These 8 hints can save you money on your next international transfer.
1. Don’t just use your bank
Banks are notorious for overcharging consumers, this applies to international payments as well as everyday banking services. Banks charge a commission when you send money overseas, and their foreign exchange rates are usually 3% or more above the market rate. Compare international transfer companies and spend a couple of minutes opening an account and you’ll be rewarded with a better deal.
Banks vs. Money Transfer Providers
| USD to EUR | Big Bank | International Money Transfer Service |
|---|---|---|
| Exchange rate | $1 = €0.918 | $1 = €0.942 |
| Transfer fee | $20.00 | $6.96 |
| Amount received when transferring $600 |
€530.80 | €558.24 |
2. Sometimes it’s worth paying a higher fee to get a better exchange rate
Don’t go for the first money transfer company you see just because they don’t charge a fee on your international transer. Often these companies offset this by offering a poor exchange rate. Before you agree to the terms, make sure you compare several providers to ensure you’re getting the best deal.
| USD to EUR | Transfer company 1 | Transfer company 2 |
|---|---|---|
| Exchange rate | $1 = €0.945 | $1 = €0.903 |
| Transfer fee | $20 | $3.99 |
| Amount received when transferring $600 |
€547 | €537.81 |
As you can see, although the second transfer company charges a lower transfer fee, its lower exchange rate makes the first transfer company a better deal.
Back to top3. Don’t be fooled by the online calculator
Many of the online calculators give an indicative rate only. You’re shown an example rate based on the market rate, and it usually won’t be the rate you will actually get when you request a full quote to send money overseas.
You will usually see an asterisk next to the company’s online currency calculator if an indicative rate is used, as shown in the screenshot below when we used the WorldFirst currency converter to transfer money to France.
4. If you have time, you can save yourself a lot of money
You can send cash to someone on the other side of the world in minutes with help from companies such as Western Union and MoneyGram. But you’ll pay a premium for speed. If it’s not urgent, it’s worth using a foreign exchange provider such as OFX, XE, TransferWise or CurrencyFair. These companies can send money to an overseas bank account in a couple of days, and you’ll pay a lower fee and get a better rate.
5. A limit order can save you money if the transfer isn’t urgent
A limit order lets you target a rate to trade at. If you have time to wait and watch foreign exchange markets before executing your international money transfer, a limit order ensures you get the best rate you can. When your targeted rate becomes available, your currency exchange account manager (not available with banks for personal customers) will execute your trade.
6. Protect yourself from losing out with a stop loss order
A stop loss order works in the opposite way as a limit order. Instead of targeting a “best rate scenario,” a stop loss order protects you from worst case scenarios. If the exchange rate drops to a certain level, your trade is executed to prevent further losses. You can use limit and stop loss orders at the same time.
7. Compare, compare and compare again
Don’t go for the first company you see if you want to send money overseas. Make sure you compare deals side-by-side and make an informed decision when you accept a quote from a company and pay for a transfer.
8. What about asking for a better deal?
If you’re a corporate customer and you deal in large transactions or recurring payments, you may want to see if any of the currency exchange companies can cut you a deal. Worst case scenario: they say no. Best case scenario: you save money.
The international money transfer market is opening up. Now more than ever you can get a good rate, pay next to no fees and send money overseas. If you have any questions about your currency exchange comparison, get in touch with us using the form at the bottom of this page, and a member of the finder team will be in touch.
