One of the most common questions we see asked time and tine again is what’s the best and cheapest way to send money overseas. In this guide, we will explain the key points and give a rough idea of how much it would cost to send $100 AUD home to the UK. Obviously rates and fees change daily and so does the costs change if you’re sending from a difference currency to another.

So what will it cost?

There are two key drains on what you’ll end up getting and they are the fee and the exchange rate. Please remember, don’t be fooled with ‘fee-free rates’ because the exchange rate is usually always adjusted to make up for the loss.

Fee

A multitude of fees, charges or commission can apply both to the sender and the recipient. Many providers impose multiples of small additional charges to disguise the real cost of the service.

Exchange Rate

This is the hidden charge.

Many companies claim to be ‘commission-free’ and then dampen the exchange rate so you get less bang for your buck. It’s often difficult to get hold of the exact rate and compare it, as some providers don’t publish daily rates which change throughout the day.

What is the best way to compare?

With all the fees and exchange rates, transferring some cash can be confusing and complicated but really, it doesn’t need to be. You just have to work out this…

After all the charges, how much money will I get at the other end.

As mentioned earlier, exchange rates change daily, and sometimes, even by the minute! To compare services accurately, you should compare them all in one go, or near enough.

Start by benchmarking a decent exchange rate – check the Travel Money Maximiser to help. If you’re transferring a large amount, then at worst you should aim to match the cheapest provider there, especially as most providers will have better rates the more you transfer – see below for more info if you’ve got £5,000 or more to send.

To find the best deal, follow the steps in this guide; each one lists who it’s suitable for. Stop at the first method that suits you.

Is my money safe when I transfer?

If you use an online transfer company (or any transfer company that holds your money) and it goes bust while it has your money, there’s no guarantee you’ll get it back. The regulation of these companies has become tighter in the past few years, but the risk of losing cash still remains.

If it’s ‘authorised‘ – your money is kept separate

A large firm trading over €3 million (£2.5 million) a month, must be authorised by the Financial Conduct Authority (FCA). Each day, at the close of business, these firms separate your money from the firm’s own accounts (known as ringfencing). This protects your cash, so you should get it back if the firm gets into difficulty.

If it’s ‘registered‘ – there are no safeguards for your cash

Smaller firms can choose to be registered. This means there’s no safety process if something goes wrong with the firm, meaning your money isn’t protected.

To check how a firm is regulated (whether it’s authorised or just registered), search for its name on the FCA register.

If a firm loses your money (but it hasn’t actually gone bust), you have the right to complain to the Financial Ombudsman Service if the company can’t sort it out for you. It will investigate on your behalf and if the company’s in the wrong, you should get the money back.

So… without further or do… lets dive in!

Free bank transfers

HSBC’s transfer service is free for Premier and Advance current account holders transferring money to any other HSBC account, as long as you transfer through their online banking system.

If the recipient doesn’t have an HSBC account, the transfer will cost £4. Transferring by telephone or in branch is more expensive and costs £9.

Make sure you check HSBC’s exchange rate. Like we mentioned earlier, the exchange may not be so great so even though the transfer may be free, they make up for it by giving you a not so great exchange rate.

Online Services

There are lots of online companies that will allow you to send money online. We’ve tried and tested quite a few of them and our favourite is TransferWise.

Firstly, a little bit of a background on TransferWise

TransferWise is an online money transfer service which allows you to transfer money up to 8 times cheaper than with the bank. The technology is based on a peer-to-peer system. If someone wants to convert their pounds to euros, TransferWise’s technology finds someone who wants to transfer money in the opposite direction (euros into pounds).

The system automatically matches the currency flows at the real mid-market exchange rate (as you would find in newspapers or at xe.com) and then pays out from the local euro or pound account, meaning the money never actually moves across borders. Doing things this way means customers can avoid traditional banking fees altogether and you don’t lose money by transferring at an unfair rate.

You’ll be updated via email at each stage of the transfer. You can also track your transfer with their award winning mobile apps and website wherever you are.

You get the real exchange rate… Banks and other providers often add a markup to their exchange rate while advertising low fees, which means you could be paying huge hidden charges. TransferWise transparently displays its fee upfront and deducts it before conversion. No nasty surprises. TransferWise then uses the mid-market rate, independently provided by Reuters without any markup. The exchange rate is guaranteed as long as TransferWise receives your money within 48 hours.

At the time of this blog post, they have a 5/5 star rating on TrustPilot. That’s pretty good!

Is TransferWise Safe?

TransferWise is fully regulated by the Financial Conduct Authority and just like large banks and financial institutions, verifies its users to protect against fraud and money laundering.

How much does it cost to use TransferWise?

Amounts up to £400 cost a flat fee of £2. After that the fee is 0.5% of the amount sent. See a breakdown of Transferwise’s charges here.

Sound good? You can get to TransferWise by heading here.

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