The pound has plummeted to lower than 1.15 up against the euro and 1.3 versus the dollar, the lowest for a long time. So finding the money transfer is much more essential than in the past. But this post is not about holiday money. It’s about those who need to send small sums regularly, and the ones making large one-off transfers, like investing in a holiday property. It reveals that some providers are good for large sums, but pricey for smaller transfers – plus it tells you to prevent PayPal, which arrived particularly poorly in our price survey.
Consumers should first cut through any nonsense about “no fees” or “no commission”. Your key question must be: “After all of the charges, just how many euros/yen/dollars etc am i going to get for X pounds?” To get this done, check exactly how much you might be offered versus the mid-market “interbank rate”, the pace used when banks trade between one other. You can check the live interbank rate on XE.com.
Secondly, you can be reasonably certian that this deal offered by your high street bank will probably be pretty lousy, unless you are a “premier” type customer transferring huge sums.
James Daley of Fairer Finance says: “Almost all major banks charge a lot of money for transferring money overseas, and give an inadequate exchange rate on top of that. The good news is that numerous alternatives provide you with much better value.”
Our third golden rule is, if transferring a sizeable sum right into a foreign account, first send a little sum and view it really has been received, just as much to ensure you have sent it to the correct account as whatever else. Only then in case you send the full amount.
Almost all major banks charge a lot of money for transferring money overseas, and present a poor exchange rate to boot
James Daley, Fairer Finance
Finally, remember there may be relatively limited protection should things get it wrong. The currency brokers could 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. In case a firm is simply registered with the FCA there’s a danger each of the money is with the same pot and could be lost in case the company went bust.
“Even if your firm is FCA authorised, it’s vital that you understand that there is absolutely no protection from the Financial Services Compensation Scheme in this particular sector,” says Daley. “So when a firm goes bust due to a fraud, there’s still an opportunity that you won’t get a refund. However, the potential risks if you’re utilizing a big brand are fairly small.”
In 2010, Crown Foreign Currency Exchange, operating out of Hayle, Cornwall, went bust, leaving 3,000 people owed £20m. It used new customers’ cash to pay off existing clients, in addition to fund the purchase of an extravagance home. Three people involved in the scam are already jailed.
We obtained quotes for moving £200, £2,000 and £150,000 into euros and dollars. We conducted the test on 29 July once the pound was fetching €1.19 and $1.32 respectively, but sadly it offers since fallen further.
Best for small sums When transferring £200 we found UKForex ideal for euros and TransferWise best for dollars. UKForex is FCA authorised rather than registered, and it is a subsidiary of any 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 within this bracket were MoneyGram and NatWest, which would go to show the reasons you shouldn’t automatically use famous names. For £200, NatWest gives us only $229.31, compared to $260.94 from TransferWise.
Great for mid-size sums When transferring £2,000, the Currency Account (for euros) and TransferWise (dollars) were best. The Currency Account is really a relatively recent and small company, formed in 2014, and is authorised through the FCA. It describes itself like a “hybrid” peer-to-peer plus direct market access company.
Great for large sums We checked rates on moving £150,000, a sum where you will be seriously upset if anything went wrong. Again, the Currency Account came top for euros, though there was very little between it and also the other brokers. HiFX came top in the bracket for dollars. HiFX was established in 1998 and is one of the largest brokers, having transferred around £100bn 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 virtually all advertise “bank beating” rates, but exactly how will they compare against one another?
A few currency comparison sites are available, however they won’t necessarily get the best deal. If you’re looking for the best value for your money you will be better off planning to individual companies, receiving a quote and asking how long the transfer can take. If you notice a company offering a great deal, take a look at its reputation by using FXCompared, TrustPilot or a general Internet search.
Established firms are generally, however, not always, by far the most reliable. Some smaller brokers and “disruptive” web platforms temporarily stopped trading throughout the EU referendum aftermath.
Peer-to-peer services TransferWise is just one of a whole new type of peer-to-peer operators which remove the banks and brokers by offering an online meeting spot for people planning to buy each other’s currencies. You don’t send your hard earned money directly, rather for the currency exchange firm which in turn passes it on.
“Our exchanges derive from free or extremely low-cost local bank account transfers. We don’t send money overseas, so can remove the crazy fees that banks charge consumers,” says Taavet Hinrikus, co-founding father of TransferWise.
Another peer-to-peer platform, CurrencyFair, works in a similar way, though the exchange rates are positioned by its users. In case you will find no customers providing a good rate to your exchange, CurrencyFair will part of and complement you. The website claims customers typically pay .35% of your amount exchanged including a fixed €3 transfer fee.
If you want to pay in cash or transfer money quickly, Western Union and MoneyGram both have branches around the high street – but their services are certainly not cheap and merely suitable for a small amount. And even though the firms are legitimate, they are usually utilized by scammers, so be suspicious of strangers seeking payment by doing this.
PayPal will make it easier to deliver money overseas, but was the costliest option by 50 % the Guardian calculations. It whacks over a hefty conversion fee if you want to pay someone in another currency.
This short article was amended on 22 August to correct the entire year when the Currency Account was put in place. It must have said 2014, not 2011.
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