Tips for saving when making an international Money Transfer

Posted by AmandaTom on June 13th, 2013

If you need to send money to a friend or relative overseas, making and receiving international payments can often be a laborious headache. For some, international Money Transfer could mean losing hundreds through poor Currency 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.

When making an international payment, there are two important variables to consider. Firstly, there is the fixed fee that a bank or currency broker will charge you to make a Money Transfer. Secondly, the margin imposed on the actual exchange rate being offered. Often, people who are abroad are much more focused on the transaction fees taken rather than rate. This is a mistake. When making an international Money Transfer, it is important to understand that the Currency 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.

Many people who are abroad only consider using their normal bank to make an international Money Transfer. As a general rule, 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 Exchange organizations. 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.

If you make many payments throughout the year you should, definitely, try to protect yourself against foreign exchange volatility. You might also have a budget for your overseas assignment. A ‘forward contract’ can protect you against changes in the Currency Exchange 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 Exchange organizations require you to pay a small deposit of between 5 to 10%. 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

Whenever you need to make an international Money transfer make sure you choose the right bank or the right broker. A reliable Currency Exchange organization can help you make the transfer at the right time thus saving some money.