Shop around for the best deal when you need to send an international funds transfer and you could save a whole lot of money.
Whether you’re a small business owner paying an overseas supplier or a worried parent helping out a cash-strapped son or daughter who is off travelling the world, there are plenty of reasons why you might need to send an international money transfer.
Traditionally, such transfers were usually sent via your bank, or by a specialist wire transfer service such as Western Union. But recent years have seen an increase in the number of online providers specialising in handling international money transfers. These companies, such as TorFX, Currency Solutions and CurrencyFair, offer fast and affordable online transfers thanks to better exchange rates and lower fees.
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What are my options when sending money overseas?
- Bank-to-bank transfers
If you have an account with any major bank in the UK, you should be able to send an international transfer from that account to your beneficiary’s bank account overseas. While this approach is reliable and convenient – you get to deal with an institution you trust and don’t have to bother with signing up for a new account – it can be costly. Banks are known for offering poor exchange rates and charging exorbitant fees for the transfers, so you can typically find better value for money by looking elsewhere.
- Online money transfer companies
These companies, including World First and TransferWise, specialise in offering more affordable international money transfers. Because they deal in large amounts of foreign currency and have fewer overhead expenses to contend with, they can offer better exchange rates than you will get from banks and from money transfer companies that offer cash pickups. However, it’s important to shop around to find a reputable transfer company that offers cost-effective transactions.
- Money transfer companies with cash pickup options
These companies allow you to send cash overseas which can then be collected by your beneficiary from their nearest transfer branch. With the funds you send often able to be collected within minutes, this is a fast and convenient transfer option for many. Western Union and MoneyGram are the two largest providers of this transfer option and each company runs its own extensive transfer network. However, the exchange rates and fees available for this type of transfer may not always be as competitive as those offered by online money transfer companies.
- International banker’s draft
An international banker’s draft involves getting your bank to write a cheque for you and then sending it overseas. Though a secure and reliable transfer method, this option is quite dated and is becoming far less popular with every passing year. Not only will you need to pay a not insubstantial fee to send the draft, but you’ll also have to endure a long waiting time before it can be cashed by your recipient. It’s worth noting that your recipient may also incur a fee from their bank when cashing the cheque.
PayPal is a very handy tool when you’re doing a spot of online shopping, but it can also come in handy for international money transfers. PayPal allows you to send money to more than 190 countries around the world, but as its fee structure is based on the amount of money you send, PayPal is only really an option worth considering for smaller transfer amounts.Back to top
How can I save money when sending money overseas?
Keep the following money-saving tips in mind when you’re looking for an affordable way to send funds overseas:
- Shop around. If you’re willing to do a little bit of research and compare your money transfer options, you could enjoy a sizable saving. A slight difference in the exchange rate from one company to the next can make a huge impact on the amount your beneficiary receives, while the difference in transfer fees between providers can be quite astounding at times. Compare your options at Finder to find a reputable provider that offers secure and affordable transactions.
- Send funds within the same bank. Some banks with branches in multiple countries, for example Citibank or HSBC, will offer cheap transfers if you’re sending funds to an account with the same bank overseas.
- Send larger amounts. Although costs differ between money transfer providers, as a general rule, the larger the transfer you send the more affordable it will be. Many companies waive their transfer fees if you send more than a set amount, such as £5,000, while large transactions can often also attract better exchange rates.
- Use flexible transfer options. Some companies offer forward contracts, which allow you to lock in an exchange rate now, when it’s favourable, for an international money transfer that will be sent in the future. Another option is to place a limit order, which allows you to specify certain conditions that must be met before your transfer will be sent, such as a certain exchange rate being available.
- Is speed important? If it doesn’t matter to you if your funds arrive within one hour or a few days, save money by selecting the standard transfer option instead of an express method.
Many Brits make their bank their first port of call when sending money overseas but, as mentioned, banks do not offer value for money. With their high fees and disappointing exchange rates, banks can end up slicing off more than their fair share of your account balance when you send money overseas.
You can find yourself a much better affordable deal by using an online money transfer provider, as Barry found out. Barry’s girlfriend lives in Germany, and he wants to send her a gift of £1,000 to spoil her for her upcoming birthday. But when Barry sees the paltry exchange rate on offer from his bank and just how much lower it is than the mid-market rate he sees reported on the evening news, he decides to compare two online money transfer providers to see which one is up to the task of sending his money to Berlin.
|Money transfer company 1||Money transfer company 2|
|Exchange rate||1 GBP = 1.3474 EUR||1 GBP = 1.3397|
|Transfer methods||Online bank account transfer||Online bank account transfer|
|Transfer time||1-2 business days||1-3 business days|
|Amount received (in EUR)||1,347.40 EUR||1,339.70 EUR|
As you can see, just by taking a couple of minutes to do a simple comparison, Barry has saved £2.50 in fees and also sent almost 8 Euros extra to his beloved.
How do I send an international money transfer?
The process for sending money overseas varies depending on the provider you choose and the transfer method you select. However, many companies will require you to sign up for a free account, which can usually be done online. You’ll need to provide your name, address, contact details and proof of ID to do as, as well as either your bank account or credit card details.
The next step in the process is to provide all the important details of your transaction: How much money are you sending? Where are you sending it to? In what currency will your beneficiary receive the funds? You’ll also need to choose whether you want to send a bank account deposit or a cash pickup transfer if this is an option.
Finally, you can pay for your transaction by sending the funds to your transfer provider. The company will then convert your Pounds Sterling into the desired currency and send it on to your beneficiary. You’ll be given a tracking number to monitor the progress of your funds and will often also receive an email or SMS notification when the transaction is complete.
Frequently asked questions
How much will it cost me to send a transfer?
Transfer fees vary substantially between providers. From zero up to £50 covers most of the range, with factors such as transfer method, transfer speed and the provider you choose all influencing costs.
How long will I have to wait until my beneficiary receives the funds?
Once again, this depends on the transfer provider you choose. Companies like Western Union and MoneyGram can offer transfers to certain destinations within 10 or 15 minutes, while bank account transfers usually take from 1-5 business days.
What are some companies that allow me to send cash overseas?
Western Union, MoneyGram and Xpress Money all offer this service. The cash you send can be picked up from hundreds of thousands of transfer branches all around the world.
Can I send money to India?
Yes, there are many companies who allow you to send money transfers from the UK to India. Compare the services, features and fees of trusted providers at finder.co.uk.
How come the exchange rate I see on the news is higher than the one I can get from a money transfer company?
The rate you see listed on the news is the mid-market rate at which banks buy foreign currency, not the rate which money transfer companies offer to their customers.