What you need to know about regular personal money transfers
In an increasingly globalised world, the need to move money across borders is more common than ever.
Whether you're an expat with a villa in Spain, a freelancer earning in euros, or simply helping out family overseas, understanding the ins and outs of international personal regular transfers is crucial.
Let's dive into what you need to know to make these transactions as smooth and cost-effective as possible.
The need for regular transfers
People who own property abroad, have family in another country, or work outside the UK often need to make regular international money transfers. These transfers aren't just one-off occurrences; they're a part of a routine that helps maintain a semblance of normalcy despite the geographical distances.
Regular international transfers are common for those supporting family or friends or for maintaining a holiday home abroad with ongoing expenses. These transactions ensure that bills are paid, and loved ones are taken care of without the hassle of constantly managing individual transfers.
These transfers can vary in amount and frequency, such as weekly or monthly. They are typically set up as direct debits in sterling, with the foreign currency sent automatically to the recipient. This automation brings convenience and peace of mind, knowing that your obligations are met on time, every time.
When setting up regular transfers, one can choose to fix the sterling amount or the foreign currency amount received. The amount deducted or received will fluctuate based on the exchange rate if the other is fixed. This decision will depend on your financial stability and willingness to deal with the uncertainties of currency fluctuations.
Where can I set up regular transfers?
While many use high street banks for international transfers, it's also advisable to consider specialist currency brokers to minimize costs. The difference in fees and service levels can be significant, so it's worth exploring your options.
High street banks typically charge between £15 to £25 per transfer, while currency brokers may offer fee-free or low-cost transfers ranging from £3 to £10. Over time, especially with regular transfers, these savings can add up to a substantial amount.
Some banks, especially those with international branches, offer fee-free transfers, which can lead to significant savings over time. It's always a good idea to check if your bank provides such services and whether their rates are competitive.
In addition to transfer fees, there is also a foreign exchange rate and a receiving bank fee, usually around 0.5%, which varies by bank. These costs can make a dent in the amount received, so it's essential to factor them into your financial planning.
Check exchange rates
It's crucial to check currency rates when making regular international transfers, as they significantly affect the transferred amount. Exchange rates fluctuate constantly, and timing your transfer can be as important as the amount you're sending.
Using a high street bank requires specifying the transfer date and hoping the exchange rate is favourable on that day. This can be a bit of a gamble, as rates can move against you, resulting in less money reaching the intended recipient.
Some currency brokers allow customers to lock in appealing exchange rates well in advance, sometimes up to a year or more. This option can provide stability and predictability for your finances, ensuring that you know exactly how much will be sent and received.
However, locking in an exchange rate comes with the risk of missing out on potential improvements in the rate. It's a trade-off between certainty and the chance to benefit from market movements.
Will my money be safe?
When it comes to money, security is paramount. Transfers through high street banks are protected by the Financial Conduct Authority (FCA), offering a level of assurance for your funds.
However, not all currency brokers, especially smaller ones, are FCA-regulated. It's important to research the currency broker's history and customer reviews to ensure the safety of your money and satisfactory customer service. The peace of mind that comes with knowing your money is in safe hands cannot be overstated.
