How To Compare Exchange Rates
If you are transferring money abroad, it can often be difficult to work out whether you have the best deal. There are a number of factors to consider when comparing quotes between banks and any prospective foreign exchange brokers, including: transfer fees, commission charges and exchange rates. It’s important that you check all the factors involved to make sure you get the most currency for your money. So in this article BritishExpats partner Moneycorp breaks down and explains each one.
If you are transferring money abroad, it can often be difficult to work out whether you have the best deal. There are a number of factors to consider when comparing quotes between banks and any prospective foreign exchange brokers.
When making an international money transfer there is often a fee involved. This is likely to be dependent on the size of the transfer, as well as the method. For example, it’s often cheaper to send currency online as there are fewer staffing costs involved for the provider.
Banks typically charge between £25 and £40 for a transfer. Our bank comparison on BritishExpats.com shows some recent charges from HSBC and Lloyds TSB.
Brokers tend to charge less. For example, Moneycorp applies a £15 fee for a telephone transfer and online transfers only cost £10. Plus, if you use their Regular Payment Plan fees are as low as £4 per transfer.
There are also some foreign exchange specialists who offer transfers for free. These savings can make a big difference to the overall cost of transferring money; however, it’s vital you check all factors to make sure you’re making the most of your money.
These are more traditional on the high street for the physical purchase of travel money. However, it’s still important to check whether any commission charges do apply to your transfer. Historically (with travel money) these charges can be as high as 2% of the amount being exchanged.
The exchange rate you receive from a bank is likely to differ from that offered by a foreign exchange broker. This is mainly due to the “˜spreads’ that they apply to the interbank exchange rate (the commercial exchange rate at which banks trade with each other).
The size of this “˜spread’ can be dependent on the size of the transfer. Often, the higher the amount being transferred, the lower the spread or cost. Banks typically apply a spread of between 3% and 5%, while brokers usually only charge 0.5-2%.
Also, whether you have paid a transfer fee can impact on the spread offered. A lower transfer fee may indicate that the cost saving has simply been “˜transferred’ over to the spread – so you effectively get a less favourable exchange rate.
Finally, it’s important to take into account the potential benefits of using a foreign exchange specialist. If you choose to make your transfer over the phone with a Moneycorp dealer, there are certain tools they can use to make sure you transfer your funds when the rate is in your favour.
By trading at the right time you can save a significant amount of money. Click here to see how Moneycorp saved a client almost $80,000.
Overall, it’s important that you check all the factors involved in making your transfer when comparing the exchange rates and the deals on offer – to make sure you get the most currency for your money.
For more information on the latest rates, please visit the Exchange Rate Zone. You can also find out about the free transfers special offer from Moneycorp – exclusively for members of BritishExpats.com