Exchanging currency and sending it overseas can be a very costly affair. Many people use their banks for overseeing these transactions, unknowingly paying through the nose for the privilege. This guide highlights some of the best things you can do to make sure your currency transfer goes through smoothly and doesn’t cost you an arm and a leg.
- Don’t use your bank if you can help it. Banks really are very expensive when it comes to foreign exchange. They take advantage of people’s ignorance and charge very wide spreads. On a $100,000 transfer, expect to pay $5000 +. To make matters worse the bank will normally charge an admin fee, something you can get around by using a different method of transfer.
- Compare rates. By using an online comparison service or even by calling a number of different companies asking for quotes, you will stand yourself in great stead for tips number 3!
- Barter. Again this isn’t something you can usually do if you are using a bank as they are very rigid with their rates but if you do end up using the services of a currency broker, make sure you haggle with them. The rate they will offer is normally discretionary and they will often rather reduce their spread slightly rather than see you take your business elsewhere. Like with any negotiation in life, be strong but don’t be too greedy as they have to make a profit too.
- Don’t leave things until the last minute. The longer you leave it, the less flexibility you are going to have with regard to who you can use. For example, brokers often require ID documents and if you leave it too late, you might not have enough time to get your account open. You might end up kicking yourself if you end up having to use your bank when you could have used the services of a currency exchange that could have saved you a load of money.
- Consider forward contracts. A forward contract allows you to buy currency at today’s rate to complete at a certain point in the future. For example, if the currency you need to buy in a years’ time is exceptionally weak today, you could fix the favourable rate by putting down a small deposit. You can then buy the currency in 12 months’ time at that favourable rate.