Currency transfers and working in the superyacht industry go hand in hand. It’s highly likely that in your yachting career, you’re going to be paid in a currency that is not your home currency.

That means you’re going to be dealing with currency transfers. While these aren’t as complicated as they once were, thanks to improved international banking arrangements and the rise of online-only banking apps, you still need to make sure that you transfer any money from one currency to another in the most efficient way possible.

That’s what we’ll be looking at in this article.

The currency exchange challenges

The first challenge you’re going to face in yachting when it comes to currency is having a suitable bank account that can take the currency you’re being paid in. If you don’t, you’re going to run the immediate risk of paying too much in fees each time you get paid.

For instance, if your account is back home with a high-street bank and in your local currency, you’re going to get hit for a) transfer fees and b) currency conversion fees. And these will not be in your favour. They’ll favour the bank instead.

So, ideally, you should either have a bank multi-currency account that can hold amounts of various currencies at the same time separately or at least bank with a bank that can provide USD and Eur accounts as these are the major currencies in yachting. Standard Bank International Isle of Man has a dedicated Seafarer account, which can provide accounts in USD/EUR/ GBP/AUD. After all, if you’re a citizen of the seas, rather than someone with a regular day job back home. Find out more about international banking here: Navigation International Banking for Superyacht Crew.

Another challenge you might face is making currency transfers of large amounts. You may even find there is a limit on how much you can convert and transfer in one go. These limits are there to help tackle criminal activity. You’re probably already familiar with this. Many banks impose a limit for 48 hours on transfers to new payees, for instance. Usually this is done to limit the amount of money people send to fraudsters if they are tricked.

Understanding exchange rates

So how are exchange rates set in the first place? And who sets them?

It depends on the currency. Most currencies in the world are variable. Their value in relation to other currencies fluctuates constantly.

The US dollar is a good example. Its value isn’t set by the US government or the US Federal Reserve. They can, of course, influence the value of the dollar by implementing policies, but they can’t dictate what the actual value of the dollar is on the international exchanges. That’s a matter of supply and demand, and a whole host of other things, including economic factors like GDP, inflation, unemployment figures and interest rate changes.

Take the Russian rouble. Reduced export and economic opportunities, coupled with an hugely expensive war, have put a strain on the Russian rouble. Consequently, few people outside of Russia are interested in owning rubles at the moment, so its value compared to the dollar has been in steady decline.

Some countries do fix the exchange rate of their currency. The most well-known one is the Saudi riyal, which has been fixed at 3.75 per US dollar since the mid-1980s.

That’s one part of what decides how much of currency X you get in return for currency Y.

The other part is what the people making the conversion add on in their favour to cover their costs and boost their profits. That’s why you see different banks and currency conversion businesses showing different exchange rates.

Timing a currency transfer

First of all, timing a currency transfer may not be entirely up to you. Sometimes, you just have to make a payment, regardless of what the current exchange rate is.

On top of which, timing a currency transfer for optimal financial gain is almost like operating as a currency trader. They make their money buying and selling currencies based on what they think is going to happen to their value. Let’s be honest, you don’t have the time or expertise to be playing the markets in this way.

That said, there are some practical steps you can take to make sure your conversion isn’t entirely at the mercy of adverse market conditions.

If you’re thinking of buying a property in the eurozone, for instance, it may make sense to start converting some of your salary into euros each month, so that you are ready to pay a deposit at short notice. A bit like dollar cost averaging when you’re investing money, converting an amount of your salary each month into your target currency means you’ll average out the ups and downs in the rates offered over a period of time.

Converting it all at once means you are entirely dependent on the exchange rate on the day you convert it. What if it just so happens the currency you’re converting into is particularly strong when you do so? You’ll end up with less of that currency than if you had converted when it was comparatively weak. Converting money gradually means you’re less exposed to such risks.

The same strategy can be used when you are near the end of your time in yachting and you know where you’re going to move to next and need some capital in a local currency to get started.. You can plan your currency transfer ahead of time and be drip feeding money into your target currency 12, 18 or 24 months ahead of time, maybe even longer. Though, as always, remember that plans can change.

Wherever you move in the world after yachting it’s usually better to keep your money in a hard currency and just convert to a local one, as and when you need to. Many yacht crew move locations at least once after their yachting career, so this strategy makes the most sense.

Currency transfer methods & minimising costs

Not all currency transfer methods were born equal, so it pays to consider carefully how you’re going to do it.

You could, for example, simply take your season’s tip money in cash, walk into your high-street bank at home and lodge it into your bank account. That may not be ideal as your tips could be in a different currency, then currency conversion would be involved, which won’t be in your favour. Additionally many banks are very cautious about accepting large amounts of cash.

If possible it would be better for the boat to transfer your tips to your international bank account in the same currency. Then you’re only looking at the bank’s transaction fees. There is no currency conversion involved. If neither of these solutions are possible,
it might be better to use your tip money as spending money.

Can you escape the transaction fees? Probably not if you use a traditional international bank. There will be a fee. After all, these banks have a physical presence around the globe which costs money and more staff than the new wave of online-only banks, which we’ll come to in a second.

You can reduce the fees and often get a better exchange rate if you go through one of the dedicated currency transfer services. Many years ago, we partnered with MoneyCorp to create a dedicated currency exchange and transfer service called YFSOL FX. It still exists today. However, while it offers competitive exchange rates, it’s a Rolls Royce service that may not suit you for day-to-day currency conversions and transfers.

The rise of online-only banking

These days, many superyacht crew use online-only banking services such as Revolut and Wise to handle their inter-currency transfers. The big draw here is that if you are sending funds to someone else who uses the same online-only banking service, you don’t pay any transfer fees at all.

However, if the transfer involves a currency exchange, you will pay the rate Revolut or Wise decides. Don’t for a second think that online-only banks don’t have ways of making money. Exchange rate conversion is one of them. That said, they may well offer a better exchange rate than traditional international banks.

On top of which, if you are sending money internationally to an account outside the online-only bank’s network, guess what…? You’ll pay a fee. Or the receiving bank account will. Either way, someone is going to pay for the transfer. Online-only banking has the reputation of being free. That’s not entirely justified.

Online-only banks may even charge more if your transfer exceeds a certain limit.

Finally, don’t forget the original online-only banking option that’s hiding in plain sight. PayPal. PayPal isn’t that old, but doesn’t get all the pazzazz and attention Revolut and Wise do at the moment. It’s developed into a highly trusted payment system, both for domestic and international transactions. That’s why you often see it as a payment option at checkout when you buy online.

In addition to sending and receiving money, PayPal allows you to have an account in multiple currencies and even run an invoicing system for a business. It also offers a debit card that runs off the Mastercard system.

Currency hedging and risk management

When should you be hedging your currencies in order to reduce risk? Frankly, it’s not something most superyacht crew need to worry about. You’re being paid in one of the world’s Blue Riband currencies. While they will fluctuate, it’s very unlikely indeed that one of them will simply collapse.

That said, as we’ve mentioned before, if you are working towards your exit from yachting and your financial plan is coming to fruition, it might be an idea to start looking at the currency of the country where you will be settling. Is it stable? If it isn’t, you’re better off keeping the bulk of your money in a stable currency and drip-feeding your conversions as and when you need them rather than making a big conversion in one go.

Tax implications of currency transfers

Governments love collecting tax from you. So whenever new money turns up in a bank account you own, they may show an interest.

To avoid any issues, it’s best to get advice from a tax specialist in the jurisdiction you are sending money to.

The role of financial advisors

Managing your currency transfers is a vital part of any effective financial plan. Over the course of a five-, ten- or even 20-year, you’ll be making many investment payments into multiple investment opportunities. Inevitably, to diversify, some of these will be into funds that have the USD, GBP or euro as their base currency.

When the funds mature, you may be receiving funds in a currency you may not yet have a suitable receiving account for. Or you may need to convert the payout into another currency anyway because you have settled ashore in a country which doesn’t use the currency the investment pays out in.

And how do you manage multiple investment strategies maturing as you approach the end of our financial plan? If you’ve been diligent and have worked hard towards the day you can leave yachting financially free, you don’t want to see a big chunk of your hard-earned wealth vanish in the form of currency conversion and transfer fees.

These are all things a good financial planner can help you with.

Currency transfers in a nutshell

Currency conversions and transfers are a fact of life for superyacht crew. So it’s best to spend some time working out how you’re going to deal with them so you can make informed decisions that will benefit you best.

Bank accounts in at least USD and Euro are a must, ideally with an International Bank as these are geared especially to working expatriates, just like you.

Online-only bank accounts often have cheaper conversion rates and transfer fees, and are a good solution for day-to-day international banking needs. That said, bank accounts from the established international banks should be a key element of your banking strategy.

For larger, one-off transfers, you may need to look beyond the online-only banks. Dedicated currency exchange services like YFSOL FX (in conjunction with MoneyCorp) are worth looking into for big, single transfers.

Above all, make sure you are actively engaged with your currency transfers and know the implications of using one service over another, and how timing your currency transfers fits in with your broader financial plan, obligations and needs.

Interested in learning more or want to talk about how your currency transfers can be best tailored to our financial plan? We’re here to help: