Sending Money Abroad? Time To Ditch Your Bank
If you're an expat who uses your bank to transfer money abroad, you'll know that extortionate fees and bad exchange rates can leave a big hole in your pocket. Using a currency specialist can cut these costs dramatically. Here is how.
Currency fluctuation might sound like something that is only a problem for a handful of foreign exchange traders, but in today's global economy the swinging value of the pound against the dollar, euro and other denominations is an issue for everyone.
For most expats their bank is their first port of call when making international money transfers. It's natural to assume that it's their best option for handling accounts in different currencies. However, regardless of where you live in the world and what types of bank accounts you have set up, most banks offer poor exchange rates and levy a variety of hidden charges.
At the end of the day they know that very few of their expat customers bother to check the rates and how much they're paying. As a result they take advantage of a captive expat market and continue to cash in on our lethargy. But it doesn't have to be this way and it pays to shop around for the best deal.
Now, currency specialists HiFX have created this simple expat guide to international payments. This simple step-by-step guide gives you all the information you need to understand how to get the most out of your money transfers, because if you don't do your homework, you could end up losing large amounts of money in hidden fees and poor exchange rates.
Beware Hidden Charges
When making international payments, the costs fall into two simple areas: fees and the exchange rate. When shopping around and comparing one company to another, regardless of whether it's your high street bank or one of the many currency specialists in the UK, it's important to pay attention to both.
Getting the most for your money actually boils down to a very simple question: "How many Euros/Dollars/Swiss Francs/Pounds etc will I receive for my money, after all charges?
Remember exchange rates often change by the minute, so to compare providers properly you need to do your comparisons in one go.
How To Find The Best Deal
For larger bank to bank international money transfers of £250 and over, it pays to compare your high street bank's exchange rates with those offered by some of the many currency specialists that exist within the UK.
Typical reasons for making international transfers include:
- Large purchases abroad such as stocks and shares, property, boats and cars
- Regular transfers such as pension transfers, overseas mortgage payments, salary transfers
- Smaller one-off transfers such as topping up an overseas bank account, transfers to family.
How Much Will I Save If I Use A Currency Broker Rather Than My Bank?
On average the amount saved by using a currency specialist rather than your bank will be between 2 and 4%. So on £100,000 this equates to a saving of £4,000 on the exchange rate alone.
How Much Quicker Is It To Use A Currency Specialist?
By using a currency broker the transfers will in most cases be free and the money will be transferred either same day or within 1-2 working days, depending on where you're sending the money.
Timing Can Mean Everything!
Depending on the amount you're sending, the timing of a transaction can also be important particularly if you're sending larger amounts.
In many cases, people don't pay much attention to what's happening to the exchange rate and simply leave their decision to make the international money transfer to the last minute hoping for a good rate, assuming, that without all the funds available, there isn't much they can do.
Regardless of why you're transferring your money, the larger the amount you're looking to move overseas, the more important it is to maximise the timing of your transaction and minimise the risk that the exchange rate could get worse and make your money worth less.
Remember, as soon as you decide to move overseas or buy and sell an asset abroad such as a property, you are exposed to adverse moves in the currency market.
How To Choose A Currency Specialist
It's important that you undertake the following checks when choosing a currency specialist:
- How long have they been in business?
- Are they authorised by the Financial Services Authority (FSA) under the Payment Services Regulations 2009? Companies that are authorised by the FSA have had to meet strict capital adequacy and business practice rules, comply with Payment Services Regulations and the FSA’s Conduct of Business requirements.
- Are they registered with HM Customs as an overseas money service business?
- Do they hold your money in segregated client trust accounts? (Your funds are held separately from company funds protecting from creditors).
- Do they have audited accounts on their website and how strong is the company's balance sheet?
- Do they have professional indemnity insurance protecting customers from, for example, staff fraud?
- How many staff do they have and what is their turnover? (Obviously a large established company is more reliable than two guys in a back room, though it's no guarantee).
- Do they have direct access to SWIFT? SWIFT is the world's largest payments and settlements network for domestic and international trades. Direct access ensures you, the client, benefit from faster payments and enhanced security.
Article Date: 15th December 2011