Wednesday, 30 January 2013

A Guide to Transfering Money Abroad: Part 1

With the deadline for companies to adopt the Single Euro Payment Area (SEPA) payment format fast approaching and the omnipresence of money transfer providers both online and offline, it is clear that this is a subject that cannot be covered in one blog. As a result this will be one of a two part blog that will explore the best options for transferring money abroad from both consumer and business perspectives.

If you are escaping the UK winter weather on a sunny holiday or simply sending money abroad to friends and family: what are the best options available to you?

The first thing that comes to mind when talking about money transfer is charges, which are generally summarised by the fees or commission you pay to the company performing the conversion and the exchange rates. It is important to bear these in mind as once added they can make transfers very expensive.

The other factors to take into consideration are the different methods of transfers that can be used. Here is a quick summary of the types of methods that are available:

  • Instant cash transfer: useful for short and urgent money requirement (to send to a member of family in need for example). Not necessarily the cheapest but probably one of the quickest ways to transfer money abroad
  • Foreign currency brokers: these companies specialise in currency conversion and there are many of these online or present in tourist areas. Unless you’re in a rush, make sure you compare several before handing over your money as the difference in the amount  received in your chosen currency can be huge depending on the fees previously mentioned
  • Credit card purchases abroad: in some situations these can be cheaper, based on the exchange rate which is often reasonable although many credit card issuers levy one-off charges and an additional percentage for such transactions, resulting in them being more expensive than cash
  • Pre-paid currency cards: these are fast becoming a cheap and secure alternative to travel money as they are denominated in the currency of your destination currency so there are no foreign exchange fees to worry about and often extremely good exchange rates when you are transferring funds onto the card. The following site is useful for comparing prepaid currency cards: http://www.mytravelmoney.co.uk/travel-money-card/prepaid-currency-card

So if the January blues have caught up with you or if you merely want to help a friend in need by sending them money abroad, ensure you do your research and follow our top tops to get the most out of your money:

  1. Compare overseas online money transfer methods (including transfer fees and how quickly the transfer can take place). Please refer to a comparison site like: http://www.money.co.uk/money-transfers.htm
  2. Request a quote from all accessible Foreign Exchange providers to get the best exchange rate possible
  3. Check if there is a minimum spend requirement or any commission that will be charged – often exchanging more gives a better exchange rate
  4. Don’t be afraid to ask questions and don’t do anything you are not comfortable with.  Speaking from personal experience, I have recently declined a debit card money transfer transaction. A particular bureau de change had in print and on their record all my personal details (card number, registered address, security code, expiry date). I felt very uneasy, so I cancelled the transaction. So be vigilant and do not give away more information than you really need to!

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