Whether you are looking to send money abroad to pay for a small good or item, or you are looking to buy a property abroad, there are plenty of financial institutions looking to get in on the action and help you send your money whilst making a healthy cut of profit along the way.
There are however, many tips that you should consider when you need to send money to ensure that you doing so at the lowest possible cost.
a) How much currency do I need to send?
b) which country and am I sending it to?
c) How does the recipient wish to receive the money? Directly into their bank account or in cash?
d) Do I have the correct bank details of the recipient?
e) How regularly will I wish to send money?
f) How quickly does it need to get to the recipient?
Once you have the above in hand, you can now review your options to find the best deal to send your money. This guide will help you run through the pros and cons of each service
1) Using your bank or building society
2) High street cash service to send money
3) Online FX Specialists and Currency Brokers
In general, if you are to use a bank or building society to send money abroad, the benefits are that they are safe but can work out extremely costly to send money internationally.
You could also choose to use a high street service such as western union, or MoneyGram, both of which allow a cash collection of an international money transfer so your recipient would be able to collect cash in the country of their choosing but this can also work out extremely expensive.
Finally there are Online currency specialists and brokers, that can be much cheaper, but still its important to understand how they operate to ensure you are getting the best deal when you send money abroad
An exchange rate is a quote of a price of one currency against another for the purpose of conversion.
Historically and traditionally, the banks followed by FX brokers have always quoted their exchange rates based on the live interbank exchange rate for a currency pair.
You can find the live interbank exchange rate for most currency pairs from websites such as XE, and Oanda. The Currency Club currency converter also shows the live interbank price at any time.
What is important to understand is that all traditional FX brokers price their exchange rates for currency transfers based on the live interbank price. In simple terms the live interbank price is the price at which banks transfer money between each other. This is usually an exchange rate that is not accessible to the consumer. They may quote that there are no extra fees or no commission charged when sending money but their profit is encompassed within the exchange rate that is being offered to you. This is known as the spread. FX brokers can undercut the banks because of the volumes that they trade, so even though they also do not receive the interbank exchange rate, they can most definitely cut the rate you get from the bank due to significant economies of scale.
For example, we are looking to send a fixed amount of 40,000 Euros to France. If you contact your bank they will provide you with an exchange rate
On making the phone call they give you a rate of exchange of £1 = €1.1200 to send 40,000 Euros.
Therefore, you expect that this would cost you £35,714.29 pounds (this is simply, 40,000 divided by the rate of exchange)
In the above example, let's say the interbank exchange rate was actually £1 = €1.17. It is likely that the cost to the bank for the 40,000 Euros would be £34,188.03.
The hidden fee within the transaction is as much as £1526! Or around 4% That's a lot of money wasted just to send money abroad! We refer to this percentage as the spread or exchange rate mark up.
The Currency Club however, provides a transparent option when sending money abroad. We provide our online users with access to the interbank exchange rate at the point of making the transaction and therefore you can transparently see where the interbank market is compared to the rate of exchange you are achieving before you confirm. You can refer directly to the currency converter on our home page for more information.
This will come down to what your preference is, specialist currency firms exist for one reason, they quote better rates than the banks when it comes to sending money internationally, BUT! I mention quote for a reason!
Some currency brokers are notorious for quoting an exceptionally good exchange rate to send money abroad, but once the account has been opened, they offer a terrible rate from the interbank exchange rate.
IF you decide to use a currency specialist make sure that they are pro-active with your needs especially if you are making a large transfer and secondly that they provide you with a level of transparency.
If you decide to go for a currency broker then make sure that they offer you access to the live interbank exchange rate when you book your currency exchange and clearly explain to you the fee that they are charging you.
Proactivity is also key. Make sure that If you are looking to make a large transfer that you have been assigned with a dedicated dealer who will reach out to you to inform you of market movements. Given the current climate where exchange rates are easily moving more than 1% within a day, there is a great deal of savings that can be made by a proactive approach when sending money abroad.
1) Low Cost best exchange rates when sending money abroad with access to the interbank exchange rate provided prior to booking online
2) Quick and convenient online sign-up process
3) Fully automated online platform for you to book your transfer
4) We compare ourselves against providers and banks to ensure you are getting the fairest deal every time
5) Assigned dealer if you decide to exchange a large amount so you always have one eye on the foreign exchange market at all times