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20 January 2017
There are plenty of ways to send money to your relatives whether you prefer to use a bank account, or cash, or an online registration. But even though there might be an illusion of transparency, some things can stay hidden, so the practical consumers need to learn how to read between the lines. In the US bank fees for transfers can reach $40, and the online services are not equally cheap. We are going to look at the factors you need to consider and companies that will help you save money.
The hidden expenses
Although it may seem that fee is everything, it’s just the tip of the iceberg. Many companies try to make up for what they have lost using higher exchange rates, or adding some extra charges that might seem invisible. So when in doubt choose the companies that publish their exchange rates daily and provide open access to them and always thoroughly read terms and conditions. Depending on the company, consumers can be charged right away, while the others will pay when the money gets to the platform.
Following daily changes of the rates might be challenging, but sometimes it’s the only way people can count how much they give to the bank. Some of the websites can track the users’ rates and send notifications, which is very convenient. For instance, OFX has a service that locks the exchange rates for you to pay less, and almost every large network has a list of options for their clients to get low charges when the right moment comes.
Authorized or registered?
There is a wide range of banking practices depending on the country and the needs of their cititzens. The regulatory systems monitor suspicious activity, such as large anonymous transactions, especially when it comes to companies with a huge money turnover. Generally, such networks are obligated to authorize and therefore they must fall within the scope of governmental laws.
When making a decision between UK companies, consumers should keep in mind that some online platforms are registered, which means if the money goes to their account it isn’t safe. Should something happen to the company, no one can guarantee to pay them back, that is why it’s better to go the other way: opt for an authorized company. That way you will be able to feel certain that the company is big and trusted, because it is regulated by the financial conduct authority.
Some companies offer a first transaction with no fees, and the amount doesn’t matter. In other cases they can give discounts or special promotional codes. It’s a good idea to use such offers, especially for one-time transactions. Sometimes online platforms can have free trial periods as well. Diligent search offers may bring several options as a result.
Western Union frequently offers special promotional codes, coupons and discounts, including one free international transfer. Such platforms as Worldremit, Azimo, and CurrencyFair present special deals for new clients as well, and a large number of banks are ready to follow their lead in hope of to getting new consumers. Now it is up to the customers to choose whether they want to become regulars, or to carry on searching for better opportunities.
Banks can quite frequently charge their clients an extra $20 or $40, so there is an alternative: online transfers that help people keep their money as they use other networks, and nowadays there are plenty to select from. Fees can be sidestepped, as long as both the sender and the remittee have accounts at the same network. Some payment methods can be fast, like cash-to-cash, but the banks can charge extra for that unless it is their specialty.
Online transfers often require less paperwork and for the most part they are faster, particularly if a person chooses a trusted platform with thousands of consumers and a good coverage. Some credit cards can also ensure great deals and allow two cardholders. Thus, if the recipient lives abroad, the shared account will help to avoid extra charges. The modern diversity of services can indulge even the most selective clients.
Cost-efficiency of higher amounts
‘The more the better’ rule often works with overseas transfer because huge number of companies do not charge transfer fees to customers for amounts of $1,000 or more. In most cases it is profitable for banks or online platforms to encourage large transaction sums. A wide range of electronic transfer services, like Currencies Direct, can even offer special bonuses if the amount of money is large enough.
If customers prefer smaller transfers, they may find many companies ready to provide respective alternative. However, sending one big sum is more advantageous than having ten small transactions. For instance, monthly $10 fee may seem like an insignificant amount, but once it is multiplied, it will turn into $12o annually. Just focus on the most important criteria.
Transferwise is one of the biggest companies that offers p2p transfers. It operates on midmarket rates – they are inexpensive since they come through internal bank channels. And despite of the fact they usually try to benefit from the higher exchange rates, TransferWise sets a goal to prevent such situation. The company doesn’t require an online transfer fee. The situations where the system can’t find a proper match may occur. Should such thing happen the exchange rates are going to be different. Although the minimum sum is $1 it’s more beneficial to send $1,000, at least. TransferWise allows online transfers only.
WorldFirst specializes in transferring money online ever since its foundation in 2004, and presents plain and low-cost international services. The number of users has recently reached 75,000, and all of them have successfully transferred money overseas. The fee for every transaction starting at $500 is $10, but sending $10,000 or more is free. The company also offers hedging options, forward and spot contracts, and clients can use digital gadgets for transfers. On the down side, the number of currencies isn’t very huge, which can be a problem for some developing countries.
OFX has a transparent navigation system that shows consumer exchange rates in comparison with market rates. It used to be widely known as USForex, and mostly specializes in big sums, therefore sending $5,000 or more without a fee may be in a consumer’s interest. The platform requires a standard $5 fee+2.08% as exchange rate margin, so the total cost is $9.16. The consumers can set the options to only monitor rates they are interested in. A single transfer is more convenient for a one-time transaction, and a recurring transfer is more suitable for monthly arrangements. The minimum sum to send is $150.
Currencies Direct is an online platform launched in 1996 and transferring money overseas is one of their specialties. To send the preferable sum, consumers need to go through a simple process of registration, see the live exchange rates and then transfer the amount between the two bank accounts. And since the company uses local accounts in different countries the money goes through as soon as Currencies Direct gets them. The minimum amount to be sent online is £100, and the maximum is £15,000.
Azimo offers money transfer services for over 190 countries. The Financial Conduct Authoriity authorized the company, so it is as safe as it gets. The transfer duration depends on the way consumers pay and on the country, but usually it takes from one to three days.The fee is a little over $1 for both bank transfers and mobile operations, which is very convenient, especially for the smaller sums. The lower limit to send is $12, and the maximum for credit cards is $3,500. The users can check the status of the transfer at any time. It also offers a customer service in 9 languages.
Western Union has the biggest number of locations all over the world and specializes in transfers, and clients don’t need to have bank accounts to use its services. Founded in 1851, it has become one of the leading companies for sending money. The consumers have a variety of options: transfer money in person, online, or through the mobile app, use a credit or debit card, or cash. The fee depends on the country: the popular destination increases chances of paying less, or nothing at all. But with cash charges rise to at least $8, not including 1.80% exchange rate margin.
When consumers are looking for the cheapest way to send the money abroad, the level of security and the creditability of companies are as important as the low fees. The number of companies keeps growing, since online transfers have always been in-demand. Take some time to compare them, look at charts, do the calculations to decide whether it is better to send a big sum or a several little ones and make sure you have all the information required.
Exciting articles several times a month