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Updated 12 Jan 2012

Transferring money abroad from the UK, and spending your precious pounds in another country has never been easier, but at the detriment of being no less expensive. 

In fact, a recent survey estimates that Brits are being overcharged almost £400 million each year when transferring money internationally; falling victim to hidden fees attached to sending money to a relative, transferring cash in order to buy a house abroad or simply paying for something in another nation. 

Getting the Best Currency Exchange Rate

First off, never change money at the airport.  

Now, with that said, if you’re like me, you won’t even think about getting foreign currency until you’re, well, at the airport (funny that), or even until you’ve left the UK and touched down in your destination.

As it turns out, this can be an expensive mistake. Airport currency kiosks, such as Thomas Cook or Travelex, make huge margins on each currency exchange transaction, and sometimes your bank or credit card company will charge an additional fee on top.

However, if you book your currency in advance via your bank or through a company like Travelex you will get a competitive rate. Furthermore, it’s worth shopping around between providers for the best rate.  

► The following firms offer pre-booked currency which can be delivered to your door in the United Kingdom: Tesco, The Post Office, Marks and Spencer and Travelex. 

Currency exchange with your ATM Card

Using your ATM card to withdraw foreign currency once you’ve arrived in your destination is probably the most convenient and popular way to get money abroad, but you must watch out for hidden charges by the banks; they can easily add up to 7 percent. 

Keep in mind that about half of this fee is a “cash-advance fee”, which you are not charged when actually paying for goods by swiping your card. So if possible, make as few cash withdrawals as possible, and simply pay for goods and service by swiping your card. 

Note that if you are paying with a credit or debit card abroad and the retailer offers to let you pay in pounds, you should always reject the offer. The exchange rate will be even worse than that offered by your bank. 

Getting a Travel Currency Card

If you travel regularly it is well worth getting a travel currency card, a relatively new phenomenon that artfully combines the traveller’s cheque and the debit card. 

These little gems grant competitive exchange rates and they have no hidden fees. 

You simply load a certain amount of money on the card prior to departing, and then you use the card in the same way you use a debit card upon arrival. As they’re not connected to your bank account though, you protect yourself from fraud; and as they don’t have credit capabilities, you can’t go over the appointed amount you initially deposited – thus they’re great for budgeting.

►The following banks offer currency cards: Halifax, Nationwide, Santander Zero, Post Office and Lloyds TSB.

Making Regular Bank Transfers from the UK?

Banks generally charge a fee for money transfers from a bank in the UK to a bank in a foreign country, and they also tend to make some profit on the exchange rate. 

However, some banks do not charge fees, provided the sender and the recipient use the same bank. For example, Citibank allows you do same-day international transfers to some 25 countries with no fee attached, and HSBC offers its premier customers fee-free transfers to more than 35 countries.

Additionally, there are a number of banks that have relationships with other overseas banks, and they ensure that you will be charged no fees and will get a competitive exchange rate (under the condition that accounts at both banks are in your name). 

►Transferring money to Spain? Halifax, Bank of Scotland and Lloyds offer free transfers to Lloyds Bank International SAU accounts.

►Transferring money to India? If you are an Indian national with a Lloyds ‘value added’ account you can transfer to an ICICI bank for a minimal fee.

Making Large Once-off Bank Transfers from the UK

Those who make large, occasional or once-off transfers abroad should consider using a Foreign Exchange (FX) Broker. 

These firms do not charge a fee, and they usually offer an exchange rate within 1 percent of the 'interbank rate'. To put this into perspective, a high street bank will offer a rate which is up to 4 percent off the interbank rate, meaning they could take an additional £3,000 commission for a £100,000 transfer. 

Though, remember that there is no compensation scheme offered by FX Brokers. So if the firm goes bust, there’s no way to recover your finances.  You should ensure you use a trustworthy firm; the better known foreign exchange brokers include HIFX, CaxtonFX, Currencies Direct and MoneyCorp. 

Sending emergency cash abroad from the UK

Even in the best of times an emergency can crop up, and for those of us who’ve had to bail out a backpacking child with a lost wallet in Peru, you know it’s vital to get funds where they need to go pronto.  

In this case, firms like Western Union and Moneygram offer a service where you can send money to someone abroad even if they don’t have a bank account in that nation. The recipient merely needs to show their ID or quote a code at the company counter to complete the transfer and retrieve the money. 

Moneygram and Western Union have online services, and can also be found in newsagents and Post Offices. You need to ensure that there is an office in the city where you need the money to be collected. Note that these firms charge fees equivalent to between 5 and 10% of the total amount transferred. 

Though, in an emergency, it’s money well-spent.

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