How to Transfer Money Overseas

Hey Folks! So if you are an expat you know the dilemma of currency trading and wiring money back home. I cringe to think of all the money I lost due to the extravagant fees to transfer money to my home bank. To shed some light on the issue, guest blogger and currency trading specialist, Alex Johnson, is going to give us some pointers.

How To Transfer Money Overseas: Currency Trading and Withdrawals for Expats

By Alex Johnson

For many expats, managing overseas payments and withdrawals can be a bit of a headache.

The FX market is unpredictable with rates changing several times a day, and there are added costs to consider when you send money abroad. If you transfer money when there’s a poor exchange rate, it could end up costing you greatly.

So how can you make the entire process easier and more affordable? In this article, I’ll look at three of the most common ways to transfer money overseas and weigh up the pros and cons of each.

Money Transfer Firm

Available online and on the high street, money transfer firms are a seemingly logical option.

They offer a range of services for sending and withdrawing money, such as direct transfers and instant cash. Transfers to a bank account take between 3 and 8 days, while cash transfers are instant. This is very useful in emergencies.

Exchange rates may be more favourable than other services (such as a bank), but you will be subject to transfer fees. Fees vary between firms, as do exchange rates.

The cost of the transfer may also differ depending on where you’re sending the money. When we compared the fees of one well-known firm, it cost more to send £100 to Hong Kong than it did to send £100 to Australia.

A very important note: these firms are not covered by The Financial Services Compensation Scheme. This puts your money at risk if the company suddenly goes under.

If you do go down this route, choose a firm that is authorised by the Financial Conduct Authority. This authorisation helps safeguard your money in the event of such an incident.

Bank or Building Society

Many expats opt to use their bank or building society to transfer money.

It’s a convenient, simple process as the bank handles everything for you. There’s also a peace of mind that comes from using your own bank; you know your money is secure.

Unfortunately, this also tends to be the most expensive option.

Banks won’t offer the best exchange rate available, and they often charge the highest fees for making a transaction. Fees vary; they can be as little as £4 to transfer online or between £15 and £30 per transaction in branch. There may also be additional charges for an express service.

Some banks offer a fee-free service, but your exchange rate may suffer as they try to recoup their costs.

Foreign Exchange (FX) Broker 

This is the safest and most cost-effective way to transfer and withdraw money overseas.

Brokers tend to offer the best exchange rates (close to the wholesale market rate) and fees (if any apply) are low. In addition to this, transfers can be completed within 24 hours.

You can use FX Brokers to make regular payments, buy and sell property overseas, transfer pension income and more.

You can also ‘fix’ your exchange rate; this means that no matter how much the rate moves in either direction, you’ll pay the agreed amount. It’s a safeguard against the unpredictability of foreign exchange.

You’ll need to set up an account and there is often a minimum transfer amount, so brokers may not be practical for small one-off payments.

Is My Money Safe? 

In these uncertain times it’s natural to worry about the safety of your money. Fortunately, there are many regulations in place to protect you and your hard-earned cash.

The most secure way to transfer money is via your bank (for small payments) or an FX broker authorised by the Financial Conduct Authority (for larger sums). Money Saving Expert’s Sally Francis discusses the safety of overseas money transfers in this comprehensive guide.

Final Thoughts

The method you choose to make overseas transfers will depend entirely on a range of factors. But before you make any decisions I strongly recommend doing some research, comparing deals and making sure your money is safe.