International personal transfers
Let’s say you want to send between £500 and £5,000 abroad. If you – and the recipient – both have a bank account, you could contact your bank and arrange a transfer from your own account to the account overseas.
Exchange rate loading
The transfer could take up to five working days and the fee will typically be about £40, though you can usually pay extra for an express service. The fee isn’t the only cost involved as banks also load the exchange rate on international money transfers. You should therefore ask how many euros or dollars you will get for your sterling in order to fully understand the charges.
Foreign exchange broker
It’s always worth contacting your bank if you want to send money overseas, but it might be cheaper to carry out the transfer through a currency or foreign exchange broker. You normally have to register with the broker first, but the process is pretty straightforward and usually does not carry an obligation to carry out a transaction.
You then confirm the details of the deal, send the funds to the broker and the cash is transferred electronically to the recipient.
Many brokers do not charge a fee for transfers of £3,000 or more. They also tend to offer more competitive exchange rates than the banks, though you should always check the charges before you agree to the deal.
Time the transaction
A foreign exchange broker can also be more flexible than a bank because you can time the transaction, hopefully taking advantage of exchange rate movements. For example, you can choose to send the money immediately at the current rate of exchange, sometimes known as the spot rate.
Alternatively, a forward contract allows you to lock into today’s exchange rate but send the money at a date in the future. Or, there’s a limit order, which lets you nominate your ideal exchange rate. The money is then sent when the rate is reached.
If you don’t have access to a bank account, a money transfer firm might be the answer. You can usually conduct the transfer online but many such firms, such as MoneyGram and Western Union, also have a high-street presence.
Again, you need to check the charges as there will be a fee, plus the exchange rate loading. It’s then simply a question of handing over your cash or card and the firm will send the money overseas. The recipient can usually collect the funds immediately at a branch or agency of the transfer firm wherever they are in the world.
Whether you choose to send the money through a bank, broker or transfer firm depends to a large extent on the cost and the timescale. But you should also consider the security of your cash. Your bank will almost certainly be regulated by the Financial Conduct Authority (FCA). It should also be a member of the Financial Services Compensation Scheme (FSCS), so there are some guarantees if something should go wrong.
If you opt for a transfer firm or broker that is not authorised by the FCA, you are unlikely to be protected by the FSCS.
MoneySuperMarket’s comparison service is a quick and easy way to compare the costs of international money transfers, so you can be sure to get the best deal.