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Money transfer hacks: 8 ways to save on your international payments
We’ve gathered tips to save money on fees and exchange rates when sending cash overseas.
There are better ways to move money overseas. In fact, we’ve assembled eight of them. Use these hacks to complete your money transfers in style while saving a boatload of money along the way.
What's in this guide?
- Open a credit card in another country
- Take advantage of zero-fee ATM cards
- Leverage Circle for dollars, euros and British pounds
- Hack cryptocurrency with a bitcoin transfer
- Trade with another person on a P2P platform
- Convert currency through a forex platform
- Set up price alerts to convert currency at the perfect time
- Arrange a domestic currency exchange with another party
Open a credit card in another country
Here’s some good news: You don’t always need a physical address to open a credit card. For some cards, applying with a PO box is sufficient — which means you don’t necessarily have to live in a country to open a credit card there.
This opens up many opportunities. For example, say your business is based in South Africa but you often make purchases in the United States. In this case, you’d benefit from having an American credit card.
With an American card, you wouldn’t have to transfer South African currency to the United States. And you wouldn’t accumulate tons of fees and lose money on the exchange rate to US dollars. Instead, you could simply use the card to make purchases directly in dollars.
Take advantage of zero-fee ATM cards
You want to send money to your recipient, but maybe they don’t want to see digital numbers in their bank account — instead, they want cold, hard cash right away.
Here’s a hack: Get a Charles Schwab checking account. It comes with no monthly service fees and no account minimums. Crucially, you get free ATM withdrawals from your account anywhere in the world.
Let’s say you need to regularly transfer cash to your family overseas. In this case, you give them the Schwab ATM card and make regular deposits into your account. Then they can withdraw cash from ATMs, fee-free. As a bonus, word on the street is Schwab’s exchange rates run close to the mid-market rate, so you won’t lose too much on currency conversion.
What is the mid-market rate?
The mid-market rate is what your money’s actually worth on the global market compared to another currency. It’s the midpoint between worldwide supply and demand for that currency — and the rate banks and transfer services use when they trade among themselves.
Use the mid-market rate as a baseline to compare against the rates provided by your bank or transfer service.
Leverage Circle for dollars, euros and British pounds
If you’re transferring dollars, euros or British pounds, try out the social payments app Circle. There’s no fee to deposit, send, receive or withdraw money. The only “fee” you’ll encounter is a small 0.25% markup on the exchange rate — that’s a fantastic margin in the money transfer world.
Use this method if:
- You’re transferring dollars, euros or British pounds.
- You need to transfer $3,000 per week or less (that’s the maximum transfer size).
- You don’t mind waiting a few days for money to be deposited to your bank account or debit card.
Circle can pass on savings to customers because the company leverages bitcoin to move money around the world. Which brings us to our next hack …
Hack cryptocurrency with a bitcoin transfer
Bitcoin is a fascinating method for international transfers, one that carries considerable potential. Without getting deep into specifics, here’s the general process for a fiat-to-fiat currency transfer through bitcoin:
- Use fiat currency — like US dollars — to buy bitcoin.
- Transfer the bitcoin to your recipient.
- Your recipient sells the bitcoin for fiat currency (for example, euros).
With multiple steps, bitcoin won’t be the fastest way to transfer money — but it could be the cheapest.
The key is finding somebody willing to trade your currency at the mid-market rate so that you don’t get hit with losing money on the exchange rate twice: once from fiat to bitcoin and again from bitcoin to fiat.
What is fiat currency?
Fiat currency is government-issued and -regulated money like US dollars, Japanese yen and euros.
How to pull off a free (or nearly free) money transfer with bitcoin
That “double charging” we talked about is why transferring through bitcoin can be more expensive than straight fiat transfers.
But if you’re patient enough, you could theoretically pull off a zero-cost transfer through bitcoin. Here’s the key: Instead of buying and selling bitcoin from cryptocurrency exchanges (which often mark up the exchange rate), you trade bitcoin with other people.
You can do this on peer-to-peer (P2P) platforms like LocalBitcoins.com:
- First, you use fiat currency to buy bitcoin from someone at the mid-market rate.
- You then transfer your bitcoin to your recipient at zero or near-zero cost.
- Your recipient sells the bitcoin to someone in exchange for fiat currency.
On LocalBitcoins.com, there are many people willing to trade bitcoin at the mid-market rate. Further, many users are open to trading thousands of dollars in bitcoins. If you have the time to look carefully, you can line up the right trades for a free international money transfer.
Why do we recommend a peer-to-peer bitcoin exchange?
Bitcoin platforms often charge fees for depositing, converting and withdrawing both fiat currency and bitcoins. Using a P2P exchange often lets you bypass these fees.
Compare international payments service providers
Enter the amount you want to send and select Calculate to compare minimums, turnaround and fees. Select Go to site to sign up and send money.
Trade with another person on a P2P platform
Peer-to-peer (P2P) exchanges aren’t just great for trading bitcoins — they can also be excellent for fiat-to-fiat transactions.
Take a P2P service like CurrencyFair, for example. Instead of trading currency with the platform, you trade with other people. CurrencyFair is just the matching service. Whenever you match yourself with a trading partner, the platform charges just 0.15% of the transaction amount.
On CurrencyFair, users set their own exchange rates. This means you could get the mid-market rate on a currency conversion. Even sweeter, you could get better than the mid-market rate, which could theoretically bring your transfer costs to zero.
Of course, someone on the other side of the world needs to be willing to trade at your desired exchange rate. But if you’re willing to wait for the right trade partners, you could make many transfers cheaply.
Convert currency through a forex platform
This method is probably best if you’re converting large amounts of currency and you’re serious about saving money, because it’s quite complicated for the newbie. Setup takes a while, and you’ll need to handle the transactions yourself.
The gist is you use a forex trading platform to convert your currency. For the sake of discussion, we’ll use a platform like Interactive Brokers (IB) as an example.
On IB, one trade costs you a fifth of a basis point multiplied by the trade value. (A fifth of a basis point is 0.002%.) The minimum fee is $2.
What is a basis point?
In forex, traders get very precise about the value of money. That said, they need a very small unit of measurement to track changes in currency values.
The basis point is the solution. It’s a hundredth of a percentage point (0.01% or 0.0001 in a calculator), and it’s often called a pip in forex.
So whether you converted $10,000, $50,000 or $100,000, the transaction would cost you $2. Even if you converted $200,000, you’d only pay $4 in fees.
With IB, you pay $20 monthly to maintain your IB account. But you could make it back in spades with the money you save on a transfer.
To use this method, you’ll need to understand how to trade currencies on a forex platform.
Set up price alerts to convert currency at the perfect time
Let’s say you want to transfer $10,000 to France, converting your dollars to euros. You could go with the current exchange rate of 0.95 euros per $1. If you made the transfer with this rate, you’d send $10,000 and get 9,500 euros on the other side.
But if your transfer isn’t urgent, you could wait for a better exchange rate — for example, waiting until $1 is worth 0.97 euros. Then you’d transfer $10,000 and get 9,700 euros, netting 200 euros more.
Fortunately, you don’t have to sit at your computer checking exchange rates all day. Just set up a price alert on a forex site or trading platform so that when the time comes, you’ll know exactly when to make a money-saving transfer.
If you’re trading on a forex platform, you could take this concept a step further by setting up a limit order. With a limit order, your currency is converted automatically as soon as the market reaches your specified exchange rate.
Arrange a domestic currency exchange with another party
If you want to save money on an “international” transfer, consider not moving it overseas. Instead, approach another party and make domestic trades with them.
For example, let’s say you want 50,000 euros for a transaction in Italy, and an Italian business owner wants the equivalent in US dollars for a transaction in the United States. If 1 euro is worth $1, that means he wants $50,000.
Normally, you’d have to find a way to convert your $50,000 and transfer it overseas — and you’d lose money on fees and the exchange rate. Same goes for our Italian friend.
Instead, you could approach your Italian trade partner and propose a deal:
- You open a bank account in Italy. Your Italian trade partner opens a bank account in the US.
- You make a domestic transfer of $50,000 to your partner’s bank account in the US.
- Your partner makes a domestic transfer of 50,000 euros to your bank account in Italy.
Just like that, you’ve completed a money transfer without getting dinged on transfer fees or the exchange rate. Of course, that’s not including legal fees you may incur for drawing up forex contracts.
This concept behind this method is similar to a currency swap.
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