For most of us, transferring money overseas isn’t something we do on a regular basis. For that reason, the ins and outs of how it works aren’t common knowledge. If you’re wondering how to transfer money abroad, how it works and what it costs, here are a few simple points to guide you through the process.
You might be thinking about setting up an offshore bank account, a mortgage on a property abroad or just sending someone in another country some money, either way, an international money transfer is probably in order, and it will cost you in charges.
Your transfer will be subject to the exchange rate at the time of the transfer, which means the amount you get in return for your pound will change according to the exchange rates. Also, you can expect to pay a fee to the company carrying out the transfer. This charge is at the discretion of the company and varies widely.
Some companies might claim to be able to do the transfer ‘commission free’, but they are likely to recoup their losses by hiking up the exchange rate. What you need to ask yourself to work out the true cost of making the transfer is: what is my pound worth once all the charges and fees have been taken into account?
You should avoid making the transfer last minute, as you’ll be stuck with the exchange rate at the time. Instead, plan ahead and keep an eye on the changing exchange rates and strike while the rate is low.
Price comparison sites like MoneySupermarket allow you to compare exchange rates and fees between different companies and also any special offers that might be available at the time, like fixed foreign exchange rate promotions.
Finally, you’ll want to make sure that the company you’re planning on using is legitimate and above board. If you found them on a price comparison site then they will be fine because they are likely to meet a certain criteria.
If you’ve not used a price comparison site, check that the company you’re thinking about dealing with is regulated by the Financial Services Authority (FSA), because then you can be assured that the company complies with the strict set of guidelines imposed by the Authority.
You can also check how long the company has been operating and whether they are registered as an overseas money service with HM Revenue and Customs.