Keep More of Your Money - Minimize Bank Fees When Getting Paid
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Why should I be worried about banking fees when getting paid?
Because most online English teaching companies are based in countries different from their teachers (usually China), getting your money can be a little tricky.
Usually, you will have to use some kind of intermediary or currency exchange service to get the funds into the bank account you use for everyday things in your home country.
There’s nothing worse than receiving your long-awaited pay check and then losing a chunk of it to annoying fees.
Teachers with U.S.-based Accounts:
If you already have a U.S.-based bank account, it will likely be easy for you to collect your pay check.
The majority of online English teaching companies pay U.S. dollars directly into U.S.-based bank accounts that have ACH or ABA numbers.
This means you can get paid without paying any banking fees or currency exchange rates.
Teachers without U.S.-based Accounts:
For those of you who do not have U.S.-based bank accounts, it can be a little trickier.
Most of the companies will pay via international wire transfer and cover some of the costs, but if you are working over 20 hours a week, you can lose up to $100 in banking fees.
This is because your home bank will often charge a fee to accept the foreign wire transfer AND it will skim some of your money when you exchange the currency.
For Canadian Teachers:
We here at Online English Teaching live and work in Canada.
A number of Canadian banks offer U.S. currency accounts, however they are actually not based in the U.S. and getting paid into these accounts will still require your employer to use an international wire transfer.
Two Canadian banks, TD and RBC, actually offer U.S.-based accounts. The problems with these accounts are:
you may have to visit the branch to open the account,
you may have to pay monthly banking fees (in addition to exchange fees) if you do not maintain a minimum balance,
you may have to call the bank to move your money from your U.S. account to your Canadian account,
and you have to pay your bank’s exchange rate (usually much worse than market value).
The Solution for All Non-American Teachers: Wise
We personally recommend Wise (formally called TransferWise) for anyone who does not have a U.S.-based bank account.
Why? Wise allows you to open a virtual U.S. bank account.
Because most of the companies we work with will pay U.S. dollars into a U.S. account with no fees, you can get paid into your virtual Wise U.S. account.
From there, you can then use Wise to withdraw the money from your virtual US account to your local bank account.
Why not use PayPal?
PayPal is a great option if you do not have to exchange currency. This is great for U.S.-based teachers. It’s free to sign up for, and it’s can fees can be very low (without currency exchange).
Many teaching platforms give you the option of being paid into PayPal.
However, Wise doesn’t skim any money when converting your currency, unlike PayPal.
Wise gives you the Google market exchange rate for that day.
Look at this real-life example:
In the photo on the left, I transferred $2,594 USD to my Canadian account using PayPal. The ACTUAL market exchange rate on that day was $1.330970 CAD. You can see in the red circle that PayPal gave me an exchange rate of $1.286318.
Using the real exchange rate that day, I should have gotten $3,452.87 CAD.
But, using PayPal’s exchange rate, I got $3,337.03.
That means I essentially lost $115.84 in that transaction.
Now, look at the photo on the right.
Using Wise with a similar amount of money, I only paid $11.35 USD in fees.
That’s it.
Wise uses the Google exchange rate that day without skimming any money on the exchange.
That’s a difference of over $100. This is significant, especially when you think about how much you would lose in a year.
We like Wise because:
it’s free to sign-up for,
you can set up your account from the comfort of your home,
there are no monthly fees,
you can move money from your computer,
you don’t pay an inflated bank exchange rate,
their fees are quite low, and
you can calculate your total fees before proceeding with any transaction.
IF you use our WISE link to sign up, you get A fee-free transfer up to £500 (Approx. $650 USD)
Payoneer - a second option
Payoneer is another online financial service, similar to PayPal and Wise.
Payoneer is the recommended method of pay by PalFish.
Payoneer is free to sign up for, but it does charge some fees for certain transactions. With Payoneer, if you are withdrawing your money to a “real” bank account in the same currency, you pay:
$1.50 USD,
€1.50 EUR, or
£1.50 GBP per withdrawal.
As you can see, this only works if your local bank is in USD, EUR, or GBP.
It’s also important to note that Payoneer may charge an annual account fee. This is free if you receive more than $2,000 per year into your Payoneer account. However, if your income is less than that, the annual fee is $29.95 USD
If you are withdrawing your money from Payoneer to your local bank account and exchanging currency, Payoneer gives you the mid-market rate (which you can find on www.xe.com) and applies a 2% fee to the transaction.
For example, if you got paid $2000 USD into your Payoneer account, and wanted to withdraw it to your Australian account using today’s rate, you would pay roughly the following amount:
$2000 USD = $2920 AUD
2% conversion fee = $58.40 AUD
$2920 - $58.40 = $2861.60
That same transaction on Wise would cost approximately $15 USD.
So as you can see, Payoneer is still a better option than PayPal if you have to exchange currency, but it’s not as good as Wise.
However, for some online teaching companies, it is the only way to get paid.
If you use our sign-up link you can get a $35 bonus after you receive your first $1000 in pay.
Keep your money, you earned it!
Whichever service you decide to use, you deserve to keep more of your hard-earned money.
We hope this article has helped you evaluate your options and choose the right one for you.