On transferring money from UK pensions/regular payments abroad

There are many reasons why people return from their overseas adventure sadder but wiser. These include:

• The death of a loved one or partner
• The wrong choice of destination
• Realising too late that they prefer their homeland after all
• Their mortgage payments have become too much
• Not being able to live on their pension.

The final point raises the question of why they can no longer live on their pension. Presumably when they went out they had planned carefully so as to ensure that they could live comfortably for ever and a day, so what changed?

Well, the dramatic events of the last few years have changed things considerably. Northern Rock was a real shock to the currency market which saw sterling fall from the €1.50ish/£1 level to the €1.25ish/£1 level. But surely this was a one off? The UK and the world banking system couldn’t possibly be about to implode - surely they weren’t that stupid…?

Well, were they that stupid? Some certainly were, but greed seems to have been the main catalyst for the worldwide economic collapse. That, plus a lack of government control that would have ensured that the excesses were avoided in both the UK and the US. So we saw Lehman Brothers go bust and RBS and the Halifax/ Lloyds Banks needing to be bailed out by the UK government.

The net result was sterling nearly hitting parity against the euro. This in turn meant that, in the space of 18 months, those receiving their pensions in euros saw its value drop by about one third.
You may ask how a currency company like Smart can help individuals when they make regular transfers and pension payments abroad. They are not miracle workers but there are two things that can and will help:

The first thing is to reduce the cost of each transfer, but how does Smart Currency do this?

By giving you a much better a much better rate than the bank and minimising, if not eliminating altogether, add on costs. Soon after Smart Currency Exchange opened for business in 2004, a client who was emigrating abroad confirmed how much better Smart’s rates were than the bank’s. After completing his initial euro transfer to purchase his new home, he was ecstatic about the excellent service received and confirmed savings of over £20,000 compared to his high street bank. Effectively he had saved enough money to pay his legal costs, removal costs and buy some new furniture for his new home – not bad going.

Since then Smart has transferred his pension each month thus saving him at least £75 each month compared to the rate he would get from his bank. So each year Smart saves him over £900 - he has an extra €1,000 in his pocket rather than the bank’s.

But he has also eliminated the add-on transfer cost that the bank charges for sending funds abroad. This could be as much £25 per transfer. So in fact he has saved in the order of £100 a month or £1,200 per year! In the current climate that extra €1,400 per year is not to be sneezed at!

So let’s work out what he could theoretically save over the lifetime of his relationship with Smart. Assume that he lives for at least another 25 years: using Smart Currency will have saved him £20,000 initially and £30,000 on his pension payments over the 25 years, making a total saving of £50,000. That means an extra €60,000 to spend on his new life abroad - a great result.

The example given above is a good starting point in today’s difficult climate but even more can be done by better forward planning.

Exchange rates have become extremely volatile over the last few years. Within the last twelve months we have seen a minimum exchange rate of €1.06/£1 and a maximum rate €1.19/£1. So if, in the course of the year, if you were transferring say £1,000 a month and you bought all your euros at the peak rate you would receive €14,280. But if you bought at the bottom you would have received €12,720. That’s a difference of €1,560.

Admittedly you would be very lucky to buy at the highest or sell at the lowest rate as no one can be sure when these extremes are reached, even those who have been in the industry for years. Exchange rates move quickly so peak or bottom rates are only available for a fleeting moment.

What Smart suggests is that clients first decide on an exchange rate that is realistic in the current environment and that works for them. Then the client should plan on ‘buying the currency forward’, within say the next 6 or 12 months. This may sound complicated but it’s really quite simple.

‘Buying forward’ means that you agree an exchange rate for a specific amount of euro’s for an agreed period in the future. Smart then phones into the market as the rate changes, trying to meet your exchange rate objective. This option of buying forward is usually not offered by the banks as it would be too time consuming. Generally banks set their rate early in the day and set it so that what ever happens during the day they do not lose money!

Recently we have secured forward contracts for clients making regular transfers to Euroland at rates close to €1.17/£1. If the forward contract was for a full year then the client would receive €1,700 a month for the next 12 months. This is an improvement of €1,320 over the minimum amount as noted above.

Of course exchange rates could improve further but that is a risky assumption in the current climate. And are you willing to forego certainty for potential gain? Many are…and it means that, if rates do improve, you can take advantage of those rates at a future date.

So it could be argued that using the services of a company like Smart Currency Exchange Limited could benefit you up to €100,000 over a 25 year period. And most of us would think that is a benefit worth having.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

Ken and Sarah's 'Smart' Experience

Over the years Ken and Sarah Smith have travelled extensively abroad. However, it was while holidaying at a neighbour’s home overseas that it occurred to them to actually build their own holiday home in the sun.

“I had retired, and we decided that if we didn’t do something about it now, we never would” recalls Ken. “Sarah is still working, but we wanted a holiday home where we could really relax and enjoy life, with the intention of staying for longer periods as we get older. I had the time to put into the project, so we bought a plot and hired a local builder.”

The first payment on the new property was a deposit of €37,000 which Ken did through their local high street bank, and found it to be a massively expensive process. “I sent the money through the bank and found it hard to believe the amount they charged for the process” says Ken. “It was only on hearing about a currency company, information that Sarah picked up on searching the Internet, that I first learnt about currency companies and what they do. Needless to say, once introduced to this money saving way to ensure the best rates, I have used them ever since.”

Ken recalls: “There were more stage payments to come for the off-plan property: €13,000 for the first stage then 3 tranches of €60,000 and then finally a completion payment of €2,000. After my initial money transfer, the follow up at the currency company was excellent. I spoke to various individuals, all of whom were friendly and to the point. All my initial concerns were answered and I found the actual process extremely easy.

They talked me through the whole process, even advising on the wisdom of ‘forward buying’ – locking the currency in at that day’s rate for a time in the future. That way I could ensure that, if the rates went against us – as indeed they did do – I was safe and would only pay what I had agreed to on the day”

Ongoing dealings with a currency company rather than a bank proved easier than expected for Ken and Sarah, with the added bonus of money saved: “We will have saved hundreds of pounds by the time the building is completed. This plus I plan to transfer some funds into my overseas savings account on an ongoing basis. Also I am kept updated on currency trends” adds Ken.

Currency fluctuations, previously not really taken into account, now became an important topic of concern as Ken realised how much money could be saved by exchanging currency at the right time. It helped to have a dedicated dealer monitoring the rates for him on an ongoing basis. This plus no commission charges and no transfer fees made a huge difference to Ken and Sarah’s bottom line.

“Once I realised that not every organisation charged the same rate I started watching the rates.” he says. “I am, by my own admission, a ‘tight git’. But now, with the passage of time, trust has been established and I don’t bother to compare rates. I won't change now. Follow up is excellent and the educational reports I receive are of enormous value.”
Ken has recommended several friends to his currency company. They have all taken a leaf out of his book and are now sending money abroad through a currency company, at better rates and with far cheaper costs. Summer is on its way, and Sarah and Ken look forward to the time when they can relax in their own lovely home in the sun.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

How much extra are you paying for your holidays billed in foreign currency?

The most common way to book a holiday is through a UK-based travel agent or website; however there are instances when the booking is done overseas. With an overseas booking the invoice is often sent in a currency other than British sterling.

For example, Simon Brown decided to change tradition and book a villa for Christmas in St. Lucia. His plan was to fly his family out along with relatives stateside to spend the festive holiday in the sun.

The villa was found on a American-based website and although there was a currency converter to help with the conversion from US dollars to British pounds the invoice was sent out in US$. The total due was $5,000 which was split into two payments. Mr Brown’s initial action was to contact a bank to find out how to make an international payment however a friend recommended that he used a currency exchange company.

Currency exchange companies specialise in moving money in and out of the UK through bank to bank transfers – as opposed to supply cash for travel money. By specialising in this very specific process, specialists are able to get rates far better than offered by the high street bank. Furthermore they can offer options to lock in exchange rates for future payments that are not readily available from the banks.

In Mr Brown’s case, he signed up with a currency specialist to determine whether or not the exchange rate offered would be better than the bank. Mr Brown explains, “After comparing rates, I was gobsmacked to discover that if I used the bank, I’d have to cough up and extra £300. And what made me even happier is that the specialist didn’t charge for the transfer giving me £25 (for each transfer) more in savings.”

Mr Brown was given the option to buy half the currency now and the remainder closer to the due date; however he felt more secure to fix the current exchange rate for both payments.

“If the exchange rate gets worse in the next few months before the 2nd payment I don’t want to find extra money to make up the difference. With the bank I wasn’t offered this option,” explained Mr Brown.

In this case, Mr Brown sent the sterling due immediately and for the 2nd payment he simply needs to send the fixed amount when it’s due. By fixing the exchange rate Mr Brown knows exactly how much the holiday villa will cost and won’t have any nasty increases to ruin Christmas!

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

Getting Your Money to Your Destination

by Smart Currency’s Charles Purdy.

There are a lot of advantages to using a currency company such as Smart Currency Exchange; better rates, one to one service, proactive management of currency requirements... the list goes on.

But one of the major advantages sometimes overlooked is that, as well as being experts in foreign currency, Smart Currency Exchange are also experts in transferring money. This may not seem such a big deal but getting a transfer wrong can be a hugely time consuming and frustrating experience to rectify.

The details required for transfers seem to vary from continent to continent and we have a clear understanding of what is required. If there is something unclear or lacking we would ask our client to clarify: better to get it right the first time.

Transfers of the euro have become much easier with the advent of what is called the IBAN number. This number is unique for a specific bank account and it can be checked for validity before sending the funds. The only time I have experienced a problem was when a client’s lawyer gave him a wrong but valid IBAN number. Thankfully this was realised very soon after the transfer and we were able to correct error with no loss of time.

Time is also an important element when making a transfer. The whole banking system is based on a time period of two days for transfers. The reason for this seems to be one of logistics and coordination between the banks [or am I being naïve and it is really a way for them to make more money?!]. This two day period still applies to most transfers but for the US$ and euro we can now transfer with a same day value. Needless to say there is a cost, but we absorb it – no hidden charges at Smart!

I hope the above is of help. It is the unglamorous side of the business but a key component in ensuring that clients are properly serviced.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

Can you afford to lose £4,000?
The economic crisis is certainly causing issues for people all over the world, yet in the world of international money transfers there are actions that can be taken to safeguard your money – especially if different currencies are required. International payments include payments between countries for property, the movement of pension payments, transferring savings or paying for any goods or services in a currency other than the one you have. Working with an international payments specialist rather than using a bank will allow you to save money over using the bank AND provide you with options that can minimise financial losses.

Moving Large Lump Sums of Money Internationally
Do you need to pay a staged payment for a property? How about moving funds from the sale of a property abroad back to the UK? Regardless as to the reason for moving money – or where you need to move it to - it’s important to realise that for every £/€100,000 you move, you could pay around £/€4,000 unnecessarily if you use a bank. Banks around the world add a margin of around 4% more than the margin used by international payment specialist. Using a bank rather than a specialist is similar to buying a property and then asking if you can pay and extra £/€ 4,000 for no reason.

Aside from saving money on the cost of buying currency, you can also ensure that the value of the money you’re moving doesn’t change. In other words, if you need to move a large sum of money within the next year and you’re happy with the current exchange rate, you can reserve that rate today yet pay for it at a later date.

For example, during the month of January 2008 Mr & Mrs Kingston contacted Smart Currency Exchange to discuss a payment of €89,400 due in November 2008. The Kingston’s were happy with the current rate of €1.317/£1 so they booked a contract for the full amount and simply paid a 5% deposit to secure the transaction. When November came, the Kingston’s sent the money due (less the 5% already paid). If however, they had waited until November 2008 to purchase the Euros, they would have had to accept a rate of €1.155/£1 and pay an extra £9,521.

Whilst the euro has lost ground since it was at parity (€1/£1) in December 2008, in the grand scheme of things it’s still a fantastic time to purchase or secure a rate for Euros to sterling. So if you originally bought your Euros at close to €1.50/£1 and you want to now bring the funds back, now is the time to think seriously about doing it - especially given many analysts feel that sterling is likely to continue to strengthen towards €1.30/£1

Moving Small Sums on a Regular Basis
When moving small sums of money on a regular basis you can benefit greatly by fixing the currency exchange rate if and when the rate is at a good level. For example, in January 2008 many Brits living in the Europe secured a rate of €1.31/£1 for monthly payments for a year or two on all their pension payments. That means that as Sterling weakened throughout the year, clients were unaffected by the rate change and received a rate of 1.31 each month.

In addition to saving money on getting better-than-bank exchange rates and fixing rates for future use, international payment specialists can also reduce the fees associated to transfers, shrink the transfer times from 5 days to 48 hours and provide a level of service that far surpasses the cold impersonal bank. As for safety, specialist organisations like ourselves process payments through a bank and negotiate a better rate of exchange with the bank and then pass the savings onto the end client.


For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

Ideal Payment Options for International Currency Exchange

Every foreign money exchange provider has its own set of options that clients can use to exchange their currencies to suit their requirements. However, there are some methods that are safer and more profitable both for the customer and the company that you should make the most of.

One option for payment is the spot contract method, which allows you to send a lump sum of cash in your desired currency within a couple of days. You may need to use this spot contract when you need to make payments like bookings, deposits, initial fees and other transactions that are required before closing a deal. You can send the foreign currency directly to the bank or institution of the recipient fast and easy, so that you can proceed with your business overseas.

The second payment option is a forward contract, and this helps you secure the exchange rate especially if you are working within a budget. For example, if you are buying a piece of property abroad, with the constant market fluctuations, the going price that you were given can rise drastically, forcing you to pay much more to get your property. With a forward contract, you can buy your currency at its most affordable rate today, and then pay any additional amount later. This way you can even make some returns for your investment without worrying about price changes.

A third foreign money exchange option is order to call or order to buy. These are different methods of payment, but they are both for someone who is trading in the currency markets with no urgent need for returns. In the two options, you state the rate at which you are willing to buy the currency in the near future. When the currency does reach your estimate, the order to call option is where your currency trader asks you whether you want to buy the currency, while the order to buy is where your trader buys the currency for you. These options can be used at the same time with different currencies, so you stand a chance of making good returns for your currency trading.

Another payment option that gives you control of your currency trading is the limit order. As the name suggests, you can limit the rate at which your traded currency will reach, that is, give it a ceiling, and then opt to buy or sell the currency for profit. You will need to observe the currency trading market for quite a while to establish your preferences to use this option.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

On transferring money from UK pensions/regular payments abroad

There are many reasons why people return from their overseas adventure sadder but wiser. These include:

• The death of a loved one or partner
• The wrong choice of destination
• Realising too late that they prefer their homeland after all
• Their mortgage payments have become too much
• Not being able to live on their pension.
  

The final point raises the question of why they can no longer live on their pension. Presumably when they went out they had planned carefully so as to ensure that they could live comfortably for ever and a day, so what changed?

Well, the dramatic events of the last few years have changed things considerably. Northern Rock was a real shock to the currency market which saw sterling fall from the €1.50ish/£1 level to the €1.25ish/£1 level. But surely this was a one off? The UK and the world banking system couldn’t possibly be about to implode - surely they weren’t that stupid…?

Well, were they that stupid? Some certainly were, but greed seems to have been the main catalyst for the worldwide economic collapse. That, plus a lack of government control that would have ensured that the excesses were avoided in both the UK and the US. So we saw Lehman Brothers go bust and RBS and the Halifax/ Lloyds Banks needing to be bailed out by the UK government.

The net result was sterling nearly hitting parity against the euro. This in turn meant that, in the space of 18 months, those receiving their pensions in euros saw its value drop by about one third.
You may ask how a currency company like Smart can help individuals when they make regular transfers and pension payments abroad. They are not miracle workers but there are two things that can and will help:

The first thing is to reduce the cost of each transfer, but how does Smart Currency do this?

By giving you a much better a much better rate than the bank and minimising, if not eliminating altogether, add on costs. Soon after Smart Currency Exchange opened for business in 2004, a client who was emigrating abroad confirmed how much better Smart’s rates were than the bank’s. After completing his initial euro transfer to purchase his new home, he was ecstatic about the excellent service received and confirmed savings of over £20,000 compared to his high street bank. Effectively he had saved enough money to pay his legal costs, removal costs and buy some new furniture for his new home – not bad going.

Since then Smart has transferred his pension each month thus saving him at least £75 each month compared to the rate he would get from his bank. So each year Smart saves him over £900 - he has an extra €1,000 in his pocket rather than the bank’s.

But he has also eliminated the add-on transfer cost that the bank charges for sending funds abroad. This could be as much £25 per transfer. So in fact he has saved in the order of £100 a month or £1,200 per year! In the current climate that extra €1,400 per year is not to be sneezed at!

So let’s work out what he could theoretically save over the lifetime of his relationship with Smart. Assume that he lives for at least another 25 years: using Smart Currency will have saved him £20,000 initially and £30,000 on his pension payments over the 25 years, making a total saving of £50,000. That means an extra €60,000 to spend on his new life abroad - a great result.

The example given above is a good starting point in today’s difficult climate but even more can be done by better forward planning.

Exchange rates have become extremely volatile over the last few years. Within the last twelve months we have seen a minimum exchange rate of €1.06/£1 and a maximum rate €1.19/£1. So if, in the course of the year, if you were transferring say £1,000 a month and you bought all your euros at the peak rate you would receive €14,280. But if you bought at the bottom you would have received €12,720. That’s a difference of €1,560.

Admittedly you would be very lucky to buy at the highest or sell at the lowest rate as no one can be sure when these extremes are reached, even those who have been in the industry for years. Exchange rates move quickly so peak or bottom rates are only available for a fleeting moment.
What Smart suggests is that clients first decide on an exchange rate that is realistic in the current environment and that works for them. Then the client should plan on ‘buying the currency forward’, within say the next 6 or 12 months. This may sound complicated but it’s really quite simple.

‘Buying forward’ means that you agree an exchange rate for a specific amount of euro’s for an agreed period in the future. Smart then phones into the market as the rate changes, trying to meet your exchange rate objective. This option of buying forward is usually not offered by the banks as it would be too time consuming. Generally banks set their rate early in the day and set it so that what ever happens during the day they do not lose money!

Recently we have secured forward contracts for clients making regular transfers to Euroland at rates close to €1.17/£1. If the forward contract was for a full year then the client would receive €1,700 a month for the next 12 months. This is an improvement of €1,320 over the minimum amount as noted above.

Of course exchange rates could improve further but that is a risky assumption in the current climate. And are you willing to forego certainty for potential gain? Many are…and it means that, if rates do improve, you can take advantage of those rates at a future date.

So it could be argued that using the services of a company like Smart Currency Exchange Limited could benefit you up to €100,000 over a 25 year period. And most of us would think that is a benefit worth having.

Let a Smart client tell you herself:

Dear Smart Currency Team,

I just would like to let you know that the money I transferred has already arrived at the destination account, and I am a very satisfied and happy customer of yours. I will use Smart Currency Exchange next time as well, and I already told my colleagues that with your service, overseas money transfer was smooth easy, and without any cost. Thanks for your help and professionalism.

Have a nice day and all the best,

Beata Turik

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

Free lunches...!

The old adage states that ‘there’s no such thing as a free lunch.’ But is this always true? I think not – and I’ll tell you why. Because of the Internet and changing marketing practices today, there is a virtual treasure trove of valuable information available - and most of it is free! Now, I don’t dispute the fact that there’s quite a bit of drivel, however, if you’re interested in gaining a greater understanding about almost anything, the Internet provides an incredible starting pint - and a potential finishing point too.

In terms of marketing practices today, many organisations have learned that the best way to help consumers to purchase their products is to educate them rather than to manipulate, coerce or control them. Just last week, a friend of mine was in absolute misery due to ‘morning sickness.’ She was aware that many women experience nausea during pregnancy yet she was unequipped for just how bad it could be. After a few days of extreme discomfort, she went onto the Internet, discovered around ten ways to minimise the effects – and, within an hour, she was armed with several options – all for free!

After a lot of research and much useful and free advice she eventually settled on an e-book on ancient Chinese pressure points. Within 2 days of purchase her ‘morning sickness’ was a thing of the past. Both the education and the e-book proved invaluable…most of the advice she had used was free and the book was good value: job done.

In this case it had not been absolutely free - so…what about having that free lunch and saving money in the process?

Smart Currency Exchange, the international payment specialists, offer two free reports that not only help readers to make more educated decisions but that also enable them to save hundreds if not thousands of pounds in the process. One report is for individuals that need to make large lump sum payments or small regular payments between Cyprus (it could apply to anywhere abroad) and any country outside the EU (say, the UK). These payments can include paying for a property or making mortgage or pension transfers. The other free report is for companies that need to buy or sell goods or services with countries outside the Euro zone.

Both reports outline how the international payment process works, with a focus on where and why particular expenses occur. Once the reader fully understands this, each report details exactly how to eliminate, if not reduce, the various costs and expenses. The reports allow readers to get valuable free information and, in the end, each reader will be armed with various tools to reduce their expenses dramatically, thus saving money too.

The information has been written in an easy-to-read format with absolutely no jargon. It outlines common mistakes that people make, along with case studies, so it’s easy to relate the information to everyday life. And neither report is longer than 10 pages – giving the reader quick, valuable information that can be assimilated in under 10 minutes.

Just by reading the Smart report could save you huge sums of money. On average, international payment specialists save individuals and organisations €40 for every €1,000 transacted through better-than-bank currency exchange rates. That means that someone buying a property in, say, Cyprus or repatriating back to the UK could save €8,000 on a €200,000 property. Or, an organisation that’s buying or selling goods could save €4,000 on a €100,000 transaction!

Getting better-than-bank currency exchange rates is only one of the tools that the reports discuss. Another significant aspect in relation to the international payment process is planning. If you need to exchange money and the markets are not looking favourable, it’s possible to reserve or lock into an exchange rate even if you don’t need to do the transaction right away.

Imagine having to move €400,000 back to the UK in a month’s time, knowing that the rate is at 1.10 with forecasts of it getting weaker. Imagine watching the value of the €400,000 go from £363,636 to £350,000 – it’s enough to make anyone’s stomach churn – and this type of situation is completely avoidable! By reserving a rate today, you’ll know that the value of the exchange will not change at all in a month’s time.

In conclusion, if you have any need to make international payments, by reading one or both of the Smart reports, you’ll not only get a ‘free lunch’ (something of high value at no cost), but you’ll also learn how to save money throughout the process. So, to find out how to save money, from an individual’s perspective (rather than a company) please go to http://www.smartcurrencyexchange.com/FreeCurrencyReport.aspx to collect your free report.

As for companies, or anyone sending or receiving funds for business purposes, just go to http://www.smartcurrencybusiness.com/freeCurrencyReport.aspx to collect your “free lunch!”

There is absolutely no obligation – or strings attached! Our hope is that you read the reports and are so enthusiastic about the potential savings that you call us. The worst thing that can happen is that you spend 10 minutes reading educational material only to choose that saving money isn’t for you….

Charles Purdy is a Director at Smart Currency Exchange, the international payment specialists. To get more information on us – or any of our educational material – you can also call us on 0207 898 0541.

Here is a slightly irreverent testimonial for Smart from Ian Munro!
I would like to express my satisfaction with the ease and convenience of using Smart Currency Exchange. My money was placed into my designated account within 24hours of transfer at the rate I wanted. I guess the biggest pleasure is reserved for knowing you can stick your finger up to the Banks with their less than generous rates and tardy service. I will definitely use Smart Currency Exchange again.

Thank You,

Ian Munro.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

How much are the banks ripping you off?

How much are the banks ripping you off?

Vince Cable is one of five Lib Dems in the Tory-Lib Dem coalition cabinet and holds the position of Business Secretary. He has come out publicly and said what we at Smart Currency have been saying for simply ages: that the high street banks are ripping their customers off.

His comments come as Panorama, in researching for their television programme on the subject, reveal that some high street banks surveyed are charging on average 32 per cent interest, despite advertised rates of around 19 per cent. With costs and other charges factored in this can reach an unbelievable 167 per cent over a year as an average rate across the high street banks.

There are fewer banks after the recent recession (and therefore less competition) and still use what some would say is an almost deliberate device of making the small print so complicated that few actually read it. This means that clients aren’t really kept in the picture. All the charges are no doubt explained, but in such a way that few ever get to know about them before running into these enormous costs.

A quite considerable sum is charged when you transfer money abroad through your bank. What we at Smart Currency have found is that we are often able to do away with certain banking fees if your currency exchange is done through us and, let’s face it any money saved on unnecessary bank charges is a real plus.

That is not the only way that the banks rip off the man on the street when sending money abroad – or indeed returning it to the UK from abroad.

Smart Currency have long commented on the fact that high street banks do not go to the money markets to get exchange rates for clients as and when they require foreign currency. Rather, they fix an exchange rate at the beginning of the day, one that what ever happens during the day will still bring them a profit. Looking at the way currencies have fluctuated recently you can imagine how high they set the bar to ensure they were not caught short at any stages – a scary thought indeed.

At Smart we call into the trading floor to get an up to the minute exchange rate just for you, at the time of your transaction. Smart charges neither commission nor do the traders take any commission cut but operate on a fixed salary. This guarantees that they have only YOUR interest at heart…indeed, we are the only currency company to operate in this way.

You will also get your own dedicated Smart trader, who you can call directly. Try speaking to anybody when phoning your bank: if I have to push one more button or speak to one more automated voice when I attempt to contact my bank I feel I will scream! Spot contracts, forward contracts, order to call, order to buy: these may all seem like confusing concepts but a few moments chat with your trader will set you on the right path – the one that is right for you.

It will cost you far less than your high street bank – guaranteed!


Jargon Buster - Forward Contract

A Forward allows you to reserve a currency exchange rate today, yet not have to pay for it or send the money until an agreed date in the future.

This option is fantastic for property buyers that have staged payments (or are paying for a new build in instalments) and want to ensure against unexpected changes (in either direction) in the price of their currency. This is especially handy if you need to work to a budget.

To discuss your options with us call in now on free phone 0808 163 0102 (+44 0207 898 0541)


A Happy Smart Customer

Recently at Smart we have had many clients coming to us from our competitors. One particular example was a couple who had used another currency broker in the past when sending money overseas and had got in touch with the same company again whilst selling their UK property. The client struggled to get through to their main point of contact at the organisation and was eventually told that this person would call them back. When they did eventually hear back from their Trader, he wasn't interested in discussing the matter, until the funds were actually available. This made the couple explore the possibility of other brokers and thus lead them to Smart.

The major difference at Smart is that its Traders are not paid on a personal commission basis, so you can speak to any of the Traders and get the same quotation with the same high level of service. Secondly, our Traders are more than happy to discuss requirements with you, whether they are a year away or instant. All in all, the couple mentioned are now incredibly happy with their service with Smart.

Find out how we can help you by calling free phone 0808 163 0102 (+44 0207 898 0541)



For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

What Factors Affect Exchange Rates

The one thing I am sure of is that expert comments from people like me do not move exchange rates. Having been involved in currency exchange for over 15 years I am confident my understanding is extensive and continues to grow. But the sheer size of the currency market, which dwarfs every other trading market, including the US and UK stock exchanges, means that comments from someone like me are quickly forgotten.

So given the enormous size of the currency market what on earth makes exchange rates move?

A significant proportion of the currency market is for bona fide business reasons such as the need to hedge a possible exposure to a loss from sudden movement in an exchange rate. Also, the physical delivery of currency forms a part of the market - but this is minimal when compared to its overall size. Probably the most important part that affects exchange rates short term is investors who “bet” on exchange rates and their future movement.

So what are they on the look out for?

Sentiment is an important factor. When the world saw long queues outside of Northern Rock Bank there was only one way for sterling to go - and that was down. This is probably a fairly extreme example of market sentiment affecting a currency and its rate of exchange as sterling fell against every other currency.

Most of the time, exchange movements will be more constrained with say, the US$/£ exchange rate moving differently to say, the €/£ exchange rate. These movements tend to be driven by the never ending flow of economic data released daily by all of the worlds’ developed economies. Most of this data will already have been forecast by the seemingly infinite number of economists who spend their life predicting the future. Because of this only very rarely will one piece of economic data have a major affect on exchange rates and then only if it was totally unexpected. So this is a rare occurrence although in recent times less rare than it used to be.

One thing that more often than not has an affect on exchange rates is announcements by a country’s Central Bank. Any announcement by the Head of the US Federal Reserve, or the European Central Bank, or the Governor of the Bank of England will be closely scrutinised by all and could even have a very dramatic affect. Take for example, the surprise announcement from the Bank of England that they wanted to increase the UK quantitative easing programme by £50billion - and then this surprise was compounded when it became public that the Governor of the Bank of England had wanted to increase the programme by £75bn but had been outvoted by his fellow BoE members. Sterling had a very bad month following these announcements, as they highlighted the UK economic problems - plus the contents of the announcements caught the markets by surprise, which as noted above, is never good.

The Central Banks also control their respective interest rates. Recent events have brought interest rates to record lows. Investors are now watching events very closely as they want to know when the Central Banks are going to increase interest rates and which country will be the first to do so, as these will be the most likely to see their currency benefit relative to others.

But at the end of the day, there is one major factor that affects the underlying value of a country’s currency - and that is that country’s longer term economic performance. Why has the UK suffered unduly? Clearly, some of its banks having to be bailed out were a major negative for sterling. However, a country that operates a budget and balance of payments deficit cannot go on borrowing forever. What these dual deficits mean is that the UK government has to keep on borrowing more each year [even before the credit crunch] to fund government spending and also the UK has to rely on other countries to invest in it to fund the continual flow of money out of the UK. As we all know personally, such a scenario can only go on for so long and the same logic ultimately applies to a country - and when confidence in the country is lost, the currency will suffer. The euro zone has one major plus: the undoubted strength of the German economy, the world’s greatest exporter. So even though there are some basket cases in the euro zone, the German economy is the cash generator that will keep it going.

At the end of the day, there are a myriad of factors that affect exchange rates. However, there is no way of really calculating how an exchange rate will move as these factors all work on different timescales and with different levels of affect. That is why I always try and get companies I work with to have a very clear understanding on what their currency requirements are, over what time period and what their targeted exchange rates are. If you can bring some certainty and clarity to such a complex market with so many variables, it really does help.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

The History of Currency

The earliest form of currency dates back to ancient Babylonia times around 4,000 BCE. Clay tablets were used to represent goods or services being traded whereas other tablets represented a receipt of deposit or letters of credit. The term, ‘cleaning of slates,’ dates back to this period and was used when the king of the time would declare all debts null and void. The actual slates would either be smashed or dissolved in water.

Up until the first world currency originating in Greek times, people operated mainly on a barter system. If you were a fisherman you could trade some of your fish in return for some vegetables from a farmer. The problem arose, however, when the farmer didn’t like fish – what was the fisherman to do? He would have to find someone else that wanted his fish in return for something the farmer would be interested in. The barter system works, however it was eventually deemed slow and inefficient.

Around 800 BCE, the Greeks developed the first money system that was eventually accepted around the world. Greek money has been found in China, India and northern Europe! The main currency in Greece was a silver coin called the Athenian drachma and during the time of Alexander the Great (300 BCE) it eventually became the monetary standard in all of Asia. Even as Greece declined and Rome came to power, the value of the drachma held its ground.

Paying the Greeks a massive complement, the Romans fashioned their own money, called the denarius, after the drachma to the exact specification. In an effort to expand from the Greek monetary system, the Romans created a gold coin for the army and emperors, a silver coin for international trades’ people and a copper coin for poor people. Eventually, however, the Roman currency system was eroded by removing the valuable precious metal and replacing it with a worthless base metal. After years of reducing the gold and silver content, the currency eventually became valueless and in 215 AD India stopped accepting it as a mode of payment. Soon after, the rest of the world followed.

In 325, as Rome was in serious decline, Constantine created a new monetary system which quickly became the world currency. The coins, called ‘bezants,’ have been found as far away as Scandinavia and Sri Lanka and as Western Europe fell into the Dark Ages, Constantine’s money was the only currency traded. By 1050 the bezant eventually lost its popularity and around 1204 the Byzantine Empire lost monetary supremacy.

During the 7th-12th centuries, the Islamic dinar also had high levels of circulation and remained quite stable. It wasn’t until paper money was introduced that the Islamic monetary system went into serious decline. Due to the ease of printing money, nothing stopped authorities from printing more of it with nothing to back it.

Throughout history, there was one constant that caused the demise of each currency. They all went into decline after the authorities removed the silver or gold and replaced it with a worthless base metal or paper. The devaluation of money has even been seen in today’s world currencies. In 1971, when America went off the gold standard the value of the US Dollar started to go down – it has actually depreciated by over 90% since the removal of the precious metal. If history is to repeat itself, American monetary supremacy may be on its way out!

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

On transferring money from UK pensions/regular payments abroad

There are many reasons why people return from their overseas adventure sadder but wiser. These include:

- The death of a loved one or partner

- The wrong choice of destination

- Realising too late that they prefer their homeland after all

- Their mortgage payments have become too much

- Not being able to live on their pension.

The final point raises the question of why they can no longer live on their pension. Presumably when they went out they had planned carefully so as to ensure that they could live comfortably for ever and a day, so what changed?

Well, the dramatic events of the last few years have changed things considerably. Northern Rock was a real shock to the currency market which saw sterling fall from the €1.50ish/£1 level to the €1.25ish/£1 level. But surely this was a one off? The UK and the world banking system couldn’t possibly be about to implode - surely they weren’t that stupid…?

Well, were they that stupid? Some certainly were, but greed seems to have been the main catalyst for the worldwide economic collapse. That, plus a lack of government control that would have ensured that the excesses were avoided in both the UK and the US. So we saw Lehman Brothers go bust and RBS and the Halifax/ Lloyds Banks needing to be bailed out by the UK government.

The net result was sterling nearly hitting parity against the euro. This in turn meant that, in the space of 18 months, those receiving their pensions in euros saw its value drop by about one third.

You may ask how a currency company like Smart can help individuals when they make regular transfers and pension payments abroad. They are not miracle workers but there are two things that can and will help:

The first thing is to reduce the cost of each transfer, but how does Smart Currency do this?

By giving you a much better a much better rate than the bank and minimising, if not eliminating altogether, add on costs. Soon after Smart Currency Exchange opened for business in 2004, a client who was emigrating abroad confirmed how much better Smart’s rates were than the bank’s. After completing his initial euro transfer to purchase his new home, he was ecstatic about the excellent service received and confirmed savings of over £20,000 compared to his high street bank. Effectively he had saved enough money to pay his legal costs, removal costs and buy some new furniture for his new home – not bad going.

Since then Smart has transferred his pension each month thus saving him at least £75 each month compared to the rate he would get from his bank. So each year Smart saves him over £900 - he has an extra €1,000 in his pocket rather than the bank’s.

But he has also eliminated the add-on transfer cost that the bank charges for sending funds abroad. This could be as much £25 per transfer. So in fact he has saved in the order of £100 a month or £1,200 per year! In the current climate that extra €1,400 per year is not to be sneezed at!

So let’s work out what he could theoretically save over the lifetime of his relationship with Smart. Assume that he lives for at least another 25 years: using Smart Currency will have saved him £20,000 initially and £30,000 on his pension payments over the 25 years, making a total saving of £50,000. That means an extra €60,000 to spend on his new life abroad - a great result.

The example given above is a good starting point in today’s difficult climate but even more can be done by better forward planning.

Exchange rates have become extremely volatile over the last few years. Within the last twelve months we have seen a minimum exchange rate of €1.06/£1 and a maximum rate €1.19/£1. So if, in the course of the year, if you were transferring say £1,000 a month and you bought all your euros at the peak rate you would receive €14,280. But if you bought at the bottom you would have received €12,720. That’s a difference of €1,560.

Admittedly you would be very lucky to buy at the highest or sell at the lowest rate as no one can be sure when these extremes are reached, even those who have been in the industry for years. Exchange rates move quickly so peak or bottom rates are only available for a fleeting moment.

What Smart suggests is that clients first decide on an exchange rate that is realistic in the current environment and that works for them. Then the client should plan on ‘buying the currency forward’, within say the next 6 or 12 months. This may sound complicated but it’s really quite simple.

‘Buying forward’ means that you agree an exchange rate for a specific amount of euro’s for an agreed period in the future. Smart then phones into the market as the rate changes, trying to meet your exchange rate objective. This option of buying forward is usually not offered by the banks as it would be too time consuming. Generally banks set their rate early in the day and set it so that what ever happens during the day they do not lose money!

Recently we have secured forward contracts for clients making regular transfers to Euroland at rates close to €1.17/£1. If the forward contract was for a full year then the client would receive €1,700 a month for the next 12 months. This is an improvement of €1,320 over the minimum amount as noted above.

Of course exchange rates could improve further but that is a risky assumption in the current climate. And are you willing to forego certainty for potential gain? Many are…and it means that, if rates do improve, you can take advantage of those rates at a future date.

So it could be argued that using the services of a company like Smart Currency Exchange Limited could benefit you up to €100,000 over a 25 year period. And most of us would think that is a benefit worth having.

Let a Smart client tell you herself:

Dear Smart Currency Team,
I just would like to let you know that the money I transferred has already arrived at the destination account, and I am a very satisfied and happy customer of yours. I will use Smart Currency Exchange next time as well, and I already told my colleagues that with your service, overseas money transfer was smooth easy, and without any cost. Thanks for your help and professionalism.
Have a nice day and all the best, Beata Turik

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

What does the increase in the €/£ exchange rate mean to you?

What does the increase in the €/£ exchange rate mean to you?

The last few months have been good for sterling relative to the euro. At one stage we even exceeded a rate of €1.21/£1 - the last time we saw this was in late 2008.

But have you sat down and worked out what this could mean to you? And do you know how to take advantage of this rate and minimise your “downside risk”? The benefits don’t just apply to the larger payments - regular and/or smaller one-off payments can benefit too.

If you started looking for a property in the Euro zone in 2009 you would more than likely have been budgeting at an exchange rate of between €1.05 to €1.10/£1. This means that every €100,000 you were expecting to spend will now cost you £10,000 less than you first thought!
A saving like that could pay for your white goods, a new car or perhaps an even bigger property.

And for those of you who originally budgeted for a rate above €1.20/£1, you may well find that the drop in house prices means that the cost in sterling terms is very similar to what you at first had budgeted. Maybe it’s a case of dusting off those cobwebs and revisiting your dreams!

And, as mentioned, this doesn’t just apply to larger payments. Regular transfers of pensions could suddenly net you 10% more or mortgages could cost you 10% less. And such amounts can make a huge difference to the way you are able to live.

The question is, of course, will the exchange rate stay at these exalted levels? Who knows? Market analysts say yes, given the problems in the Euro zone, but we also have to remember the problems we have here in the UK and the huge government budget deficit. Things could change very quickly…

How do you guard against this and minimise the chance of getting less for your sterling as the rate returns to €1.10/£1?

In an ideal world, if I was committed to buying a property, I would want to buy my euro’s sooner rather than later, so that I could secure the reduced sterling cost. However, I wouldn’t want to pay it for it all now. That sounds a trifle unrealistic, but it can be done, using something called a forward contract.

You simply agree the amount of euro you are buying and the exchange rate you are happy with. This in turn means you will have established the sterling cost and the time by which you will pay for the funds in full. A deposit of up to 10% will secure the funds being bought on your behalf.

The same principle can be applied to regular payments, where you can fix an exchange rate for the next twelve months and draw on it monthly.

Give us a ring and talk though the different options. This will remove the downside risk by buying some, if not all, of your euro’s ‘forward’.


Jargon Buster – Downside Risk
"Downside risk" - the possibility that exchange rates will move in such a way that you suffer an additional cost and there is nothing worse than suddenly having to find an extra amount of sterling or receiving less than you had originally expected. Also it seems to happen when all indicators seem to point to the opposite happening! That is why buying/selling forward is excellent for minimising downside risk


UK Banking Systems – the simple made so difficult
Just thought it worthwhile to share an article from this weekends press on the UK banking system. Never ceases to amaze me how the simple is made so difficult. You would think that the "faster payments" system would be fairly universal in how the UK banks implemented it. Clearly not.

But having said that it makes it so much easier for people to understand why we exist as a company bringing simplicity to international transfers plus the ability to talk to someone who can help rather than having to spend half a day trying to find someone who may be able to help.

http://news.bbc.co.uk/go/em/fr/-/1/hi/business/10297758.stm


For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

An Option the Banks Won't Tell you About....

by Smart Currency’s Charles Purdy.

It is often thought that the only way to buy currency is by paying for it in full.

Most buyers that don't know about currency options buy the currency as and when it is required - they wait until the last minute. This is what the banks love their clients to do as the client is 'forced' to buy at the rate the bank offers.

Some buyers buy the €’s immediately when they know the amount even if they don't need to use them for 3 months. Buyers do this to avoid the cost of the euros increasing so they know their exact costs.

However there is a more efficient alternative that the banks fail to tell you about.

The alternative is to secure your currency requirements (without paying the full amount for them) using what is known as a forward contract.

Pretend that you require €100,000 in three months time and you don't want to risk the sterling cost increasing by £5-10,000. (An increase can easily happen due to changes in the exchange rate between now and 3 months time)

You can agree an exchange rate for those €’s now. All that would be required is a deposit of up to 10% of the sterling purchase cost.

This means that you don't need to pay the full amount for the euros now, so you can keep 90% of your funds in a sterling high interest account. By doing this you will know EXACTLY how much you will require when it comes to pay for the €’s in three months time. (You'll know that you won't need to pay an extra £5-10,000 )

It may sound complicated but is very simple to do when you work with a company like Smart Currency Exchange. And the joy of such an approach is that it removes all the uncertainty and the associated stress and strain as you know exactly what your cost will be.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

So Happy in Cyprus!

Hilary and Lyn Whitehead were looking for a sunny, relaxing holiday retreat away from the gloom and doom of the UK. Life had not been altogether easy recently: “I nursed a sick relation through very serious health problems” confided Hilary, “and I must say I really was looking forward to a time when we could relax in the sun - and where better to do that but in Cyprus?”

Added to that was the incentive of a rental investment. With property sales slipping worldwide, they realised that rental properties are much in demand and they decided this could be a good way to supplement their pensions.

“We had spent many happy family holidays on the island” recalls Lyn, “so it seemed the obvious choice for us to start looking for our place in the sun there.”

“We had visited the island over a dozen times over the years, and loved it. Hilary agreed. “We wanted to buy perhaps in the Tala or Pissouri areas – that was our original idea. We were all booked and set to travel to Cyprus in September 2008 – and guess what? We had booked our return trip with XL Airways, flying out of Gatwick on the 15th; on 12th September the company went into administration!” Undeterred, the Whiteheads rescheduled and flew off to Cyprus early in November, determined to enjoy their new property by the spring of 2009.

After quite a bit of research on the Internet, help for the Whiteheads came in the form of a company that offered impartial advice, backed up by references from people who had actually been through the buying process in Cyprus themselves. “We did our homework very thoroughly and found what turned out to be a most amazing estate agent. We had read the Cyprus Buying Guide website and contacted them for help. They were able to make informed recommendations based on both information gleaned from readers and from personal experience.

“The estate agent helped us reschedule our trip and took us to numerous properties in Cyprus” adds Hilary. “Their service was absolutely EXCELLENT. And not only that: our concern was the fact that the exchange rate had turned against us. We were on a very tight budget...135,000 GBP. We also anticipated a lot of add on’s.....Smart Currency Exchange, the currency company the Guide recommended, talked us through the idea of buying our currency in advance, what they called ‘forward buying’ - which made a lot of sense and set our mind at rest about spiralling costs.”

By early January the Whiteheads were well underway to being the proud owners of a lovely property in Cyprus. Spring in their new home has become a reality, and all that remains is to move in and enjoy the fruits of their labour!

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

How Smart Differs…

A couple of days ago I was asked a very simple question by someone who was thinking of buying property abroad: “How do currency companies differ?”

He went on to add: “They all seem the same…they seem to offer the same benefits when I speak to them about transferring money abroad. How do I know which one to choose?”

Actually, the people at Smart Currency Exchange are often asked this…and their reply is that there are enormous differences between Smart Currency Exchange and any other exchange company, differences that could make a world of difference to you.

Firstly, Smart Currency Exchange is the only currency company in the UK that does not pay their traders commission – they get a regular salary. That fact alone will allow you peace of mind that you’re not in the hands of someone who is trying to make the most money they possibly can out of you.

Secondly, they do not spend thousands of pounds on marketing. Generally, the word is spread via the Internet and by word of mouth, from one contented client to their friends and relations. This means that Smart is able to save vast sums on advertising and this is reflected in the exchange rates they are able to pass on to you, the client.

Thirdly, Smart is totally dedicated to personal service, a rare thing in this day and age. I don’t know about you, but if there is one thing that absolutely MADDENS me it is when I phone somewhere – be it my bank, water or currency exchange company – and I spend the next half an hour pressing buttons and listening to ridiculous messages like ‘Your call is important to us’ – quite clearly it isn’t, otherwise they would actually be talking to me!!

When you phone Smart Currency Exchange, you will actually speak to REAL PEOPLE - people who can explain the whys and wherefores of transferring currency abroad and all about currency exchange rates. So please, don’t hesitate to pick up that phone and ask questions about this – Smart’s currency experts will have heard them all before and will be delighted to help you. You will immediately speak to someone who can clearly and concisely explain the whole process to you.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

The Election and how it has affected the Currency Market

The UK has just had one of the most hotly contested elections in living memory which, as expected, resulted in a hung Parliament [no one party having a clear majority]. Whilst we saw the pound gain initially as the new Conservative – Liberal Democrat coalition was announced, it has fallen even further and has hit a 13 month low against the US dollar as the reality of the situation facing the UK has hit home. With the election now firmly out of the way, what will drive the value of the pound over the next few months?

Sterling has come under attack in the last few months over political uncertainty related to the perceived ‘weakness’ that a hung parliament would bring. Why has this been a problem? The UK needs to match income to expenditure that means tax hikes and spending cuts in order to start paying down the biggest deficit since WW II. Neither the Conservatives nor the Liberal Democrats made it clear in their manifestos exactly how they would tackle the huge deficit. Sterling has weakened since the election as the government has promised £6bn of cuts in the next year and many are concerned – especially with poor housing figures released this week – that aggressive cuts will stifle out the fragile growth that we have seen so far since the credit crunch. Looking at the UK relative to the USA, where interest rates are expected to rise at some point later this year, the USA becomes a far more attractive investment than the potentially stagnant economy of the UK. Whilst the markets have embraced the new government’s stance on aggressively cutting the deficit, they are tentative over its implication.

The new chancellor George Osborne releases his first budget on June 22nd, in which he will outline where the cuts are to come from in order to attack the record deficit. For the pound to strengthen there needs to be a clear plan of action that the financial markets thinks is realistic and addresses the core problems and which the “ruling” parties can agree in order for any legislation to get passed. This may seem like too much to ask. Firstly, there are potentially deep ideological differences between the parties on how policy should be implemented and it is likely that the markets will be sceptical of any budget clearing plan – especially given the scale of cuts and savings required.

As it stands, the outlook for the pound is poor against the US, Australian and New Zealand dollar or South African rand as these economies seem likely to retain the relative upper hand over our own. There may be one light at the end of the tunnel for sterling – the Euro zone. With the Euro zone in the midst of a debt crisis, the pound could take advantage and strengthen. Could we see sterling hit €1.20/ £1 in the coming months? We will have to wait and see. The best thing to do is call in sooner rather than later and speak to a currency specialist to ensure that you avoid missing out on favourable rates and ensure that you don’t lose money by buying at a poor time.
Please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK)


Jargon Buster - Hung Parliament

This is where no one political party has a clear majority following an election. You usually find that the political party with the most seats takes the lead but they need to rely on other parties to support them. The support could be either in the form of a lose political agreement or based on a detailed agreement similar to the one we see between the Conservative and Liberal parties here in the UK.


For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

New Government & Sterling by Charles Purdy

So we have a new government in the UK. An interesting set up and certainly a bold move by David Cameron to move things forward. It certainly must be a dream come true for many of the liberals who probably thought they would never have any ministerial positions ever.

There has been lots of talk about the deals being done on electoral reform and nuclear deterrent but the key is still what is to be done about the huge budget deficit and the need to match government income to expenditure. Initial talk is about an emergency reduction in government expenditure of £6bn but this will only be the start and not nearly enough.

What will the effect be on sterling? Initial reaction has been neutral to slightly positive.

But given on-going problems in the euro zone where the rescue package announced last weekend seemed by many to be an effort to paper over the cracks and some fundamental problems still needing to be resolved, sterling could start to gain especially if this coalition government does have the willpower to sort out the deficit.

And against currencies such as the US$ and the commodity backed currencies such as the Australian and Canadian dollars sterling could continue to weaken as they are ahead of us in their economic recovery.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

Stop Banks from Cashing in on Your Overseas Transfers - Part Four

By Charles Purdy, Smart Currency Exchange

Many British ex-pats overseas send or receive money to or from the UK and in the process they unintentionally lose money. In some cases, losses can be up to tens of thousands! This is part 4 of a special 4-part series that has been written to outline how the bank-to-bank international payment process works, the specific areas where expats are losing money and definite actions that can be taken to mitigate losses. At the end of the article, there are details on how you can download the full series.

In the previous three parts, I explained that expats can save money by using an international payment provider rather than using a high street bank. Compared with the mark-up supplied by the banks on a £100,000 transfer clients can save up to £4,000 by using a currency specialist. And on a regular payment of £1,000 a month, a saving of up to £40 per month can be made (that’s £480 a year). The other way to save is by enlisting the help of a specialist to reduce and/or eliminate fees. When using a specialist, it’s possible to save up to £50 (by avoiding fees) for every transfer!

I also explained that rather than being forced to take the exchange rate on the day that the money needs to be transferred, there is the option to buy a ‘Forward Contract.’ This allows people to reserve an exchange rate over a period of say, 1 year, fixed. So – if you have regular pension payments and you are happy with the exchange rate, you can fix it so that the value of your pension doesn’t decrease over the course of the year.

Something I haven’t covered is repatriation. Occasionally, people decide to move back to the UK from abroad. It doesn’t happen often; however, due to illness or family reasons, people sometimes do have to move back home.

Usually, a move back is not wanted and can be an uncomfortable process. During the move, things are done quickly and often in haste. One of the largest mistakes people make, however, is to simply send money back to the UK through a bank rather than using an international payment specialist. When doing this, it’s possible to lose a substantial amount of money in the transfer process.

For example, Donna and Nick had three properties overseas. Two were for investment and one was their main residence. Due to Nick’s mothers failing health, it became unmanageable to keep flying between these and the UK.

After many discussions, the couple decided to sell their main residence as it wouldn’t rent very well due to its remote location. By selling they could afford better health care for Nick’s mum and rent in the UK for a while. If they decided to stay in the UK, they would also have the flexibility to buy a property if they wanted to. Regardless as to how long their stay in the UK would be, they both knew that they’d return to live abroad either in one of their investment homes or to buy another property. For the time being, they had to move over €437,000 to the UK.

After hearing about International Payment Specialists, Nick contacted us because his friend had used us in the past. He explained his situation to us and said that he’d like to move the €437,000 soon, but it wasn’t necessary to do it immediately. We explained that, ‘no one can predict where the exchange rates are going, however market analysts think that the euro to sterling rates may improve over the next few weeks.’ The trader explained the concept of an ‘Order to Buy’ – this allows clients to outline a rate that they’d like to achieve and if the exchange rate hits that designated rate, the specialist buys the currency on behalf of the client.

Nick wanted to achieve a rate of €1.10/£1.00 however it was currently at €1.143/£1.00. After speaking with us, he realised that if the rate fell to the amount he wanted, he’d get an extra £14,900, so not being in a rush, Nick put in an ‘Order to Buy.’ Fortunately, the rate increased and we purchased the currency. Nick was very pleased that he had not just gone ahead as planned and bought his funds on the day he called.

There are considerable savings to be made, whatever your circumstances. I hope you found this article useful – please call me if you need any further information.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

Stop Banks from Cashing in on Your Overseas Transfers - Part Three

By Charles Purdy, Smart Currency Exchange

Many British ex-pats overseas send or receive money to or from the UK and in the process they unintentionally lose money. In some cases, losses can be up to tens of thousands! This is part 3 of a special 4-part series that has been written to outline how the bank-to-bank international payment process works, the specific areas where expats are losing money and definite actions that can be taken to mitigate losses. At the end of the article, there are details on how you can download the full series.

In the previous two parts, I explained that expats can save money by using an international payment provider rather than using a high street bank. Savings can be made by buying currency at rates that are better than offered by the bank. Compared with the mark-up supplied by the banks, there’s a possibility to receive up to a 4% saving. On a £100,000 transfer that’s a reduction of £4,000 by using a currency specialist rather than a bank. And on a regular payment of £1,000 a month, that’s a saving of £40 per month or £480 a year. The other way to save is by enlisting the help of a specialist to reduce and/or eliminate fees. When doing this, it’s possible to save up to £50 (by avoiding fees) for every transfer!

Aside from saving money on better exchange rates and reduced or eliminated fees, expats have a wide range of options when it comes to working with an International Payment Specialist. Rather than being forced to take the exchange rate on the day that the money needs to be transferred, there are alternatives.

The most common option that assists expats greatly is to buy a Forward Contract. A ‘Forward’ allows you to reserve a currency exchange rate today, yet not have to pay for it in full or send the bulk of the money until an agreed date in the future.

Take John and Jane Wilson as an example. They moved overseas during the middle of 2009. The couple were worried that sterling may again lose value against the euro and so they contacted us and explained that their joint pensions came to £2,120. They wanted to know how they could make sure that the amount they receive each month didn’t decrease due to changing exchange rates.

After talking with us, the Wilson’s decided to buy a ‘Forward Contract,’ for a full year. This means that they fixed a set exchange rate for the course of the year. They set up an automated standing order system that allowed their pension to be sent to our bank in the UK on a monthly basis. Once the money arrived at our bank, it would be exchanged from sterling to euros at a rate of 1.162 every month for the full year. In August, they received € 2,463.44 in their overseas bank account and continued to receive the same amount every month for twelve months. To set up this facility, the Wilson’s simply had to open an account with us and pay a small administration fee for the regular payment system.

If the Wilson’s decided against fixing a currency exchange rate, their monthly amount would have decreased along with the weakening sterling rate, and by October 2009 they would have received monthly payments at an amount 11% lower - from €2,463.44 down to €2,185.10!

Banks often fail to offer, or even mention the alternative of fixing a currency exchange rate for use in the future, yet it’s such a valuable tool. The option of buying a ‘Forward Contract’ gives you peace of mind that your pension payments won’t decrease in value.

In Part 4 of this 4-part series, I will explain the procedure for moving large amounts of funds from overseas back to the UK.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

Stop Banks from Cashing in on Your Overseas Transfers

Stop Banks from Cashing in on Your Overseas Transfers – Part Two

By Charles Purdy, Smart Currency Exchange

Many British ex-pats overseas send or receive money to or from the UK and in the process they unintentionally lose money. In some cases, losses can be up to tens of thousands! This is part 2 of a special 4-part series that has been written to outline how the bank-to-bank international payment process works, the specific areas where expats are losing money and definite actions that can be taken to mitigate losses. At the end of the article, there are details on how you can download the full series.

In part 1 of this series, I explained that ex-pats overseas send and receive money to and from the UK in large lump sums (for example, property staged payments) and regular payments (for example, pensions, mortgages and salaries). My main premise of part 1 is that the actual process of moving money isn’t rocket science, however the commission, currency exchange rate and fee structure imposed on clients by the banks can be extremely confusing.

Rather than using a bank, there are specialist international payment organisations that assist their clients to save substantial amounts of money throughout the process. One of the manners in which they do this is to offer better-than-bank exchange rates. For every £1,000 exchanged the savings on better rates could be up to £40 – extend that over a series of payments, or on one large payment and the savings add up!

Another way that banks profit from their clients is through various charges throughout the money transfer service. The charges imposed often include a fee to purchase foreign currency, another fee to send the funds and a charge from the overseas bank for receiving the funds. Before you know it, you can easily lose around £50 (unnecessarily) in fees for every transfer.

When working with an organisation that specialises in currency exchange and international transfers, you’ll discover various methods of reducing and often eliminating fees. For example, when transferring funds from the UK to Cyprus through a bank, you’ll often be charged £20 to £30 for the privilege. However, if you transfer funds from your bank using the Internet or Fast Payment system to a currency specialist, you’ll completely avoid the charge.

As for charges concerning the movement of funds, most currency payment specialists charge a nominal value if the transfer is under £3,000 however, getting better-than-bank exchange rates more than compensates for the small administrative fee. And, all transfers over a particular amount, say £3,000, are sent free of charge. It’s important to note, however, that not all currency specialists will help their clients with low regular payments (for example, under £500).

The bank receiving fee is the worst fee of all, as most people don’t know that it exists until they find less money in their account than they sent! European Law dictates that on amounts under 50,000 euros, receiving banks are allowed to charge a ‘nominal fee’. Nominal can be interpreted to be 2 euros or 10 euros. If you are going to send regular payments, it’s often a good idea to ask every bank what their receiving charges are and go with the lowest. In Spain for instance, it’s not uncommon for banks to charge 1% of the value of money coming in or going out, so in comparison, the small charges that some banks make aren’t that offensive.

With regard to receiving bank charges, some currency exchange and transfer specialists agree to absorb this fee – it’s best to check with them when booking your transfer. Whether you need to make a series of large payments or several transfers throughout the year, avoiding or reducing the various charges that the banks impose can save thousands. By researching the bank that will be receiving funds along with working with your transfer specialist, you could save enough money to cover several flights to and from the UK!

In Part 3 of this 4-part series, I will explain an option that expats find extremely valuable when buying and transferring payments between a foreign country and the UK.
Charles Purdy is a Director at Smart Currency Exchange Limited – the International Payment Specialists. To move money go to http:www.smartcurrencyexchange.com for more information – or if you prefer to speak to us in person, just telephone +44 207 898 0541.

Stop Banks From Cashing In On Your Overseas Transfers

Stop Banks from Cashing in on Your Overseas Transfers – Part 1

Many British ex-pats send or receive money to or from the UK and in the process they unintentionally lose money. In some cases, loses can be up to tens of thousands! This special 4-part series has been written to outline how the bank-to-bank international payment process works, the specific areas where ex-pats are losing money and definite actions that can be taken to mitigate losses.

Initially, most ex-pats are introduced to the international payment process when they make a payment or payments from the UK Overseas for a property purchase. The general series of events consists of the property buyer putting down a deposit and then sending one lump sum or a series of staged payments from their UK bank to a solicitor’s account Overseas.

Once a buyer becomes a fortunate Overseas homeowner, their international payments tend to become smaller and sent on a regular basis. Many Brits receive their UK pensions, investment payouts or funds from savings through UK bank to Overseas bank transfers. And in some cases, many Brits send funds to the UK for mortgage payments or to top up their UK funds for visits. It’s also quite common for the British Forces to send their salaries home to the UK to support their families or cover expenses.

Whether transferring large or small funds, either internationally or on a regular basis, it’s the same procedure. The person making the transfer instructs their bank to send the amount due to the beneficiary’s bank overseas. When calculating the amount due in the overseas local currency, the bank will instruct the buyer of the cost and they will be debited accordingly. Within 5 days of instructing the bank, the funds in the designated currency will arrive and clear at the overseas destination.

The actual process of moving money isn’t rocket science – however, the commission, currency exchange rate and fee structure imposed on clients by the banks can be extremely confusing.

And through this confusion, the banks are able to relieve clients of substantial sums of money without them even realising it. The Sunday Times (5 Feb 2007) reported that: “Britons buying property abroad could have lost out on up to £1.8 billion because of high-street banks offering such a poor deal on foreign exchange, according to new research.”

Before I explain how the banks make their billions on international currency transfers, let me explain what the ‘interbank’ rate is. The interbank rate is the price banks trade between each other when they’re moving millions. When rates are announced on the News, on Internet ticker tapes or in the newspapers, they are not the rates that you or I can actually buy at, but they are the rates the banks use between themselves.

Even though you can never buy currency at the rate quoted on the news, the interbank rate gives you an indication of where the rate is and what direction it’s moving in. It also gives you a rough idea as to how much currency will cost you.

When you do decide to buy currency or make an international payment the institution that you do it through will put a ‘mark-up’ over and above the interbank rate. So – if the interbank rate for a pound is equal to €1.15, you should expect to buy Euros at a discounted price of €1.12, the difference representing the mark-up.

Below is the amount added on top of the interbank rate when purchasing from the following institutions:

- Banks – they’ll charge you up to 5% more for popular currencies such as the Euro and US$, and up to 9% for less common currencies

- Credit Cards – up to 7% more

- Airport Currency Shops – could be as much as 10% - 15% more

The one institution that I didn’t mention above is that of an International Payment or Currency Exchange Specialist. For bank to bank transfers (which means electronic transfer of funds and not physical cash), they add a mark-up of 1% (on average) over and above the interbank exchange rate. Compared with the mark-up supplied by the banks, that’s an instant 4% saving. On a £100,000 transfer that’s a reduction of £4,000 by using a currency specialist rather than a bank! And on a regular payment of £1,000 a month that’s a saving of £40 a month or £480 a year!

Poor exchange rates are only one of the ways that the banks make extreme profits from their clients. In the next instalment I’ll explain how they also charge their clients for the privilege!

Charles Purdy is a Director at Smart Currency Exchange Limited – the International Payment Specialists. To move money between the UK and Overseas, go to http://www.smartcurrencyexchange.com for more information - or if you prefer to speak to us in person call 0808 163 0102 or +44 (0) 207 898 0541 from outside the UK

How will the general election affect the cost of your future international payments?

Find out what are the ‘experts’ predicting…

Sterling has dropped nearly 8% against the US dollar since January.

The UK recovery is at best slow-moving whereas the US economy has enjoyed two consecutive quarters of positive growth significantly better than the UK’s.

Also, in the last few weeks, political concerns in the UK have taken hold– namely the possibility of a hung parliament.

On March 1st, sterling dropped 3% to a 9 month low against the US dollar as a Sunday Times opinion poll put the Conservative lead at 2% - lacking the required majority to avoid a coalition government.

This is an issue for the financial markets as a coalition is likely to lack the political willpower to push through the tough legislation required to clear the UK’s record budget deficit.

The investment bank Nomura are forecasting a 35% chance of a hung parliament and if that happens, many analysts are predicting a ‘sterling crisis’ as investors avoid the UK completely.

From recent market reaction, it seems that the best outcome for sterling would be a clear Conservative victory (60% probability according to Nomura). If this doesn’t happen, the pound is likely to suffer.

And a hung parliament is not the only problem…

Another major problem for sterling is the Bank of England’s program of “Quantitative Easing” (the pumping of money into the UK economy). At the moment it is on hold, but the door has been left open for further emergency measures should the economy need further stimulus.

The consequences of further money being injected into the economy are more than likely to be disastrous for sterling.


US dollar and Euro predictions

If this were to happen (which is not too unlikely given the mixed nature of the economic data released recently) analysts are predicting sterling exchange rates heading towards:

- US dollar $1.40/ £1

- Euro €1/£1 (called parity)

There is likely to be some serious movement in exchange rates over the next few weeks and the period up to the election will be critical for the pound. Whichever way the outlook goes over the next few weeks, expect sterling to see large movements.

Get in touch now to avoid unfavourable affects on your international payments (to or from the UK), as we can help put a strategy in place that minimises your exposure to the market movements. Smart Currency Exchange can supply excellent exchange rates for all popular currencies so ring today on 0207 898 0541 or visit http://www.smartcurrencyexchange.com/


Limited Time Offer: Place In the Sun Tickets for Free (£8 value)

Smart Currency is currently offering complimentary tickets to this months ‘Place in the Sun’ exhibition at Earls Court, London. Tickets are available for all Smart clients, so if you already have a Smart account, simply email the below address requesting tickets. If you’d like tickets, yet don’t have a Smart account, simply open an account today! As soon as we receive your request, we’ll send your tickets out in the post. Please note that we have a limited supply of free tickets – once they’re gone, they’re gone…so request them ASAP.

Details
Dates: 26th, 27th and 28th of March (Fri, Sat, Sun)
Time: 10:00 – 17:00
Venue: Earls Court (London)
Children under 16 are free
For more information on the UK’s top overseas property exhibition, go to: http://aplaceinthesun.com/exhibition

To claim your tickets
Smart account holders – to request your tickets, please email the address below along with the amount of tickets needed (up to 4):
Enquiries@SmartCurrencyExchange.com

Non-Smart account holders – to become a Smart account holder please fill out our online form at: http://www.smartcurrencyexchange.com/applyOnline.aspx (in the comments box, please note that you’d like to take advantage of the free ‘Place in the Sun’ tickets. Let us know if you need 2 or 4 tickets).


Jargon Buster: Downside Risk

In layman’s terms: Downside risk is the risk of the exchange rate moving against you and causing your payment to cost more.

For example, there is a lot of downside risk at the moment, as the Bank of England has not discounted the possibility of pumping more money into the economy. There is currently a lot of downside risk for sterling as concerns grow over a hung parliament.


How Smart helped at an amazing Grand Charity Event!

On the 26th February 2010 Peace and Harmony Freemasonry Lodge of Paphos held a Grand Charity Event and raised almost 24,000 euros for "Help for Heroes", http://www.helpforheroes.org.uk/ in the UK.

But first of all - what is the charity for? Well, “Help for Heroes” is all about our men and women of the Armed Forces who are injured in the course of their duties. All profits raised will be donated to the charity, which in turn will use these funds to transform the lives of wounded service personnel.

Smart are very proud to have been involved with the event.


Do you need a live quote or more information on just how much Smart Currency can save you? Call 0808 163 0102 or visit http://www.smartcurrencyexchange.com/ today!

Stop the Value of your Pension from Decreasing!

Many Brits abroad unknowingly lose money when receiving their monthly pension payment. Often a pension is paid in sterling at a UK (or off-shore) bank, exchanged to Euros and then sent to the pension holder’s overseas bank account. Alternatively, pensions are paid into a Sterling account in their overseas bank account and then exchanged into Euros for use.

By using the standard banking system, money saving options are overlooked, unnecessary charges are made and poor currency conversion rates are applied. In the end, the pension holder loses around £50 - £100 unnecessarily on every transfer. In some cases, the pension holder can lose much more. The solution is to use an international payment specialist rather than a bank.

The money saving option – fix the currency exchange rate
Mr Benson retired overseas in the middle of 2009. In July 2009, he contacted a payment specialist, explained that his monthly pension amounted to £1,134 and wanted to know what options were available. After a chat with the specialist, he decided to set up a regular payment with a fixed exchange rate of 1.16 for the full year. In July, he received €1,315.44 in his overseas bank account and will continue to do so every month for the full year. To set up this facility, Mr Benson set a standing order from his bank to the payment specialist and paid a small administration fee.

If Mr Benson had decided against fixing a currency exchange rate, his monthly amount would have decreased along with the weakening sterling rate and by October his payment would have fallen to €1179.36 - a 10% drop in value. Banks often fail to offer or even to mention the option of fixing a currency exchange rate for use in the future.

Avoid Charges
Banks in the UK and overseas seem to charge for anything they can get away with. When working with an international payment specialist they will help to reduce and often eliminate most bank sending and receiving charges. Why pay a fee if you don’t have to?

Get good exchange rates.
International payment specialists offer exchange rates that beat the rates provided by the bank. Banks often set their buying and selling rates for currency in the morning – when you visit a branch, you’ll see them hanging on the wall. Specialists, however, don’t set the rates in advance but call into the market floor to get you the best rate possible at the time of transaction.

Watching the value of your pension depreciate can be soul-destroying. Receiving €1,180 rather than €1,315 can cause great anxiety. Both situations can be avoided when discussing matters with an international payment specialist.

Smart Currency Exchange Limited – the only international payment specialists in the UK that work specifically to help people moving money for property purchases or for regular payments such as mortgage or pension payments.

To move money overseas or repatriate back to the UK go to www.SmartCurrencyExchange.com for further information.