It’s always worth doing your homework when you’re about to send money abroad. The right partnership with the right money transfer business could save you plenty of money in fees, either commission-based or a flat fee that a bank or broker might charge when you make a payment.
Banks do exchange currencies with each other, but the foreign exchange market is complex. You won’t get the same rates that corporate banks enjoy, which are known as interbank rates. You might call it professional courtesy from one bank to another or an attempt to stop smaller businesses from flourishing. Whichever it is, interbank rates can be traced via Google Finance.
Big banks like Westpac didn’t become big by being a passive recipient of your cash. Banks who add big margins to their exchange rate or charge you commission earn profit, which might be used in their next big advertising campaign or to pay bonuses to staff.
Exchange rates are calculated by the amount they vary against other currency rates and are determined by the forces of supply and demand. It’s why it’s difficult to predict how currencies will behave, and why so many international news sites have fast-moving finance pages.
How much your international money transfer will cost you depends on how much you’re transferring, if you’re willing to lock into an exchange rate for 12 months or less, the kind of currencies you’re exchanging, the exchange rate levels at the time you make the transfer, and the provider you’re using to make the transfer.
Use a price comparison site first to find the best currency deals around, and then have a look at what else is important for you. For example, there’s no use finding the best rate and then discovering it takes 12 days to reach your recipient, as has been known to happen.
Also, be wary of using banks and other services which make their exchange rate, fees and commission deliberately difficult to find. PayPal, for example, will only divulge a business exchange rate to customers once a payment has been made. Although plenty of these services will send the money you want to send, it might not be worth it for the fee you’ll have to pay.
Nobody can help you trust a provider if you’re unsure about their credentials, so we encourage you to do your research before sending sums of money through the provider. Find customer reviews and experiences, see if they’re regulated by a financial body that requires them to follow certain rules, see how recently they’ve been established, and above all see if you can trust them.
Your gut can be a powerful decision-making tool when it comes to online wire transfer. Listen to it.
You are the only person who can make that decision, based on your personal experiences with all three. If you don’t mind paying high fees and waiting longer for your money to clear, go through a bank or a broker, but if you want to work with like minded people who want to swap currency without hidden fees, try a peer to peer international money transfer service like AquireFX.