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.