contemplating a US bank account.
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You could get a Multi-Currency Cash Passport which has no transaction fees for deposits or withdrawals. (You can pick one up at Australia Post.)

This allows you to load it with money now in US dollars. The exchange rate is locked in at the time you load it to the card. When you're in the USA, just use that card or get the cash out from an ATM so you can deposit it into a US bank.

To see the exchange rate they charge, you can scroll to the very bottom of their Fees and Limits page at there's a nice little table you can compare with. Otherwise, they've got a calculator tool.

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    Nice idea... except that the current rate google is quoting (I know, not what a real person can get) is 0.78 vs the above quote of 0.7418...
    – Peter K.
    Commented Feb 4, 2015 at 14:37
  • @PeterK.pretty much gets to the crux of the issue---there are a lot of providers who will do a so called "no transaction fee" conversion, but the bid-offer spread is such that in practical terms you're still being charged a premium for the service. The real litmus test is, if you convert from currency A to currency B and then back to currency A, do you get back your original amount of currency A (or close to it). With most "transaction fee free" providers it's not even close.
    – Bryce Thomas
    Commented Feb 5, 2015 at 9:53
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You could convert your Australia cash to US dollars in cash now through a Foreign Currency provider like Travelex or UAE Exchange.

To convert to USD cash right now, here's the rate you're looking at with both providers:

Travelex       USD   0.7495
UAE Exchange   USD   0.7681

The downside with either converting to cash now, or getting a "cash passport" like my other answer is you're not earning any interest on your cash.

Alternate Option

Anther idea is to just leave your cash in an Australian bank earning interest, and get credit card that has no Annual Fee and Free Foreign Currency Conversions. That way, use that credit card to make purchases while in the USA, and the currency conversion will happen at the time of the transaction using the credit card issuer's Bid/Offer spread. This is what I do. The credit card I use in the Bank West Platinum Zero Mastercard. Just make sure you pay the full amount off the card when the bill comes (not the minimum) to avoid paying any interest on the card's balance.

The current conversion they give for a USD transaction is:

Bank West    USD   0.7429
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  • The interest isn't a big issue at the currently low rates and the fact that it's only for a few months. UAE certainly seems to be getting closer to an attractive bid-offer spread based on your quote, so I might look into that. The credit card option mentioned is what I would irrespective do once I'm there if converting currency, but again, doesn't hedge against large changes in the exchange rate of the coming months.
    – Bryce Thomas
    Commented Feb 5, 2015 at 9:57

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