With so many options for transferring your money internationally, it’s easy to see that not all services are created equal and not all services will be the right fit for your individual circumstances. Some services are designed to send money abroad quickly, which usually comes at a cost, whereas others are designed to get you the very best rates. Here are 10 tips for transferring your money internationally to make sure you get the best deal to suit your needs.
1. Specialist debit and credit cards for spending abroad
Many parents will have children leaving the nest to go travelling around the world as gap year travels continue to be a popular choice for sixth form leavers. If you find yourself funding some of the trip or wanting to provide them with emergency funds, you could set them up with a specialist credit or debit card, with good exchange rates on withdrawals and purchases. Some cost little or nothing to withdraw cash abroad and you just need to set your kids up as secondary cardholders for them to be able to access money abroad.
2. Secure bank transfers can be the right choice in specific situations
Usually, bank transfers will not give you very good exchange rates for your payments abroad. However, some accounts will provide very cheap exchange rates in certain circumstances. These tend to be when the recipient has an account with the same bank as you or if the foreign bank account is also in your name. This can be a great option for paying bills abroad on a second home, sending regular payments to contractors, family or friends. Check with your bank if they provide a service like this.
3. For transfers under £5,000, an online service can be an easy solution
Online transfer services are usually better for non-urgent payments since it can take a few days to become a verified user and then a few more days to actually send the payment. These types of services are a good option for one-off payments abroad such as a cash gift at Christmas.
4. Foreign exchange brokers will get the best deals on payments over £5,000
For larger international transfers, a foreign exchange broker will get you the most cost effective deal. They are specialists in their field and as such are able to access the most favourable exchange rates. They’re the ideal choice when buying and selling property overseas, making regular payments abroad or moving all of your cash overseas, for example, if you are intending to live abroad permanently.
5. Small variations in exchange rate can make a big difference to large payments
A 1% variation in exchange rate on a small payment may only add up to a few pence, but on a large payment, particularly for a house purchase, this could equate to thousands of pounds. Doing your research when finding an FX broker is therefore crucial. They tend to offer a personal service, so speak to them about what services they offer that may help you to get the very best deal.
6. Find out about additional fees
Some foreign exchange brokers will charge fees on international payments. There are often cut-off points where payments will have no fees above a certain amount. When researching which broker to choose, remember to ask about their fees, whether they will apply to your payment and factor them in when deciding who is going to offer you the most cost effective option.
7. Instant transfers for emergencies only
In an emergency, the speed of your transfer may be the only thing that matters. In this situation, an instant transfer service is your best choice, however, you will pay poor exchange rates to get such a quick service, so use sparingly. You can easily make your payment online or in a Post Office or shop. The recipient at the other end usually just needs to present some ID and can collect their payment straight away. This is ideal if a child abroad has lost their wallet or come up against an unexpected cost. The whole process can normally be completed in 1-2 hours.
8. Forward contracts help you to budget and plan ahead
If time is on your side, then consider making a forward contract with your FX broker. Forward contracts allow you to fix the current exchange rate so you can make a transfer abroad, up to a year later, at the same rate. This is ideal if you’re purchasing a home overseas, especially if the interest rate seems likely to increase. By knowing in advance exactly how much your payment will cost you, you’ll be able to budget accurately for your move.
9. Market orders can help you get the best exchange rate
If you’re really seeking out the best rate, you could set up a market order. Your foreign exchange broker will save you a lot of time by monitoring the exchange rates on your behalf and then automatically making a payment or purchasing currency when your desired exchange rate becomes available. This could save you thousands of pounds as well as saving you time and allowing you to plan ahead.
10. A rate alert will keep you in the know when favourable exchange rates are available
Your foreign exchange broker can set up a rate alert to inform you when an exchange rate is in your favour. This can be useful if you make regular payments abroad and need to keep informed when exchange rates are good. When you receive an alert you can then decide whether to make your payment or fix the rate and set up a forward contract for a future payment.
These tips are a great starting point for deciding which option is right for you, however thorough research to find the right service is particularly important on large payments. Choose well and it could save you thousands of pounds.