If You Plan to Send Money Overseas, Please Don't Do This
When it comes to international payments, there's a right way and a wrong way to send them. Do you know the difference?
With the pound at a low against the dollar and the euro, it's important to get a good deal when you're making international payments. If you're not careful, you could be paying more than you have to. And if you send money regularly, it's even more crucial that you know exactly how to do it the right way.
So, what is
the right way, and what is the wrong way to send money overseas?
Here's (Probably) the Wrong Way to Make International Payments
If you compare advertisements for services that do international money transfers, you'll invariably see a lot of claims about "no fees" or "no commissions". But as a savvy consumer you should learn to cut through the claims and answer one very simple question:
"How much is it going to cost me to send my money abroad?"
And there's one factor that makes more of a difference than all the rest combine... the exchange rate
. Remember just above, where we reminded readers that the Pound isn't doing so well against the major world currencies? That's the main reason you'll need to focus on currency exchange rates over any other factor.
For many, their first thought of where to go to transfer money abroad is their bank. But, as many others have discovered, this may actually be the last
place you want to end up making your transfer.
That's because most major banks charge very high prices for this service. Not only do they charge high fees, but they also give quite terrible exchange rates too! Unless you're a high-balance customer transferring extraordinarily large sums of money, banks aren't interested in giving you a very good deal because it's not worth their while.
It certainly seems, based on fees and rates, that banks aren't very interested in attracting customers who want to send money overseas.
What About PayPal?
PayPal is, first and foremost, extremely convenient. Even people without a PayPal account can send money using the service, which uses major credit card integrations with companies like Visa and MasterCard to make payments possible.
PayPal is also widely known, used all over the globe, and visible on most major online shopping sites.
But the one thing PayPal isn't is cheap. Their currency conversion fee is relatively high when you look at all your options. In a comparison study
done by The Guardian, £2,000 got you 2,307.39 in Euros through PayPal. That's lower than for every other method used in the research, including Western Union.
Multiply that difference over the course of a year, and for anyone making regular international payments, it adds up to quite a lot. So, what's a better way to send money online?
Here's a Better Way to Send Money Online
For most consumers, sending money to someone overseas is preferably done online. Unless you have regular business in downtown London, for example, online is the way to go. Both Western Union and MoneyGram may have branches all over your city, but they're only a step above PayPal on the affordability scale. Plus, they only allow small amounts for transfer.
Plus, with the proliferation of scammers who use Western Union and MoneyGram, you must be on your toes when using them to send money. The companies themselves are above board of course, but scammers love to use their services.
So... What is the Right Way to Send Your Money Abroad?
Since banks are expensive, PayPal offers terrible exchange rates, and Western Union and MoneyGram are risky and expensive, what's left?
Individual companies like ACE-FX offer the most bang for your buck, as well as a good balance of value, quality, and customer service. Some even have local branches (ACE-FX has several in London) so if you'd prefer not to send money online but rather in person, you have that option.
Maybe you feel uncomfortable using a smaller company whose name you don't recognize? That's what third-party review companies like TrustPilot are for. Check out any international money transfer company on TrustPilot or even perform an internet search on their name to see if you can dig up any dirt or hopefully, some positive reviews on their services and their rates.
And don't forget to make sure the provider you've chosen is authorised by the FCA. That's the regulating authority for these companies, and it signifies compliance you'll want to know is in place.