willielad

Any insights on the least expensive way to transfer funds from a US bank account to a UK account would be appreciated. Did a transfer today and the mark up on the exchange rate was from 1.33 to 1.38, they used the Wells Fargo Exchange rate. I was expecting a mark up, but wondering if i can do better than this. Thanks

Pulaski

Using a bank wire was an expensive mistake.

An on-line FX broker-remitter is the way to go. Worldfirst and Transferwise are often recommended on BE and seem to be among the cheapest. Others include xoom, and xe,com. I think Transferwise transfers at very close to the mid rate and charges ½%, so massively better than Wells Fargo or any other bank.

Be aware that for any on-line broker you will need to go through the same sort of process as for opening a bank account - so proof of name, address, date of birth, and (for the US) your SSN. In other countries they might expect to see a copy of your passport. Also some on-line brokers are not authorized to serve customers resident in the US.

MinMax

I will be transferring money from US to UK in perhaps mid-October. One suggestion I received was a "forward contract" in which I would open an account now and presumable (I have yet to follow up on this) establish a rate which would be locked in regardless of how the exchange rate went up or down.

I'm thinking this might be a good idea, depending on what rates are on offer, because of the wild card of the US election, when the dollar could crash.

Does anyone have any thoughts/knowledge of this option?

Pulaski

(i) a forward has a fee, which immediately stacks the deck against you.

(ii) any movement between now and the transfer date is as likely up as down, and the most likely movement is "not much".

(iii) you're locked in even if the market moves in your favour - an FX option might be a better bet - take the option rate if the market moves against you, or forget the option and take the market rate if it moves in your favour. (Actually with an option you settle for cash, effectively compensating you if the market moves against you, rather like insurance).

(iv) unless you're moving $millions it would be a lot of faffing around for very little benefit. I never recall hearing of anyone bothering to take such extreme measures for really very little benefit.

(v) who said the dollar might "crash"? The stock market might crash, but the dollar is a global currency, and a huge one at that, the chances of a sudden move in the value of the dollar is slim, and likely to be reversed within a few days. Any volatility or movement is far more likely to be on the GBP side of the exchange rate than the USD side.

(vi) further to (v), the likelihood is that the pound will slide further because of Brexit, and the dollar will rise because the Fed is about to raise interest rates.

J.JsOH

I've been moving money occasionally from US to UK for a few years with xe.com
I stopped trying to guess what might or might not happen and I just execute a transfer when the funds are ready to move.
Ups and downs on the rate, it is what it is and not, for me, worth stressing myself over.

MinMax

Thank you for this very clarifying answer. Could you explain your point iii a little more?

Pulaski

Well a forward is fixed - you are contracted to pay, say $130,000 for £100,000.

With an option, you pay a premium (effectively a fee), for the right but not the obligation to pay, say, $130,500 for £100,000. The fee might be $1,000. If on the date the option matures the rate is $1.295, you forget the option and buy at the market rate, however if the rate is, say, $1.33, you exercise the option and buy at $130,500 (what actually happens is you buy at market, $133,000, and the broker that sold you the option pays you $2,500 to give you a net price of $130,500).

However per (iv) above, IMO it's a lot of faffing around (and it is a bit more complicated than my outline description above) not much likelihood of benefit.

MinMax

Yes, whatever it is is what it is, it always comes down to that. But this is the proceeds from the sale of my apartment and the only large sum I am ever likely to see, so I rather want to do it the most sensible and cost-effective way. Using one of the transfer companies myself does seem to be the best way, given the responses, and that's what I need to know. And you have given me another company to check. Thank you!

MinMax

So I'm opting for cutting the faffing and just checking out three company's rates, WorldFirst, Transferwise and xe.com, and doing it myself. I'm, obviously, new to this and I wanted to see the bigger picture, but I feel I have that now and can just get on with it.

So now I shall start focussing on opening a bank account in the UK!

MinMax

I seem to have sortd the bank account so am back now to the money transfer question.

I had settled on Transferwise as a good company to use, but then read various reviews, one of which suggested no-one in their right mind would transfer large amounts of money (I'm transferring the proceeds of my NYC apartment sale) without a person involved. I'm not clear whether that would mean using a company where you could talk to a (still-anonymous) person on the phone, or using a broker.

Another thought is to use Transferwise but transfer the money in increments.

One of the reviews also said that for larger sums somewhere like Moneycorp could give a better rate than Transferwise.

Any thoughts anyone? My move now looks like happening in the second half of October, but I'd like to get all practical aspects settled so I can start partying! So many people to see before I go--40 years worth of friends and colleagues.

Pulaski

Some people have an aversion to using on-line brokers but the better known ones are well established and have a good reputation. And money cannot just "go missing" (it still travels through the banking system, so csn always be traced to somewhere), so IMO the risk is very low. I used xe,com to transfer the proceeds of the sale of my house 14 years ago and didn't worry about "not having a person to speak to".

Per my advice above, I would be sceptical whether any broker could beat Transferwise on fees and charges.

MinMax

So perhaps I am well settled with Transferwise after all. I will send it in batches though at least at first.

And thank you for your prompt reply! You are a wonder.

Pulaski

That's not an unreasonable plan - it will smooth out some of the volatility in exchange rates, but be sure to send (if possible) amounts significantly exceeding $10,000 at a time (say $11,000-$12,000 or more) because banks take a dim view of patterns of multiple credits of $10,000 or just under, because it looks like you're trying to hide something. It likely wouldn't make any difference, but I would still recommend avoiding irritating your bank.
Thank you, you are very welcome.

MinMax

Yes, I'd be able to do that, excellent idea. Thank you!

scot47

You could do it the Third World Way. Get all your money in used dollar bills, put it in a suitcase and dly to your destination.


A poster here did that when emigrating to Canada and was surprised when he got a telling off from some irascible posters here.