How to compare money transfer fees
With so many options to send money to someone, it’s easy to overpay. Find the best option for your needs.
Money transfers are a way to send money to nearly anyone on the planet, usually through online services or direct bank transfers. With so many services available, each has its own benefits and drawbacks.
How do banks and transfer services make money on transfers?
Banks and independent money transfer services charge fees per transfer. These fees can be a flat transfer fee — for example, £25 per transfer — or a percentage of the total amount you’re sending.
What fees should I look out for?
Depending on your bank or money transfer service, you could pay:
- Margins on the exchange rate. For international transfers, banks and money transfer services typically skew the mid-market rate for a profit.
- Incoming fees. Typically a bank fee for receiving money from another bank account.
- Outgoing fees. Typically a bank fee for sending money to another bank account.
- International fees. For sending or receiving money from an overseas bank account.
- Bank-to-bank fees. A fee for transferring money to a competing bank, much like an ATM fee.
- Fees by transfer amount. A percentage-based fee based on the amount of the transfer.
- Fees by payment method. A fee based on how you’re paying for the transfer. For instance, some banks charge more if you pay at a branch (rather than online), and you’ll often pay higher fees if you pay by credit or debit card.
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 this rate as a baseline to compare against the rates provided by your bank or transfer service. With it, you’ll discover which companies offer the best rates.
How can I compare money transfer fees?
How much you’ll pay for a money transfer depends on where you’re sending it to, how you’re paying for it and:
- Are you sending or receiving money? With a bank, incoming transfers tend to be cheaper than outgoing transfers, for which the sender bears the brunt of costs.
- Is it domestic or international? Sending money overseas involves more processing and is typically more expensive.
- Will you need to send this transfer more than once? By scheduling more regular payments, you can often save a few dollars.
- Are you getting the best exchange rate? Banks aren’t always forthcoming about the margin they add to the mid-market rate. Confirm the rate you’ll receive before handing over your cash.
- Are you sending £1,000 or more? Some online money transfer services will waive their fees for larger transfer amounts.
In general, you will pay more for an international wire transfer through your bank than you will by using an independent money transfer service like World First, which offers stronger exchange rates and lower transfer fees.
Case study: Sending £1,000 to Australia
Lilli needs to send £1,000 to her host family in Sydney ahead of studying abroad. While she’s comfortable with the security and familiarity of her local NatWest, where she holds an account, she decides to compare its rates and fees against a popular online money transfer service.
Here’s a breakdown of what Jessica could pay to transfer £1,000 to Australia.
|Transfer fee||£35 (outgoing international fee)||£6.95|
|Exchange rate||1 GBP = 1.53 AUD||1 GBP = 1.59 AUD|
|Transfer method||Online deposit||Online deposit|
|Transfer speed||1–2 days||1–2 days|
|Total AUD received||1,526 AUD||1,597 AUD|
Jessica’s learns that her bank not only charges a high transfer fee but also offers a weaker exchange rate. By going with a money transfer service like Transferwise, Jessica could save nearly £30 in fees and send about 70 more Australian dollars to her host family — a lot more to help them in preparing for her stay.
Compare fees between money transfer services
The next time you need to send money to friends, family or businesses overseas, you’ll likely pay a transfer fee and a margin on the exchange rate.
But by comparing your options, you can be sure you’re getting the best deal for your situation.
Frequently asked questions about money transfer fees
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