Research suggests lots of people are overpaying for their international cash transfers.
With more expats South Africans now living and earning in the UK, transferring money back to SA or internationally is now increasingly common place. Whether it is buying anything abroad, a large purchase like a holiday home in the sun or sending money back to south Africa to meet financial obligations, many of us will have to transfer money overseas at some point or time.
Banks, unfortunately dominate the money-transfer market and research suggests lots of people are overpaying for international money exchanges. For many people, their bank is their first port of call when producing international money transfers. But no matter where you live in the world and the number of bank accounts you have, many banks offer poor exchange rates and levy numerous bank charges. TOP TIP - it pays to shop around for the best deal.
Peter Walker, Rand Rescue United Kingdom Director, a company that specialises in assisting expats Saffas repatriate pensions and annuities and cash out of SA, says increasing numbers of expats are using online payment services. "We are seeing a trend from individuals to rather use a currency specialists for online payments rather than your normal bank, " Peter says. "Currency specialists can be less expensive, particularly for payments of more than £150."
Beware hidden charges
When creating international payments, costs fall into two categories: fees and the pending exchange rate. When comparing one service with another, it's important to be aware of both:
- Fees – the key charges to be aware of include transfer charges fees.
- Exchange rates – some banks claim to become 'commission free' then load the actual exchange rate. It can be difficult to discover the exact rate to compare it – some providers simply don't give the information.
Getting the most on your money
Exchange rates can change through the minute, so to compare providers properly you must do your comparison in one proceed. For larger bank-to-bank international cash transfers it pays to compare your street bank's exchange rates with those offered by currency specialists. The rate you are offered would depend on a number of factors, including: the amount of money an individual transfer time frame, ie whether you'd like to to lock into an exchange rate for approximately 12 months the currencies you trade, and their volatility and the exchange rate during the time of purchase
How much would you save utilising a currency broker?
According to forex specialist HiFX, the average saving simply by using a currency specialist, rather than a bank, varies between 2% along with 6%. It's also worth thinking about how that, because of their department networks, high street banks are only able to set their exchange rates a couple of times a day. To make certain they remain profitable, they have to increase the spreads to allow for exchange-rate volatility. Brokers give clients usage of live rates, saving you cash.
By using a currency company then of course you'll avoid bank fees, which differ from bank to bank, and your money will get there much faster.
Timing is everything
Depending within the amount you are sending, the timing of a transaction will also be important, particularly if you're transmitting larger amounts. In many instances, people don't pay much attention to what's happening to the swap rate. They leave their decision to produce the international money transfer till the last minute, hoping for an excellent rate and assuming that, without each of the funds available, there isn't much they could do.
Regardless of why you're transferring your Pounds, the larger the amount you're looking to move overseas the more important it truly is to maximise the timing of your transaction and minimise the risk which the exchange rate could get worse and devalue your Pounds. Remember, as soon as you move overseas or trade an asset abroad, such as being a property, you are exposed to adverse moves inside the currency market.