Whether you have just made the dream move overseas, or you are now nicely settled as an expatriate in your host country, making and receiving international payments can often be a laborious headache. For some, international money transfers could mean losing thousands through poor exchange rates and high transaction fees. In most cases, these losses are almost entirely unnecessary and with the right degree of planning, can be totally avoided.
Drawing on both personal lessons learnt as an expat, and my experience working with foreign exchange suppliers globally, here are my six tips to save on international money transfers:
1. Consider the ‘Hidden Fee’: Exchange Rate is Key
When making an international payment, there are two fundamental variables to consider. Firstly, there is the fixed fee that a bank or currency broker will charge you to make a transfer. Secondly, the margin imposed on the actual exchange rate being offered.
Often, expats are much more focused on the transaction fees taken ($20, £40 and so forth) rather than rate. This is a mistake. When making an international money transfer, it is important to understand that the exchange rate is the ‘hidden fee’ and often where currency suppliers make most of their money.
Banks and foreign exchange brokers make their money on transfers by selling currency at the interbank rate plus a margin, which can be substantial. Be sure to have a currency converter at hand the next time you transfer money, and know how far off the market rate (interbank rate) you are being quoted, so that you can better ascertain whether you are being offered a good deal or not.
2. Consider Both Bank and Non-Bank Foreign Exchange Providers
Many expats only consider using their normal bank to make an international money transfer. As a general rule of thumb, the more currency you are moving globally, the more a bank will sit up and take notice of your particular account. If you are not moving millions, it is worthwhile to speak to dedicated currency organisations. They do not replace banks, but they can offer a much more ‘high touch’ service at a smaller margin. Good specialist brokers should take the time to understand your foreign exchange requirements, watch the markets on your behalf, and ensure you are trading at the right time.
3. Understand All The Options To Protect Against Currency Volatility
As an expat, you may be making many payments throughout the year and should try to protect yourself against foreign exchange volatility. You may also have a budget for your overseas assignment. A ‘forward contract’ can protect you against changes in the currency market. This allows you to order foreign exchange at an agreed fixed exchange rate for up to 12 months in advance. It is the classic ‘buy now, pay later approach.’
To secure the exchange rate, most currency organisations require you to pay a small deposit of between 5 to 10 percent. The remaining amount is paid once the transaction is completed. It must be said, if you do fix the cost of your money transfer, do not watch the markets too much, or you can cause yourself unnecessary stress. Rather, be pleased that you have peace of mind and that you are budgeting effectively.
4. Buy Currency If The Rate Hits Your ‘Budget Rate’
This particular strategy, called a ‘limit order’, is designed for expats who have some time before they need to send money overseas. Perhaps you know that ultimately funds need to be sent to the host country (or vice versa) but you are in no rush to do so. In this instance, you can speak to your account manager about an achievable budget rate, which is both realistic and achievable. If the currency pairing hits the pre-determined rate, your broker will look to buy the currency for you. This is a particularly useful product for prospective expats who are overwhelmed with all of the other aspects of an international move and would prefer not to worry further about currency exchange rates.
5. Shop Around For The Best Deal On The Market
Most currency organisations will boast of getting you the best exchange rates on the market and providing you with superior service. If you are not sure who to use, one tactic is to register with two or three providers.
Opening an account is usually a free process, which takes little time and places you under no obligation to trade. Once registered, you can obtain multiple quotes, get a feel for the organisation and make an objective decision. If you are ‘rate shopping’, it is important to call brokers within the shortest possible space of time, as only this way will you have an accurate rate comparison. Markets can move quickly, often 2 – 3 percent in a single day, meaning you have to be nimble if shopping around. Using an FX comparison site can be a good starting point.
If you are to use a non-bank foreign exchange specialist, check their credentials very carefully. Make sure that you use a supplier who operates segregated client accounts (separate from the day to day running of the business).
Lastly, if you are considering using a UK based broker, ensure they are authorised and regulated by the FSA (Financial Services Authority) for the provision of payment services. Check their FRN number prior to transfer.
6. You Do Have The Ability To Save Money
Finally, the most important point to take from this article is that you have the ability to save on the cost of making an international money transfer. Whilst you cannot control the exchange rates or fluctuating market movements, you do have the opportunity to make choices that can dramatically increase your chances of getting a good deal. Make sure that you negotiate on rate with currency suppliers, because you might be surprised at the lengths that your account manager will go to win your business.
Drawing on both personal lessons learnt as an expat, and my experience working with foreign exchange suppliers globally, here are my six tips to save on international money transfers:
1. Consider the ‘Hidden Fee’: Exchange Rate is Key
When making an international payment, there are two fundamental variables to consider. Firstly, there is the fixed fee that a bank or currency broker will charge you to make a transfer. Secondly, the margin imposed on the actual exchange rate being offered.
Often, expats are much more focused on the transaction fees taken ($20, £40 and so forth) rather than rate. This is a mistake. When making an international money transfer, it is important to understand that the exchange rate is the ‘hidden fee’ and often where currency suppliers make most of their money.
Banks and foreign exchange brokers make their money on transfers by selling currency at the interbank rate plus a margin, which can be substantial. Be sure to have a currency converter at hand the next time you transfer money, and know how far off the market rate (interbank rate) you are being quoted, so that you can better ascertain whether you are being offered a good deal or not.
2. Consider Both Bank and Non-Bank Foreign Exchange Providers
Many expats only consider using their normal bank to make an international money transfer. As a general rule of thumb, the more currency you are moving globally, the more a bank will sit up and take notice of your particular account. If you are not moving millions, it is worthwhile to speak to dedicated currency organisations. They do not replace banks, but they can offer a much more ‘high touch’ service at a smaller margin. Good specialist brokers should take the time to understand your foreign exchange requirements, watch the markets on your behalf, and ensure you are trading at the right time.
3. Understand All The Options To Protect Against Currency Volatility
As an expat, you may be making many payments throughout the year and should try to protect yourself against foreign exchange volatility. You may also have a budget for your overseas assignment. A ‘forward contract’ can protect you against changes in the currency market. This allows you to order foreign exchange at an agreed fixed exchange rate for up to 12 months in advance. It is the classic ‘buy now, pay later approach.’
To secure the exchange rate, most currency organisations require you to pay a small deposit of between 5 to 10 percent. The remaining amount is paid once the transaction is completed. It must be said, if you do fix the cost of your money transfer, do not watch the markets too much, or you can cause yourself unnecessary stress. Rather, be pleased that you have peace of mind and that you are budgeting effectively.
4. Buy Currency If The Rate Hits Your ‘Budget Rate’
This particular strategy, called a ‘limit order’, is designed for expats who have some time before they need to send money overseas. Perhaps you know that ultimately funds need to be sent to the host country (or vice versa) but you are in no rush to do so. In this instance, you can speak to your account manager about an achievable budget rate, which is both realistic and achievable. If the currency pairing hits the pre-determined rate, your broker will look to buy the currency for you. This is a particularly useful product for prospective expats who are overwhelmed with all of the other aspects of an international move and would prefer not to worry further about currency exchange rates.
5. Shop Around For The Best Deal On The Market
Most currency organisations will boast of getting you the best exchange rates on the market and providing you with superior service. If you are not sure who to use, one tactic is to register with two or three providers.
Opening an account is usually a free process, which takes little time and places you under no obligation to trade. Once registered, you can obtain multiple quotes, get a feel for the organisation and make an objective decision. If you are ‘rate shopping’, it is important to call brokers within the shortest possible space of time, as only this way will you have an accurate rate comparison. Markets can move quickly, often 2 – 3 percent in a single day, meaning you have to be nimble if shopping around. Using an FX comparison site can be a good starting point.
If you are to use a non-bank foreign exchange specialist, check their credentials very carefully. Make sure that you use a supplier who operates segregated client accounts (separate from the day to day running of the business).
Lastly, if you are considering using a UK based broker, ensure they are authorised and regulated by the FSA (Financial Services Authority) for the provision of payment services. Check their FRN number prior to transfer.
6. You Do Have The Ability To Save Money
Finally, the most important point to take from this article is that you have the ability to save on the cost of making an international money transfer. Whilst you cannot control the exchange rates or fluctuating market movements, you do have the opportunity to make choices that can dramatically increase your chances of getting a good deal. Make sure that you negotiate on rate with currency suppliers, because you might be surprised at the lengths that your account manager will go to win your business.
Check out this Profile sites
https://macro.market/company/ca-club-india
https://myanimelist.net/profile/club4ca
https://www.mytradezone.com/profile/CaClubIndia
http://sara-mathur.bravesites.com
http://saramathur.simplesite.com
https://saramathur.pageride.com
http://saramathur.wikidot.com
https://caclubindiaformat.quora.com
https://saramathur.bookmark.com
https://macro.market/company/ca-club-india
https://myanimelist.net/profile/club4ca
https://www.mytradezone.com/profile/CaClubIndia
http://sara-mathur.bravesites.com
http://saramathur.simplesite.com
https://saramathur.pageride.com
http://saramathur.wikidot.com
https://caclubindiaformat.quora.com
https://saramathur.bookmark.com
