Foreign exchange brokerage firms offer competitive and little or no fees for overseas money transfers. This provides you with a great advantage especially if you are transferring Â£5000 or more. These companies specialize in currency transactions, so you can use foreign exchange brokers to send money overseas. While most of these companies do not deal with small money transfers, some may handle small transfer of about Â£3000 for a fee. On the other hand, when you make sizable transfers, many companies will not charge for the money transfers because they turn a profit on the exchange rate. Compare these companies and get a great deal.
Making a transfer
First, you are required to open an account and transfer money or pay in to an account with the exchange broker. This may take a day or two. When making a currency comparison, you have two options: you can transfer the money abroad using the current exchange rate, or you can use a forward contract. The contract locks in the exchange rate for future trade. Some foreign exchange brokers will also handle regular overseas transfers. They can also offer travel cash, typically delivered to your door the following day via post. Currency comparison sites can help you identify currency traders near you.
If you encounter challenges
Keep all the paperwork in a safe place. If you encounter any problems with the transfer, your receipts will assist you in proving that you sent the money. If your foreign exchange broker becomes insolvent, there are no compensation schemes to cover your loss. Therefore, these companies may not be as safe as using a bank. It is imperative that you check out the firm before committing yourself, as you will be using the broker for large transfers. Conduct adequate research on currency traders before comparing them on money transfer comparison sites.
In the UK, companies authorized by the Financial Conduct Authority are required to safeguard your money by keeping it separate from the firms' fund. Therefore, your money is paid back should the company become insolvent. Companies simply registered with the Financial Conduct Authority are not required to safeguard your money this way. Make sure that you always choose an authorized company.
A money transfer firm or a bank: which is the better choice?
When making an overseas money transfer, you can opt between a bank, a foreign exchange broker or a money transfer firm. Find out from your bank how much it charges. Ask about both the fees and exchange rates to come up with the total amount of foreign currency your money will buy. Visit a money transfer comparison site to compare deals from money transfer companies and foreign exchange brokers. Keeping the risk of each option in mind, compare the quotes. If, for example, the best deal is from a firm that is not FCA authorized, take into account the size of your transfer. If you are transferring a large amount of cash, an unauthorized firm is not worth the risk as protection of your money is not guaranteed.