Travel Money: Money Transfers Frequently Asked Questions

Answers to Frequently Asked Questions

Who are specialist foreign exchange brokers?

Foreign exchange brokers specialise in currency exchange and allowing people to transfer money from one currency to another for international payments. For example if you need to pay a mortgage on a house overseas, if you are emigrating and want to send money abroad or if you are making a lump sum purchase overseas then foreign exchange specialists can help.

How do I know if I need to use a broker?

If you need to transfer money abroad, separate to holiday money, of amounts more than c. £3000 then a specialist foreign exchange broker can help. As these providers specialise in currency exchange they can offer you a range of products to help make the transfer easier for you, e.g. fixing the rate for a point in the future, or setting a minimum limit on the exchange rate before the transfer is made etc.

If you need holiday money or to transfer less than £1000, then it can be very time consuming and less cost effective to use a broker and your bank will be able to offer more suitable services.

Is it cheaper to use my bank?

Generally, no. If you need to send money abroad, specialist foreign exchange brokers can often offer a much better deal than banks as they have much lower overheads and focus only on foreign exchange. Typically the foreign exchange margins are below 1% for foreign exchange specialists, whereas banks will usually charge upwards of this for international payments and transactions between international accounts. Most brokers estimate they can save you up to 4% compared to using your bank for a money transfer.

What options are there for international money transfers?

There are a range of different foreign exchange products available when you need to make your international payment. The key products are explained below:

• Spot contract: If you need to transfer money quickly this gives you the exchange rate available at that time.
• Forward contract: buy now, pay later. Forward contracts allow you to fix an exchange rate for up to two years in advance, protecting yourself from any currency fluctuations. If you know what date you will be completing a house purchase for example, this is a good option.
• Time option: This is similar to a forward, but you can draw down all or some of your funds up to three months before the original date set, giving you an extra degree of flexibility.
• Limit order: If you want to protect yourself from any declines in the exchange rate, a limit order allows you to set threshold levels so that the transaction occurs as soon as a set exchange rate is met. Perfect if you have a set budget
• Regular payments: If you have a mortgage overseas or have emigrated and want to receive a monthly income, a regular transfer can help you save money each month, quarter etc

What is foreign exchange margin spread?

The foreign exchange margin spread gives an indication of the typical margins applied by foreign exchange specialists on the currency exchange rate.

The foreign exchange margin is the amount the bank or broker adds onto the interbank exchange rate when they quote the rate to the consumer. The bigger the margin, the more each international money transfer will cost you.

The spread gives an indication of the possible margins the brokers will charge. The actual margin quoted will depend upon the amount transferred, the currencies involved etc.

What fees should I look out for?

When making an international money transfer you will usually be charged a nominal fee for your transfer, especially if you are sending smaller amounts of money overseas. However, some brokers will actually waiver these fees for large transactions. These are normally termed transaction or commission fees.

You can compare the fees on our comparison tables, and each broker will be able to explain their fees in more detail.

What do I do if the money doesn’t arrive?

If your international money transfer does not reach its destination account then you need to contact the foreign exchange broker you used with your receipt. They will be able to let you know why the money has not arrived, and what actions you need to take.

Will there be a fee to pick up the money?

There can be a fee to pick up the money, usually charged by the recipient’s bank for depositing the money or depending upon the withdrawal or cash transfer method used to access the money in its destination account. The foreign exchange brokers will be able to offer advice on this.

What questions should I ask the foreign exchange broker?

There are a few different things it is useful to check with the foreign exchange brokers before deciding on a provider. Such as:

• What foreign exchange margin will be applied?
• What fees will you need to pay?
• Can they guarantee delivery of the money by a certain date or time? Or how long will the transfer take?
• If this timeframe is not met, are you covered in case of any financial repercussions?
• Will there be a fee when the money is picked up?
• What happens if the money does not arrive?