How to Keep International Money Transfer Fees and Exchange Rate Differentials below $1,000?
International money transfers are gaining prominence every year. The increasingly integrated nature of the global economy ensures that ITMs will play a big part in the average household’s financial activities. There are many reasons why people may wish to transfer money overseas. Foremost among them is the desire to own property abroad. Whether this takes the form of a primary residence or a vacation home is irrelevant. For many people in Third World countries, the opportunity to send their children abroad to study at prestigious universities and colleges is hard to resist.
International money transfers for college tuition purposes are rapidly gaining ground. For the savvy investor, money transfers for investment in foreign bourses and accounts have been taking place for time immemorial. Then, there are the migrant workers and new immigrants who move from Third World countries to developed countries. They are the most important component in international money transfers, and these remittances amount to more than $500 billion per year as at 2016. The precise value of these figures is difficult to pin down with a high level of accuracy. Indeed, immigrants have been credited with substantial annual transfers, typically with traditional money transfer services (banks) which are proving to be extremely costly.
The problem with sending money abroad is not the transmission mechanism per se, it’s the hidden fees, charges, commissions, and sky-high exchange rates that are levied by traditional banks and financial institutions. Fortunately, there are many disruptive companies entering this lucrative space. These FinTech companies are providing easy ways to process international money transfers, sans all the regulatory gobbledygook, fees and commissions. By bypassing bank wire fees, many companies don’t even need to transfer funds across international borders. All that needs to happen is that a deposit is made in your local currency at a local bank and it is picked up in the receiving country at a local bank. In other words, there are two different banks and no money needs to move from point A to point B. This negates the need to pay a wire transfer fee.
What Are Some of the Leading Forex Companies for International Money Transfers?
Besides the wire transfer fee, there are many other costs to bear in mind. Foremost among them is the exchange rate. Companies like World First, FC Exchange, Transfer Wise, Currencies Direct, Currency Fair, Moneycorp and others are fully regulated entities with FCA (Financial Conduct Authority) licensing. These companies typically don’t charge any wire fees, but if they do they are minimal. The real benefits of using these types of companies to transfer funds abroad is the competitive exchange rates that are offered. Since the spread is significantly less than High Street Banks, you get to keep more of your money in the transfer.
Consider the case of the GBP/USD at an exchange rate of 1.31. This indicates that for every £1 you exchange, you qualify for $1.31. However, if a bank offers you an exchange rate of $1.27 on every £1, you get less for your money than the actual exchange rate. Typically, the bank rate is reserved for interbank lending, and not for B2C purposes. Nonetheless, £100,000 may be worth $131,000, or $127,000 depending on where you buy your Forex. That’s why FinTech companies with competitive rates are fast-gaining the advantage over banks and traditional financial institutions. Depending on how much you are transferring, it is not outside the realm of possibility to save $1,000 + on your next international money transfer!
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