If you’ve ever tried to send money abroad using your bank, you’ll have encountered exorbitant fees. Not only do you face the obvious fees, that is, the charges and commissions providers apply to the service, but you also face a hidden charge of a rubbish exchange rate.
Many ‘commission-free’ companies will give you a bad exchange rate, and won’t display a rate that changes throughout the day. Luckily there are ways to reduce fees.
Firstly, a number of banks do allow you to transfer money to linked banks overseas. There are a lot of limitations to this however – you need to have accounts with the same bank, and often the foreign account will have to be in your name. This is fine if you’re wanting to transfer money between your own accounts, but it is a bit useless for sending money to someone else.
#2. Personal Banking Platforms
If you are transferring a small amount of money, there are online services such as Wirex that will charge you far less than the banks. It is worth having a shop around – some of them offer very low transfer fees but poorer exchange rates, others offer extras like amazon vouchers, and some have very poor exchange rates for smaller amounts but good ones for larger amounts. One thing that is worth remembering, is that there is a significant difference between ‘authorised’ firms and ‘registered’ firms. In short, authorised firms keep your money separate (so that your money is protected), whereas registered firms do not. Check with the FCA register to find out whether a company you are potentially going to use is authorised or not.
You’ve almost certainly heard of PayPal, and might consider using PayPal to send money abroad. Whilst it does technically fall into the same category as Wirex and similar services, it’s worth talking about separately due to its ubiquitous-ness and poor deals. PayPal both charges a fee (of up to 3.9% depending where you are sending the money), and has very poor conversion rate, costing an additional 3.5%.
#4. Specialised Exchange Broker
Transferring larger (particularly much larger) amounts generally requires the use of a specialised exchange broker. It’s worth checking with your bank first, as whilst they rarely offer the best rates for large transfers, they are sometimes worth using and (if nothing else) offer a benchmark to beat. The aforementioned security concerns apply here as well – with large amounts of money, consider the importance of going with an authorised firm over a registered firm. If something went wrong, it could save you a lot of money.
#5. Bitcoin & Cryptocurrencies
One thing you probably haven’t considered using to send money abroad is Bitcoins. The world of cryptocurrencies can be intimidating to someone who has never used them, and it is worth noting their volatility – if you wish to send money abroad, doing so via bitcoins necessitates the conversion out of bitcoins into a currency of choice fairly quickly, to avoid having your money held in a volatile currency.
There are two options for using bitcoins – sending using a service, and sending directly to a wallet. Sending to a wallet is relatively simple – you just need the wallet address. The costs and difficulty however come from changing the bitcoins into your currency of choice. Using a service like Wirex to do so makes the whole process, from buying the bitcoins to sending them, much easier. Bitcoins are probably the cheapest way to send significant amounts of money, making them worth using even though they can be confusing.