The pound has plummeted to under 1.15 versus the euro and 1.3 versus the dollar, the best for years. So finding the foreign currency transfer is much more essential than before. But this information is not about holiday money. It’s about those who must send small sums regularly, and others making large one-off transfers, including getting a holiday property. It reveals that some providers are great for large sums, but pricey for smaller transfers – and it also informs you to avoid PayPal, which became available particularly poorly inside our price survey.
Consumers should first cut through any nonsense about “no fees” or “no commission”. Your key question should be: “After each of the charges, just how many euros/yen/dollars etc will I get for X pounds?” To do this, check simply how much you might be offered against the mid-market “interbank rate”, the speed used when banks trade between an additional. You can check the live interbank rate on XE.com.
Secondly, you will be reasonably certian how the deal offered by your high street bank will be pretty lousy, unless you are a “premier” type customer transferring huge sums.
James Daley of Fairer Finance says: “Almost all major banks charge a fortune for transferring money overseas, and offer an inadequate exchange rate on top of that. The good news is that a variety of alternatives give you much better value.”
Our third golden rule is the fact, if transferring a sizeable sum into a foreign account, first send a little sum and look this has been received, just as much to make sure you have sent it on the right account as other things. Only then should you send the total amount.
Nearly all major banks charge a lot of money for transferring money overseas, and provide a terrible exchange rate on top of that
James Daley, Fairer Finance
Finally, remember there is relatively limited protection should things get it wrong. The currency brokers may be “authorised” from the Financial Conduct Authority (FCA) or just “registered”. Authorised firms should keep clients’ money separate from the company’s own funds. If a firm is just registered using the FCA there’s a danger all of the money is in the same pot and can be lost when the company went bust.
“Even if your firm is FCA authorised, it’s crucial that you know that there is no defense against the Financial Services Compensation Scheme within this sector,” says Daley. “So if a firm goes bust because of fraud, there’s still a chance which you won’t get a refund. However, the risks if you’re employing a big brand are fairly small.”
During 2010, Crown Currency Exchange, based in Hayle, Cornwall, went bust, leaving 3,000 people owed £20m. It used new customers’ cash to settle existing clients, as well as fund purchasing an extravagance home. Three people involved in the scam are already jailed.
We obtained quotes for moving £200, £2,000 and £150,000 into euros and dollars. We conducted the test on 29 July when the pound was fetching €1.19 and $1.32 respectively, but sadly it has since fallen further.
Great for small sums When transferring £200 we found UKForex best for euros and TransferWise ideal for dollars. UKForex is FCA authorised rather than registered, and it is a subsidiary of any Australian group, OFX. TransferWise can be a peer-to-peer service (see below), headquartered inside london and run by Estonians. Investors in the commercial include Richard Branson.
Worst in this bracket were MoneyGram and NatWest, which would go to show why you shouldn’t automatically use well-known names. For £200, NatWest gives us only $229.31, in comparison with $260.94 from TransferWise.
Ideal for mid-size sums When transferring £2,000, the Currency Account (for euros) and TransferWise (dollars) were best. The Currency Account is actually a relatively recent and small company, formed in 2014, which is authorised from the FCA. It describes itself being a “hybrid” peer-to-peer plus direct market access company.
Best for large sums We checked rates on moving £150,000, a sum where you would be seriously upset if anything went wrong. Again, the Currency Account came top for euros, though there seemed to be almost no between it and also the other brokers. HiFX came top from the bracket for dollars. HiFX was established in 1998 and is amongst the largest brokers, having transferred around £100bn consequently.
Currency brokers There are numerous currency brokers or money transfer specialists. Such as MoneyCorp, Currencies Direct, CaxtonFX, TorFX, HiFX, UKForex, FairFX, Azimo and Xendpay. They just about all advertise “bank beating” rates, but exactly how do they really compare against the other person?
A few currency comparison sites can be purchased, but they won’t necessarily find the best deal. If you’re looking for the best bang for your buck you would be more well off likely to individual companies, receiving a quote and asking how long the transfer can take. When you see a company offering a good deal, have a look at its reputation by using FXCompared, TrustPilot or perhaps a general Google search.
Established firms are usually, yet not always, probably the most reliable. Some smaller brokers and “disruptive” web platforms temporarily stopped trading in the EU referendum aftermath.
Peer-to-peer services TransferWise is among one of a brand new type of peer-to-peer operators which reduce banking institutions and brokers by offering a web-based meeting area for people planning to buy each other’s currencies. You don’t send your hard earned dollars directly, rather to the forex firm which in turn passes it on.
“Our exchanges are based on free or extremely low-cost local bank account transfers. We don’t send money overseas, so can eliminate the crazy fees that banks charge consumers,” says Taavet Hinrikus, co-founding father of TransferWise.
Another peer-to-peer platform, CurrencyFair, works in the similar way, even though the exchange rates are set by its users. In the event that you can find no customers providing a reliable rate for your personal exchange, CurrencyFair will part in and complement you. The internet site claims customers typically pay .35% of the amount exchanged including a fixed €3 transfer fee.
Other available choices
If you need to pay in cash or transfer money quickly, Western Union and MoneyGram have branches on the high-street – however their services are certainly not cheap and just suited to a small amount. And although companies are legitimate, they usually are utilized by scammers, so be suspicious of strangers asking for payment using this method.
PayPal may make it easy to deliver money overseas, but was the costliest option in half the Guardian calculations. It whacks on a hefty conversion fee if you wish to pay someone in another currency.
This article was amended on 22 August to correct the year in which the Currency Account was set up. It should have said 2014, not 2011.
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