The pound has plummeted to lower than 1.15 against the euro and 1.3 up against the dollar, the smallest for years. So finding the currency exchange is a lot more essential than ever. But this post is not about holiday money. It’s about individuals who need to send small sums regularly, and the ones making large one-off transfers, such as investing in a holiday property. It reveals that some providers are great for large sums, but pricey for smaller transfers – plus it tells you to avoid PayPal, which arrived particularly poorly in our price survey.
Consumers should first cut through any nonsense about “no fees” or “no commission”. Your key question must be: “After all the charges, the number of euros/yen/dollars etc will I get for X pounds?” To achieve this, check just how much you might be offered from the mid-market “interbank rate”, the velocity used when banks trade between another. You can examine the live interbank rate on XE.com.
Secondly, you could be reasonably certian the deal provided by your high street bank will likely be pretty lousy, unless you happen to be “premier” type customer transferring substantial sums.
James Daley of Fairer Finance says: “Almost all major banks charge big money for transferring money overseas, and offer an inadequate exchange rate on top of that. The great thing is that several alternatives give you significantly better value.”
Our third golden rule is the fact, if transferring a sizeable sum in a foreign account, first send a compact sum and check it has been received, the maximum amount of to ensure you have sent it to the correct account as whatever else. Only then in case you send the total amount.
Virtually all major banks charge a fortune for transferring money overseas, and present a bad exchange rate to boot
James Daley, Fairer Finance
Finally, remember there is relatively limited protection should things go wrong. The currency brokers could be “authorised” from the Financial Conduct Authority (FCA) or perhaps “registered”. Authorised firms should keep clients’ money separate from the company’s own funds. When a firm is just registered using the FCA there’s a risk each of the money is incorporated in the same pot and could be lost when the company went bust.
“Even in case a firm is FCA authorised, it’s crucial that you understand that there is no protection from the Financial Services Compensation Scheme with this sector,” says Daley. “So in case a firm goes bust due to a fraud, there’s still the opportunity that you won’t get your money back. However, the risks if you’re using a big brand are fairly small.”
During 2010, Crown Foreign Currency Exchange, located in Hayle, Cornwall, went bust, leaving 3,000 people owed £20m. It used new customers’ cash to pay off existing clients, along with fund purchasing an extravagance home. Three people active in the scam happen to be jailed.
We obtained quotes for moving £200, £2,000 and £150,000 into euros and dollars. We conducted the exam on 29 July as soon as the pound was fetching €1.19 and $1.32 respectively, but sadly they have since fallen further.
Best for small sums When transferring £200 we found UKForex ideal for euros and TransferWise ideal for dollars. UKForex is FCA authorised as opposed to registered, and it is a subsidiary of your 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 within this bracket were MoneyGram and NatWest, which goes toward show reasons why you shouldn’t automatically use well known names. For £200, NatWest would give us only $229.31, in contrast to $260.94 from TransferWise.
Perfect for mid-size sums When transferring £2,000, the Currency Account (for euros) and TransferWise (dollars) were best. The Currency Account is really a fairly new and small company, formed in 2014, which is authorised from the FCA. It describes itself as 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 something went wrong. Again, the Currency Account came top for euros, though there seemed to be minimal between it as well as the other brokers. HiFX came top within the bracket for dollars. HiFX was established in 1998 and is among the largest brokers, having transferred around £100bn since that time.
Currency brokers There are loads of currency brokers or money transfer specialists. Included in this are MoneyCorp, Currencies Direct, CaxtonFX, TorFX, HiFX, UKForex, FairFX, Azimo and Xendpay. They just about all advertise “bank beating” rates, but just how do they compare against each other?
A few currency comparison sites are available, nonetheless they won’t necessarily get the best deal. If you’re looking for the most value for your money you would be more well off planning to individual companies, receiving a quote and asking how much time the transfer will take. If you notice an organization offering a great deal, have a look at its reputation through the use of FXCompared, TrustPilot or possibly a general Google search.
Established firms are often, although not always, one of the most reliable. Some smaller brokers and “disruptive” web platforms temporarily stopped trading during the EU referendum aftermath.
Peer-to-peer services TransferWise is among one of a new breed of peer-to-peer operators which eliminate financial institutions and brokers by supplying a web-based meeting spot for people seeking to buy each other’s currencies. You don’t send your hard earned money directly, rather to the foreign currency exchange firm which in turn passes it on.
“Our exchanges are derived from free or extremely low-cost local checking account transfers. We don’t send money overseas, so can reduce the crazy fees that banks charge consumers,” says Taavet Hinrikus, co-founder of TransferWise.
Another peer-to-peer platform, CurrencyFair, works within a similar way, though the exchange rates are set by its users. In the event that you can find no customers providing a significant rate to your exchange, CurrencyFair will part of and complement you. The site claims customers typically pay .35% of the amount exchanged along with a fixed €3 transfer fee.
If you need to pay in cash or transfer money quickly, Western Union and MoneyGram both have branches on the high street – however their services are not cheap and just suited to small amounts. Even though the companies are legitimate, they are usually made use of by scammers, so be skeptical of strangers requesting payment by doing this.
PayPal will make it easy to send out money overseas, but was the highest priced option in half the Guardian calculations. It whacks on the hefty conversion fee if you wish to pay someone in another currency.
This post was amended on 22 August to take care of the year wherein the Currency Account was put in place. It must have said 2014, not 2011.
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