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