There are two ways that a provider makes money on your transfer. The obvious one is the transaction fee. But the sneakier one is what your bank or transfer service marks up on the exchange rate.
Most providers either charge a set fee per transaction or a percentage of your total transfer amount. To save on fees, keep an eye out for special deals. Keep in mind that a lower fee doesn’t necessarily translate to the biggest savings. A lower fee might be accompanied by a poor exchange rate, negating any savings from the low fee.
The exchange rate determines how much one country’s currency is worth in another currency. Most countries’ exchange rates are flexible, which means it can change from moment to moment. Factors that influence the exchange rate include interest rates, economic stability and inflation. Most transfer services will advertise the real exchange rate, or “mid-market rate” — the mid-point between the buy and sell prices of two currencies on the global market. But when it comes time to make your transfer, you’ll notice you almost never get this rate. The provider will mark up the exchange rate — and pocket the difference. Using a provider that offers the most competative exchange rate could save you hundreds on your transaction.
Tips for saving on your international transfer
There’s no one best way to transfer funds overseas. It depends on how much you’re sending, how soon you need it to be made available and the exchange rates at the time. Below are a few tips you can use when sending money overseas.
Know your transfer currency’s mid-market rate. This rate is the midpoint between worldwide supply and demand for that currency — and the rate banks and transfer services use when they trade among themselves. Use it as a baseline to compare against the rates you’re being offered. The company that’s closest is offering you the best rate.
Send more money per transfer. Many services discount the fees or waive them altogether when you send larger transfers. XE, for example, waives fees for all transfers.
Use forward contracts and limit orders if sending money regularly. A forward contract allows you to lock in a favorable exchange rate for future transfers. This means you avoid unpredictable movements in exchange rates. A limit order allows you to wait until a favorable exchange rate is found, and then lock it in for your transfer.
Send same-currency transfers. It can sometimes be cheaper to transfer US dollars to your recipient, allowing them to transfer the dollars into their own currency when received. Depending on the situation, your recipient could pay lower fees overall.
Alex sends money to Mexico
Alex wants to help his family in Mexico with bills and critical home improvements. He initially planned to transfer $1,000 through his local bank, but he’s decided to compare his bank to an independent service to see what his best option is.
Money transfer service
1 USD = 19.61 MXN
1 USD = 19.95 MXN
2 business days
Amount received in MXN
Visiting his local bank, Alex learns that he’ll need to transfer money from his account to another bank account, which will take a few days. His bank offers a weaker exchange rate and a stiffer transaction fee than a money transfer service does. Overall, he’ll be out $1,035 for the transfer. Working with a money transfer service, Alex discovers it offers not only a stronger exchange rate but also a lower transaction fee. It charges a mere $4 for bank-to-bank transfers but offers quicker cash pickups for only $11 more. By going with a transfer service, Alex saves $20 in fees and his family can pick up the cash — and an additional 340 MXN — within minutes.
How do I compare international money transfer providers?
This is the rate at which your money will be converted to your target currency. Some transfer providers offer lower fees but weaker exchange rates, while others charge no fees but profit from the margin between its rate and the mid-market rate. Compare the total cost of your transfer to make sure you’re getting the best deal.
Your bank or transfer provider will usually charge a fee for making a transfer. Fees can vary widely depending on who you’re transferring with. Generally, fees come in the form of a flat fee (such as $5 for transfers up to $5,000) or a percentage of your transaction (such as 1% of your transfer amount).
Independent transfer services like OFX and XE offer competitive exchange rates and no fees. If you want to send and receive cash right away, compare options like WorldRemit, Ria, MoneyGram and Western Union. Bank-to-bank transfers are safe and convenient but typically not your cheapest or fastest option.
The best method for transferring money might depend on how much you want to send. If you’re making a transfer of five figures or more, you’ll want to make sure you’re getting the best exchange rate — especially since providers encourage large transfers by offering low fees. If you’re sending a small amount to friends or family, it’s wise to also consider any fees you’ll pay on top of the exchange rate.
Sending a one-time transfer differs from sending regular transfers, whether to pay for bills like an overseas mortgage payment or for goods and services. With a one-time transfer, you may put more weight on speed and flexibility in delivery, such as cash pickup. But if you’re sending recurring payments, you’ll want to set up regular transfers that can save you the most on rates and fees over the long term.
Sometimes you or a loved one is in an emergency and needs funds quickly — and in cash. Thankfully there are global money transfer providers with tons of agent locations that allow your recipient to pick up the funds in cash, often within minutes. If you have a little more time, however, consider an independent transfer provider that can get you much lower fees and stronger exchange rates.
The United States does business with just about every country worldwide. When it comes to money transfers, you have options to convert your dollars into Mexican pesos, Kenyan shillings and many currencies in between. Larger networks like Western Union will have the largest number of possible currencies, whereas smaller banks and other services usually limit their supported currencies to the most popular ones, including:
A solid exchange rate is crucial. When it comes to larger amounts, even two cents in your favor can save — or cost you — hundreds of dollars. If you have the luxury of time, you may be able to take advantage of a limit order. A limit order allows you to set a target exchange rate with a service or broker, which monitors the markets 24/7 to ensure you don’t miss that target. Once rates meet your what you’re looking for, you give the OK to complete the transfer. Services like OFX offer free limit orders for transfers of $35,000 and more.
When a few cents totals thousands
How important is the exchange rate? Say you need to get 500,000 euros to a broker in Spain for a down payment on a pied-à-terre. The mid-market rate for dollars to euros is 1 USD = 0.95 EUR. You’re happy to find two online services that are pretty close to the mid-market rate — one is offering 0.93 for your dollar and the other 0.92. But to be sure, you crunch the numbers.
1 USD = 0.93 EUR
1 USD = 0.92 EUR
Inverse exchange rate
1 EUR = 1.075 USD
1 EUR = 1.087 USD
500,000 euros in dollars
Finding the inverse rate, you learn that the exchange rates are a mere 1 cent difference (0.012 cents, to be exact). Yet, when applying these rates to 500,000 euros, you’d lose $6,000 to the first money transfer service on the exchange rate alone. That’s a lot of rioja you could be sipping in Madrid. How do I find the inverse exchange rate? The world of finance can feel hopelessly complicated. But it’s easy to find the inverse exchange rate for your currency. If you think of an exchange rate as A = B, you’d simply divide the number 1 by B: 1/B Take 1 USD = 0.93 EUR. To find how much 1 euro is worth in dollars using this same exchange rate, divide 1 by 0.93: 1/0.93 = 1.075. With this exchange rate, 1 euro is worth $1.075.
Common questions about money transfers
Most services will give you a tracking number or ID that you can use to check the status of your transfer. In many cases, your recipient will also receive one so they can check as well.
The maximum you can send depends on both the transfer service you use and the type of transfer you’re making. Money orders through USPS are capped at $700, although you can send multiple orders. MoneyGram has a per-transfer limit of $6,000 and Ria has a per-transfer limit of $2,999.99. These providers also have 30-day transfer limits of $3,000 to $7,999. Services like Xoom allow you to transfer up to $2,999 per transaction with a 30-day limit of $6,000, but you can increase this limit if more information is provided.
The minimum you can send depends on the service you use. Travelex has a slightly higher minimum of $500, while others let you send as little as $1. PayPal’s services are optimal for transactions under $200. Some forex providers waive transfer fees when you send more than $5,000 per transaction.
WorldRemit: $0 minimum
Travelex: $500 minimum
TransferWise: $1 minimum
OFX: $150 minimum
TorFX: $200 minimum
MoneyGram: $1 minimum
Currency Online: $0 minimum
CurrencyFair: 8 EUR minimum
This could be for a few reasons — including whether the country is currently under economic sanctions (such as Iran) or your transfer provider hasn’t yet built the facilities and networks needed to send money to a particular country. See the countries you can send money to on our individual review pages.
Providers generally turn a profit on your money transfer in two ways. One is by charging you a fee to complete your transaction. These transfer fees can vary wildly by provider but are typically a flat fee or a percentage of your transfer. If you’re sending a large amount, ask whether you qualify for a fee-free transfer. The other “fee” is an often hidden markup on the mid-market rate — or the rate banks and transfer services use when they trade among themselves. Nearly all providers skew exchange rates for a profit, so be sure to find one offering the smallest margin between the mid-market rate and the rate they’re offering to you. Other fees will depend on how you’re paying for your money transfer and how you’d like your recipient to pick it up. Credit or debit card transfers are often your most expensive option, though often the fastest, while cash pickups can also increase what you’ll pay.
The quickest money transfers will arrive instantly depending on the specific service you use and where you’re sending the money to. Western Union can have funds to your recipient almost instantly. MoneyGram, on the other hand, can send funds to China that are available in as little as an hour, but funds are available the next business day when sent to France. Other services like OFX can take longer than quicker cash services like MoneyGram and Western Union. Sending money to Australia using OFX takes at least a day, whereas countries like Canada can take one to three days.
Yes, a number of providers have fee-free thresholds for international money transfers. For example, OFX charges no fee for transfers of $5,000 or more, while XE charges no fee for transfers. Keep in mind that even if a service is free, you’ll likely pay through a margin applied to the exchange rate. Because it’s a trusted partner of finder.com, OFX is waiving transfer fees for our readers on all qualifying transfers. See how they compare to find the right one for your needs.
Today, you have many options for initiating money transfer. But if saving money is your goal, online services are a wise choice. Most banks offer the ability for account holders to initiate a transfer online simply by logging into their account. Banks, however, typically won’t be your cheapest online option. Online money transfer specialists like TransferWise and XE have been giving banks a run for their money, offering lower fees and stronger exchange rates. Still other online options include PayPal and payment apps like Circle. With these services, you can often send funds to friends and family for free.
To initiate a wire transfer, you can visit your local bank, go to a money transfer office or use an online money transfer specialist. With any of these option, the process will differ slightly. Generally, you’ll need to complete a wire transfer form indicating your personal banking information, your recipient’s name and banking information and the amount you’re sending. Once your transaction is complete, you’ll typically receive a tracking number to confirm that your recipient receives your funds.
Yes, PayPal is a popular way to make international payments. Both the sender and the receiver both need an active PayPal account. Once the funds are transferred to the recipient’s PayPal account, they will then need to transfer to their bank account to be withdrawn. PayPal international transfer fees vary according to the method of payment. Using a credit card to credit a PayPal account with money is more expensive than transferring the money from a bank account. The fee is a percentage of the total transfer amount.
To send money to a PayPal account, you must sign up for a free account online. Once signed up, click “Send & Request” at the top of the screen. If the account you’re sending to is in the US, click “Send to family and friends in the US” and follow the prompts to enter your recipient’s email address or phone number, the amount you’re sending and where your money will be pulled from. Transfers among PayPal accounts are free. If you’re sending money to an international account, click “Send to friends and family internationally.” Choose your recipient’s country from the drop-down menu and click “Next.” Indicate how much you’re sending to see how much your recipient will receive in their home country’s currency. Confirm the exchange rate you’ll receive and transfer fee you’ll pay, then follow the prompts to complete your transaction.
Yes. It is industry standard for international money services to use 128-bit SSL encryption systems at a minimum. Many also are licensed with US financial regulators. When processed through a reputable bank or company, your funds are safely tracked until in the hands of your recipient. And if you’re sending money internationally, federal protections are in place that require banks, credit unions and money transfer companies to, for example, disclose all fees upfront and give you 30 minutes to cancel a transfer, assuming it hasn’t yet been picked up or deposited.
Jing Jun Ma is an innovations expert at Finder. With a decade of experience in digital marketing and programming, Jing is a tech and data guy. He wrangles data to make it useful for consumers facing a decision.
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