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Updated 18 Aug 2010

We may think that with the advent of the digital age, the world is getting smaller and more interconnected. However, those who have had to exchange significant amounts of money into a foreign currency will know that the world isn't as connected as we might think. 

When moving abroad, there tend to be large sums of money involved that need to be exchanged into foreign currency. This can involve transferring personal or business bank accounts overseas, or even buying property. Getting the best possible exchange rate is especially important when this kind of money is involved as the state of the exchange market can equate to a huge loss, or even a huge gain.

What are the options?

The best advice here is never to use high street currency exchange services, as they tend to offer very poor rates. Yes, they are convenient when exchanging smaller sums of money, but far too expensive when doing something more significant.

Banks can sometimes offer a good alternative to these high street stores, as their rates tend to be up to 4% more favourable. However, they often charge larger administration fees, and sometimes you will have to wait for the money to be ordered in to the branch.

Another option is to use online money transfer services like Paypal as a currency exchange option. However, this method is not recommended by foreign exchange professionals. The main reason for this is that it is very difficult to predict how much each exchange will cost, and therefore whether it is good value. Paypal spread their rates by up to 2.5%, and their sending charges operate on a percentage rate. This, of course, means that the process gets more expensive the more money you are exchanging. Another downside of the Paypal method is that there is no human interaction involved in the process at all. This is particularly off-putting when there are significant sums of money involved.

Foreign Exchange Brokers

A fourth money exchange option which can be very attractive to those looking to do more significant exchanges is that of a foreign exchange broker. Foreign exchange brokers are financial advisors who specialise in the practice of money exchange, and can be invaluable to soon-to-be expats. Brokers tend to offer better exchange rates as they take less of a personal cut than the banks do.

Another key difference between exchanging currency with a bank and a specialist broker is the clarity of the service. Foreign exchange brokers will always be transparent about all the costs involved; including their own margins. They can also offer a much more personal service in addition to specialised advice. For example, it is often wise to consult a foreign exchange broker fairly early on in the decision making and planning process as they can help you calculate exactly how much money you will have to spend on your move.

Problem Countries

Potential expats wishing to move to countries such as Russia, China, Brazil and Japan may benefit particularly from using a foreign exchange broker. Traditionally, these have been difficult countries to move money in and out of, and they can still sometimes present a bit of a challenge. However, a specialist foreign exchange broker will be able to use their expertise to make the whole process smoother and less stressful.

How to Choose a Broker?

There are obviously a lot of foreign exchange brokers on the market, and soon-to-be expats should  speak with a few before deciding which one to work with. We would advise those on the market for a foreign exchange broker to check credentials such as Financial Service Authority membership and whether or not the broker is registered with the Authorised Payment Institution. Put simply, if a broker is authorised with the Authorised Payment Institution, it means that the money given to them by their clients is held in a segregated account. In the unlikely event of the broker suffering financially, their client's money will still be protected. It would also be wise for people thinking about working with a particular broker to ask to see references (either from the bank or previous clients) and to ask what the broker's exposure is. 


The golden rule when moving abroad is to do your research thoroughly and shop around before deciding on a currency exchange method. Remember to stay away from high street currency exchange services and weigh up the benefits of using a bank against a foreign exchange broker. Taking this process seriously will ensure that you have more money to spend on your new life abroad.

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