The pound has plummeted to less than 1.15 up against the euro and 1.3 from the dollar, the smallest for many years. So locating the money transfer is more essential than ever before. But this post is not about holiday money. It’s about people who must send small sums regularly, and people making large one-off transfers, including getting a holiday property. It reveals that some providers are good for large sums, but pricey for smaller transfers – and it lets you know in order to avoid PayPal, which came out particularly poorly within our price survey.
Consumers should first cut through any nonsense about “no fees” or “no commission”. Your key question ought to be: “After all the charges, the number of euros/yen/dollars etc am i going to get for X pounds?” To accomplish this, check just how much you will be offered against the mid-market “interbank rate”, the rate used when banks trade between an additional. You can check the live interbank rate on XE.com.
Secondly, you can be reasonably certian that the deal made available from your high street bank will probably be pretty lousy, unless you happen to be “premier” type customer transferring very large sums.
James Daley of Fairer Finance says: “Almost all major banks charge a lot of money for transferring money overseas, and provide an inadequate exchange rate on top of that. The good news is that a variety of alternatives provide you a lot better value.”
Our third golden rule is that, if transferring a sizeable sum right into a foreign account, first send a tiny sum and look it really has been received, all the to ensure you have sent it to the right account as anything else. Only then should you send the entire amount.
Almost all major banks charge a lot of money for transferring money overseas, and provide a poor exchange rate on top of that
James Daley, Fairer Finance
Finally, remember there exists relatively limited protection should things go wrong. The currency brokers may be “authorised” from the Financial Conduct Authority (FCA) or maybe “registered”. Authorised firms ought to keep clients’ money apart from the company’s own funds. In case a firm is definitely registered together with the FCA there’s a risk every one of the money is incorporated in the same pot and could be lost in the event the company went bust.
“Even when a firm is FCA authorised, it’s essential to understand that there is not any protection from the Financial Services Compensation Scheme in this sector,” says Daley. “So in case a firm goes bust because of a fraud, there’s still a chance which you won’t get your money back. However, the potential risks if you’re by using a big brand are fairly small.”
During 2010, Crown Foreign Exchange, located in Hayle, Cornwall, went bust, leaving 3,000 people owed £20m. It used new customers’ cash to pay off existing clients, along with fund purchasing a high end home. Three people working in the scam have already been jailed.
We obtained quotes for moving £200, £2,000 and £150,000 into euros and dollars. We conducted the test on 29 July as soon as the pound was fetching €1.19 and $1.32 respectively, but sadly it has since fallen further.
Great for small sums When transferring £200 we found UKForex best for euros and TransferWise great for dollars. UKForex is FCA authorised as opposed to registered, and is a subsidiary of your Australian group, OFX. TransferWise is a peer-to-peer service (see below), headquartered inside london and run by Estonians. Investors in the commercial include Richard Branson.
Worst in this bracket were MoneyGram and NatWest, which goes toward show reasons why you shouldn’t automatically use popular names. For £200, NatWest will give us only $229.31, compared with $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 can be a relatively recent and small company, formed in 2014, and it 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 seemed to be almost no between it along with the other brokers. HiFX came top in the bracket for dollars. HiFX was established in 1998 and is probably the largest brokers, having transferred around £100bn ever since then.
Currency brokers There are loads of currency brokers or money transfer specialists. Such as MoneyCorp, Currencies Direct, CaxtonFX, TorFX, HiFX, UKForex, FairFX, Azimo and Xendpay. They virtually all advertise “bank beating” rates, but exactly how do they compare against one other?
Some currency comparison sites are available, however they won’t necessarily look for the best deal. If you’re looking for the most value for your money you will be more satisfied planning to individual companies, acquiring a quote and asking just how long the transfer is going to take. When you see a company offering a great deal, look at its reputation through the use of FXCompared, TrustPilot or a general Google search.
Established firms tend to be, although not always, 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 fresh breed of peer-to-peer operators which remove banking institutions and brokers through providing an online meeting spot for people planning to buy each other’s currencies. You don’t send your hard earned money directly, rather on the foreign exchange firm which in turn passes it on.
“Our exchanges are derived from free or extremely low-cost local bank 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, even though the exchange rates are positioned by its users. In cases where you can find no customers providing a decent rate for your personal exchange, CurrencyFair will element of and match with you. The site claims customers typically pay .35% from the amount exchanged plus a fixed €3 transfer fee.
If you want to pay in cash or transfer money quickly, Western Union and MoneyGram both have branches about the high-street – but their services usually are not cheap and just ideal for a small amount. And although the firms are legitimate, they are usually used by scammers, so be wary of strangers requesting payment by doing this.
PayPal could make it easy to transmit money overseas, but was the most costly option by 50 % the Guardian calculations. It whacks over a hefty conversion fee if you would like pay someone in another currency.
This post was amended on 22 August to correct the year wherein the Currency Account was setup. It should have said 2014, not 2011.
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