The pound has plummeted to lower than 1.15 versus the euro and 1.3 versus the dollar, the best for many years. So locating the money transfer is much more essential than before. But this post is not about holiday money. It’s about people who have to send small sums regularly, and the ones making large one-off transfers, including buying a holiday property. It reveals that some providers are good for large sums, but pricey for smaller transfers – and it informs you 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 should be: “After each of the charges, the amount of euros/yen/dollars etc am i going to get for X pounds?” To achieve this, check simply how much you might be offered from the mid-market “interbank rate”, the velocity used when banks trade between an additional. You can check the live interbank rate on XE.com.
Secondly, you may be reasonably certian that this deal offered by your high street bank is going to be pretty lousy, unless you happen to be “premier” type customer transferring huge sums.
James Daley of Fairer Finance says: “Almost all major banks charge a fortune for transferring money overseas, and provide a bad exchange rate to boot. The great thing is that a number of alternatives give you far better value.”
Our third golden rule is that, if transferring a sizeable sum into a foreign account, first send a small sum and check it really has been received, just as much to make sure you have sent it to the right 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 give a poor exchange rate to boot
James Daley, Fairer Finance
Finally, remember there is certainly relatively limited protection should things get it wrong. The currency brokers could be “authorised” with the Financial Conduct Authority (FCA) or just “registered”. Authorised firms should keep clients’ money apart from the company’s own funds. In case a firm is merely registered with the FCA there’s a danger all the money is within the same pot and may be lost in the event the company went bust.
“Even in case a firm is FCA authorised, it’s essential to recognize that there is not any defense against the Financial Services Compensation Scheme in this sector,” says Daley. “So when a firm goes bust because of a fraud, there’s still a chance that you won’t get your money back. However, the potential risks if you’re utilizing a big brand are fairly small.”
In 2010, Crown Foreign Exchange, operating out of Hayle, Cornwall, went bust, leaving 3,000 people owed £20m. It used new customers’ cash to get rid of existing clients, as well as fund the purchase of a high end home. Three people active 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 exam on 29 July if the pound was fetching €1.19 and $1.32 respectively, but sadly they have 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 instead of registered, and it is a subsidiary of your Australian group, OFX. TransferWise can be a peer-to-peer service (see below), headquartered in London and run by Estonians. Investors in the industry include Richard Branson.
Worst within this bracket were MoneyGram and NatWest, which goes to show the reason why you shouldn’t automatically use well-known names. For £200, NatWest would give us only $229.31, in comparison with $260.94 from TransferWise.
Best for mid-size sums When transferring £2,000, the Currency Account (for euros) and TransferWise (dollars) were best. The Currency Account is a fairly new and small company, formed in 2014, and it is authorised from the FCA. It describes itself as a “hybrid” peer-to-peer plus direct market access company.
Ideal 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 is hardly any between it as well as the other brokers. HiFX came top from the bracket for dollars. HiFX was established in 1998 and is among the largest brokers, having transferred around £100bn since then.
Currency brokers There are numerous currency brokers or money transfer specialists. Included in this are MoneyCorp, Currencies Direct, CaxtonFX, TorFX, HiFX, UKForex, FairFX, Azimo and Xendpay. They basically all advertise “bank beating” rates, so how can they compare against one another?
A number of currency comparison sites can be purchased, however they won’t necessarily look for the best deal. If you’re looking for the most value for your money you would be better off gonna individual companies, acquiring a quote and asking just how long the transfer will take. If you notice a firm offering a great deal, take a look at its reputation by utilizing FXCompared, TrustPilot or a general Internet search.
Established firms tend to be, although not always, the most reliable. Some smaller brokers and “disruptive” web platforms temporarily stopped trading through the EU referendum aftermath.
Peer-to-peer services TransferWise is one of a new type of peer-to-peer operators which reduce banking institutions and brokers through providing a web-based meeting area for people wanting to buy each other’s currencies. You don’t send your hard earned dollars directly, rather to the currency exchange firm which in turn passes it on.
“Our exchanges are derived from free or extremely low-cost local banking 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, although the exchange rates are positioned by its users. In case there are no customers providing a significant rate for your personal exchange, CurrencyFair will element of and match with you. The website claims customers typically pay .35% from the amount exchanged including a fixed €3 transfer fee.
Other available choices
If you need to pay in cash or transfer money quickly, Western Union and MoneyGram have branches in the high-street – however their services usually are not cheap and just appropriate for small amounts. Even though the businesses themselves are legitimate, they are generally utilized by scammers, so be wary of strangers looking for payment by doing this.
PayPal will make it easy to send out money overseas, but was the most costly option in two the Guardian calculations. It whacks with a hefty conversion fee in order to pay someone in another currency.
This article was amended on 22 August to fix the season wherein the Currency Account was put in place. It ought to have said 2014, not 2011.
… we have a small favour to inquire. More and more people are reading the Guardian than ever but advertising revenues over the media are falling fast. And unlike many news organisations, we haven’t build a paywall – we would like to keep our journalism as open as we can. To help you discover why we must ask for your help. The Guardian’s independent, investigative journalism takes a lot of time, money and hard work to create. But we all do it because we believe our perspective matters – as it might well become your perspective, too.