Whether you are sending money to relatives or buying a property overseas, there are a number of different methods to send money abroad. We take a look at the safest and most cost-effective options.
Things to consider
Your choice of method to send money abroad will depend on a number of factors.
Fees and charges
Companies that organise foreign exchange money transfers can charge you in three different ways:
- The person sending the money has to pay a fee.
- The person receiving the money has to pay a fee.
- Many companies offering their services ‘free of commission’ will modify the exchange rate in their favour.
Fees and charges can vary depending on the amount you are sending and the method you use. Many companies charge lower fees and better exchange rates for larger amounts.
Type of currency
As a rule of thumb, transferring ‘well-known’ currencies such as euros or US dollars tends to be cheaper and easier.
You may have problems finding a company that will transfer lesser-known currencies, and if you do, they may charge a higher rate.
Some methods are faster than others, so if you need a quick transfer you will need to choose accordingly.
If you want to send money regularly to the same location, a more permanent solution might be best, such as a foreign bank account.
Best methods for sending money abroad
There are three main methods to send money abroad.
1. Using your bank or building society
This is a safe, secure and convenient method. If you contact your bank or building society they will talk you through the process.
You will need an International Bank Account Number (IBAN) and the Bank Identifier Code (BIC) for both your bank and the bank that will receive the funds.
The main disadvantage of using this method is that you may not get the best deal on larger amounts. Also, this type of transfer takes four to six business days, so it’s not the fastest option.
2. Using a specialist money transfer company
Examples of this type of company include Western Union, XE Money Transfer and CurrencyFair.
No account is necessary, and the transaction can be completed the same day.
Once the fee is paid and the money to be transferred is submitted, the sender is given a reference number. This number is given to the receiver who can use it to collect the money at an overseas office.
Before committing to this method, make sure you are aware of the fees and charges. They can be high depending on the company. Bear in mind that this type of company is not covered by the Financial Services Compensation Scheme (FSCS) so your funds are not protected if they go bust.
3. Using a foreign exchange broker
This method is useful for sending larger sums of money abroad. These brokers tend to charge lower fees and competitive exchange rates when transferring larger sums. This type of transaction can be completed the same day.
You may need to open an account to use this type of service, so you may need to plan ahead. Foreign exchange brokers are not covered by the FSCS.
If you are planning to send money abroad, think about your requirements first. This will have a big influence on the method you choose. Further information on sending money overseas is available from the Money Advice Service.