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How do international money transfers work?
An international money transfer allows you to send money to a recipient overseas. Generally, a transfer involves you providing funds to a bank or an independent transfer provider, which then sends the money to your recipient in another country — in this case, Colombia. This can be done in person, over the phone, through a mobile app or online. You can use cash, a credit or debit card, or transfer funds from your bank account, which will then either be deposited into your recipient’s bank account or mobile wallet, or made available as cash for them to pick up at a location in their country.
Banks vs. money transfer companies
If you want to send money from the US to Colombia, you could use your bank. But while banks offer a convenient transfer solution, they don’t offer it cheaply. Banks are notorious for offering mediocre exchange rates and charging high fees on international transfers, so even a transfer of a small amount can end up costing a whole lot more than you might expect.
If you’re looking for a more affordable option, consider the services provided by a wide range of specialist online money transfer providers. These companies, such as XE and Currency Fair, offer quick and affordable transactions to myriad destinations around the world. Their exchange rates and fees are much more reasonable than those charged by banks, which means that more money stays in your bank account (or your recipient’s).
Case study: Carlos sends money to Colombia
While Carlos is living and working in America for a couple of years, he intermittently sends money home to his parents in Colombia. Up until now he has used his bank to send the international transfer, but he decides to compare two money transfer providers to see if they can offer a better deal.
The results of his comparison are shown below. As you can see, Carlos can save $10 in transfer fees and send an extra 11,736.56 COP using the second money transfer company.
|Money transfer provider 1||Money transfer provider 2|
|Exchange rate||$1 USD = $2,225.85 COP||$1 USD = $2,237.5866 COP|
|Transfer method||Online bank account transfer||Online bank account transfer|
|Processing time||1 to 3 days||1 to 3 days|
|Amount received||$2,225,850 COP||$2,237,586.56 COP|
How do I compare transfer companies when sending money to Colombia?
- Exchange rates. Compare the exchange rates offered by a number of transfer companies to calculate just how affordable your transaction will be.
- Transaction fees. It’s worth pointing out that a company with fantastic exchange rates may also charge high fees, so read up on all the fees and charges that will apply to your transfer. Some companies will also waive their fees for large transactions.
- Method of placing a transfer. Check to see what options are available for placing transfers: online, over the phone, in person at a branch and/or using a smartphone app.
- Transfer options. Can you lock in an ideal exchange rate now and transfer the money later, known as a forward contract? Does the institution offer limit orders, which allows you to take advantage of changing market conditions by executing the money transfer when a certain exchange rate is met? Can you schedule recurring payments?
- Minimum amounts. If you need to transfer a small amount of money, stay away from providers that impose a high minimum transfer limit.
- Turnaround time. Compare transaction processing times between providers to see which one can get your funds to the destination the quickest, not to mention how much you’ll have to pay for an urgent transfer.
- Pickup options. Does the provider offer cash pickup transfers or bank account deposits? Are there any other ways your beneficiary can access the money you send?
- Customer service. If you ever have a question about a transfer or about the services a company offers, can you easily access the assistance you need from the customer support team?
Foreign exchange rates explained
The exchange rate determines how much one country’s currency is worth in another currency. When a country’s currency is strong, it will yield more money when exchanging it in a country with a weak currency. Since Colombia’s exchange rates is flexible, it can change from moment to moment. Factors that influence the exchange rate include interest rates, economic stability and inflation.
Currency exchange rate for Colombia
What are my options for sending money to Colombia from the US?
- Specialist transfer companies. Money transfer providers can offer convenient and affordable international transfers.
- Cash pickup transfers. Western Union and MoneyGram offer easy cash transfers to Colombia.
- Bank transfers. You can send money to Colombia through your bank, but this will usually be an expensive transfer option.
- International checks. A secure yet slow transfer method is to send an international guaranteed check.
Steps to send money to Colombia
- Choose a provider from the many options available.
- Create an account and provide your name, contact details and proof of ID.
- Enter the information for your transfer’s recipient.
- Complete the transfer and save your reference number so you can monitor the progress of your funds.
Tips for picking up cash in Colombia
It’s important that you take care when picking up cash. If you can, get a friend to accompany you and act as an extra deterrent to would-be thieves. While it’s also a good idea to only visit a cash pickup agent in an area you know to be safe. Don’t display the cash you collect in public and deposit it in your bank account as soon as possible.