The pound has plummeted to under 1.15 against the euro and 1.3 from the dollar, the cheapest for a long time. So finding the money transfer is more essential than ever before. But this article is not about holiday money. It’s about those who have to send small sums regularly, and the ones making large one-off transfers, such as getting a holiday property. It reveals that some providers are good for large sums, but pricey for smaller transfers – and it informs you to prevent PayPal, which came out particularly poorly inside our price survey.
Consumers should first cut through any nonsense about “no fees” or “no commission”. Your key question must be: “After each of the charges, the amount of euros/yen/dollars etc can i get for X pounds?” To achieve this, check exactly how much you happen to be offered up against the mid-market “interbank rate”, the rate used when banks trade between one other. You can examine the live interbank rate on XE.com.
Secondly, you could be reasonably certian the deal provided by your high-street bank will likely be pretty lousy, unless you happen to be “premier” type customer transferring substantial sums.
James Daley of Fairer Finance says: “Almost all major banks charge a fortune for transferring money overseas, and give an inadequate exchange rate on top of that. The good thing is that numerous alternatives provide you with much better value.”
Our third golden rule is the fact, if transferring a sizeable sum in a foreign account, first send a tiny sum and appearance it really has been received, just as much to make sure you have sent it to the right account as anything else. Only then should you send the total amount.
Just about all major banks charge a lot of money for transferring money overseas, and give a terrible exchange rate to boot
James Daley, Fairer Finance
Finally, remember there exists relatively limited protection should things go wrong. The currency brokers may be “authorised” by the Financial Conduct Authority (FCA) or maybe “registered”. Authorised firms ought to keep clients’ money outside of the company’s own funds. If a firm is simply registered using the FCA there’s a danger every one of the money is with the same pot and might be lost if the company went bust.
“Even when a firm is FCA authorised, it’s crucial that you recognize that there is not any protection from the Financial Services Compensation Scheme with this sector,” says Daley. “So if a firm goes bust because of fraud, there’s still the opportunity which you won’t get a refund. However, the potential risks if you’re employing a big brand are fairly small.”
In 2010, Crown Foreign Exchange, operating out of Hayle, Cornwall, went bust, leaving 3,000 people owed £20m. It used new customers’ cash to settle existing clients, along with fund purchasing a luxurious home. Three people working in the scam have been jailed.
We obtained quotes for moving £200, £2,000 and £150,000 into euros and dollars. We conducted the exam on 29 July if the pound was fetching €1.19 and $1.32 respectively, but sadly it provides since fallen further.
Ideal for small sums When transferring £200 we found UKForex ideal for euros and TransferWise perfect for dollars. UKForex is FCA authorised instead of registered, and is a subsidiary of your Australian group, OFX. TransferWise can be a peer-to-peer service (see below), headquartered in London and run by Estonians. Investors in the business include Richard Branson.
Worst in this particular bracket were MoneyGram and NatWest, which goes toward show reasons why you shouldn’t automatically use famous names. For £200, NatWest would give us only $229.31, compared to $260.94 from TransferWise.
Best for mid-size sums When transferring £2,000, the Currency Account (for euros) and TransferWise (dollars) were best. The Currency Account can be a relatively recent and small company, formed in 2014, which is authorised from the FCA. It describes itself as being a “hybrid” peer-to-peer plus direct market access company.
Perfect for large sums We checked rates on moving £150,000, a sum where you would be seriously upset if anything went wrong. Again, the Currency Account came top for euros, though there was clearly very little between it along with the other brokers. HiFX came top inside the bracket for dollars. HiFX was established in 1998 and is amongst the largest brokers, having transferred around £100bn ever since then.
Currency brokers There are loads of currency brokers or money transfer specialists. Included in this are MoneyCorp, Currencies Direct, CaxtonFX, TorFX, HiFX, UKForex, FairFX, Azimo and Xendpay. They just about all advertise “bank beating” rates, so how do they really compare against one another?
A few currency comparison sites can be purchased, but they won’t necessarily get the best deal. If you’re looking for the most value for your money you would be better off going to individual companies, obtaining a quote and asking how long the transfer can take. Once you see a firm offering a great deal, take a look at its reputation by making use of FXCompared, TrustPilot or perhaps a general Internet search.
Established firms are usually, although not always, probably the most reliable. Some smaller brokers and “disruptive” web platforms temporarily stopped trading in the EU referendum aftermath.
Peer-to-peer services TransferWise is just one of a brand new breed of peer-to-peer operators which remove the banks and brokers by supplying a web-based meeting place for people seeking to buy each other’s currencies. You don’t send your hard earned dollars directly, rather towards the forex firm which then passes it on.
“Our exchanges are based on free or extremely low-cost local banking account transfers. We don’t send money overseas, so can cut out the crazy fees that banks charge consumers,” says Taavet Hinrikus, co-founder of TransferWise.
Another peer-to-peer platform, CurrencyFair, works within a similar way, although the exchange rates are set by its users. In the event that there are no customers providing a good rate to your exchange, CurrencyFair will part in and complement you. The website claims customers typically pay .35% of the amount exchanged along with a fixed €3 transfer fee.
If you have to pay in cash or transfer money quickly, Western Union and MoneyGram have branches around the high street – however services usually are not cheap and only suitable for a small amount. And even though companies are legitimate, they are often used by scammers, so be suspicious of strangers seeking payment this way.
PayPal might make it easy to deliver money overseas, but was the highest priced option in two the Guardian calculations. It whacks over a hefty conversion fee if you would like pay someone in another currency.
This informative article was amended on 22 August to improve the season where the Currency Account was create. It should have said 2014, not 2011.
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