Published on July 26th, 2014 | by Tom Wake1
How to get the best rate sending money abroad (every time)
If you have friends or relatives abroad… you plan on travelling for an extended period of time… or you’re lucky enough to have a property overseas, please read on – these tips could save you a small fortune in transfer fees and commission
It used to be that if you wanted to send money abroad you had to pay your bank a whopping great amount to do it for you.
Depending on your bank this means paying commission charges, getting a terrible exchange rate or paying a hefty flat fee (often £10… £15 or more) each time you place a transfer… or a combination of the above.
Western Union has always been a popular ‘alternative’ option, BUT even thought they’re often cheaper than the banks you still pay through the teeth for the privilege.
Let’s say for example you want to send £200 from a bank account in the UK to a bank account in France via Western Union.
They charge no ‘transfer fee’ BUT here’s where they get you. The exchange rate you get is just 1.22 EUR/GBP compared to the ‘real’ midmarket rate of 1.27 (figures correct at the time of writing).
Now that might not sound like much… but it’s the difference between getting €245 for your £200 and €253.
So what’s the alternative?
Well, thankfully you now have FAR better, FAR cheaper options. They’re quick, properly regulated and user friendly.
My top pick gives you the real midmarket rate on any transfer (which is, for want of a better word, the official, or actual rate) and charges you just £1 for any transfer below £200 or 0.5% for anything over that.
Here are my Insider’s Edge top picks for sending money abroad:
1. Transferwise – Best for transfers UP TO £5,000
Transferwise gives you the ‘actual’ exchange rate (the midmarket rate) on any transfer you make. They charge you just £1 on any transfer below £200 or 0.5% of the transaction on anything over that. In our example your £200 would be worth €251. Remember with Western Union it was €245 and with a standard bank you’d be looking at much less – around €225.
Cons: Transferwise are expanding rapidly but currently only offer 19 different currencies. You can find out which currencies they currently offer here.
2. CurrencyFair – Best for transfers OVER £5,000
CurrencyFair offer a fantastic service and if it wasn’t for Transferwise (and their razor thin profit margins) they’d be topping the list here. On average CurrencyFair charge you a fixed fee of £3 per transaction and then an additional 0.35% of the amount you exchange. So in our £200 example you’d get €248 after fees. With CurrencyFair’s service, things get more interesting on larger transactions. If you’re transferring £5,000 you get slightly more than you would with Transferwise (approximately 50 cents more). On a £10,000 transaction you’d get around €6 more.
Cons: Like Transferwise they’re limited on the currencies they offer and currently offer 20 different currencies. For a full list click here (click on the + button next to ‘What currencies does CurrencyFair offer).
What other options are there?
If they are able to transfer in your required currency I strongly recommend using one of the above services (TransferWise or CurrencyFair). They’re secure, heavily regulated and offer by far the best (and most transparent) rates I’ve come across.
However, there are other options out there and if you’re looking to transfer in a currency that isn’t available above or you’re looking to transfer extremely large amounts of money (£10,000+) then it’s worth talking to your bank – they might be able to offer you a preferential rate.
There are also a raft of online FX transfer websites that you can look at. Rather than list them all here, try the following FX comparison website:
3. Send that Cash – User Friendly Transfer Comparison Website
There are others, but this is by far the most user friendly I’ve come across. The first thing to note using this and other FX comparison websites is that some of the ‘instant quotes’ they give you aren’t always spot on – so please keep this in mind.
You need to check with the individual transfer companies they represent to get the exact figure (which, frustratingly is often different). Do your homework on any company listed on a price comparison websites and check that they are regulated and reputable companies.
Right, that’s it!
I hope you found this article useful. Have you used any of the services mentioned in this article to transfer money? Or one I’ve not mentioned here? What are you thoughts? Please leave a comment below, I’d love to hear from you.