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If you’re starting a new life in a foreign country, one of the most important – yet often overlooked – factors you need to consider is how you’ll manage your international currency transfers.
While moving abroad can be exciting, there’s a lot of administration involved in the process that can be daunting to navigate alone. For many prospective expats, the world of foreign exchange is also completely unknown, and it can be difficult figuring out where to start. Here’s all you need to know about the best money-moving method for your big life change.
Making the best decision when moving abroad
The two most popular kinds of foreign exchange providers are banks and specialist currency brokers. Today, many prefer to use currency brokers to manage their transfers because of their industry expertise and lower fees.
While there are several currency brokers to choose from, you should always look for some of the following differentiators:
- A focus on fund security and customer care
- Authorised by the Financial Conduct Authority (FCA)
- Operates with segregated client accounts (this means there are separate accounts for the clients’ and the company’s funds ensuring client funds are protected no matter what)
- Highly recommended by existing clients (you should be able to find ratings and reviews online)
Understanding the exchange rate
The exchange rate you see when you check the currency conversion online is often the market rate, also known as the “interbank rate” or the “mid-market rate”. It is essentially a wholesale rate that is available only to large financial institutions or those who purchase large volumes of currency.
Generally, this will not be the actual rate you’re offered when you exchange your currency. You will be provided with a “retail” rate. Similar to the sale of goods and services, the retail rate typically is the market rate plus a mark-up added by the provider. You’ll want to work with a provider that offers exchanges closest to the interbank rate as much as possible, but watch out that they don’t compensate for this with hidden fees.
Exchange rates are far from static and can fluctuate wildly in a matter of days as a result of a wide range of stimuli. If you move your money when the exchange rate is strong, you could be much better off than if you made your transfer when the rate was lower.
Keeping an eye on the rate can be time-consuming and confusing if you’re not familiar with the currency market. Some forex providers will monitor exchange rates on your behalf and let you set up currency alerts so you can make your transfer at the optimal time. There’s a lot of benefit attached to getting regular market guidance from industry experts, whether you’ve got small or large transfer requirements.
How to get the best exchange rates for your transfer
Currencies can rise and fall without warning due to many reasons, including central bank announcements and fresh economic data releases. However, there are ways to ensure you still get the most out of your money when making transfers abroad.
Don’t use the bank
When sending money abroad, many businesses and individuals head straight to their bank because they’re familiar with them and assume it’s the easiest option. However, most banks offer poor exchange rates and add on a variety of hidden fees that push up the cost.
Compare rates
Whether it’s your first time transferring money abroad or you do so regularly, it’s good practice to compare the rates you’re being offered against the real rate of exchange. Some unscrupulous brokers tend to offer great rates for the first few transactions and then slowly widen the spread thereafter. Eventually, you end up with bad rates without ever noticing.
Make every transfer count
If you regularly make multiple transfers to the same beneficiary, it can be more cost-effective to send a single large amount than to make multiple transfers of smaller amounts. Transfer fees can add up quickly.
Forward planning
Booking in advance allows you to budget ahead and start your financial journey knowing what you can expect to pay. Make use of market orders and hedging to limit your risk, especially when you’re planning to transfer large amounts.
Post-emigration demands after moving abroad
After you have settled in your new country, you will most likely still have global ties and need to make cross-border payments and transfer money overseas. Whether you have a mortgage back home or international school fees to pay, a forex broker can help you lock in exchange rates for big purchases or assist in targeting set rates and waiting until the currency matches it.
Whatever your needs, taking your money abroad is complex. Working with exchange control regulations and knowing which amount you can safely transfer requires specialist understanding.
Addressing your cross-border needs
The primary benefit of consulting a dedicated broker is that you will be able to have access to a personalised financing solution. Working with an expert can ease the stress of your big move and save you money in the long term.
In addition to managing all of your foreign exchange transfers and cross-border payments, a good forex specialist can also set up virtual e-wallets if you want to begin your transfer process before you’re actually present in the country you are moving to. Having a reliable, money-saving way of managing currency payments makes a world of difference.
When exchanging your hard-earned money, Sable International can provide a cost-effective structure formulated to fit your needs. Speak to us about your global money moves. Email [email protected] or call +44 (0) 20 7759 7554 for a free consultation.
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