The pound has plummeted to lower than 1.15 against the euro and 1.3 up against the dollar, the best for several years. So locating the foreign currency transfer is much more essential than ever. But this information is not about holiday money. It’s about people that should send small sums regularly, and the ones making large one-off transfers, for example investing in a holiday property. It reveals that some providers are perfect for large sums, but pricey for smaller transfers – and it tells you to avoid PayPal, which came out particularly poorly within our price survey.
Consumers should first cut through any nonsense about “no fees” or “no commission”. Your key question needs to be: “After all the charges, the amount of euros/yen/dollars etc can i get for X pounds?” To get this done, check just how much you might be offered from the mid-market “interbank rate”, the velocity used when banks trade between another. You can check the live interbank rate on XE.com.
Secondly, you may be reasonably certian that this deal provided by your high street bank will likely be pretty lousy, unless you happen to be “premier” type customer transferring huge sums.
James Daley of Fairer Finance says: “Almost all major banks charge big money for transferring money overseas, and present an inadequate exchange rate on top of that. The good news is that several alternatives offer you significantly better value.”
Our third golden rule is the fact, if transferring a sizeable sum right into a foreign account, first send a compact sum and view this has been received, just as much to make sure you have sent it to the correct account as everything else. Only then should you send the total amount.
Nearly all major banks charge big money for transferring money overseas, and give an inadequate exchange rate on top of that
James Daley, Fairer Finance
Finally, remember there exists relatively limited protection should things go wrong. The currency brokers could be “authorised” through 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 definitely registered together with the FCA there’s a risk all the money is in the same pot and can be lost in the event the company went bust.
“Even when a firm is FCA authorised, it’s crucial that you realize that there is no defense against the Financial Services Compensation Scheme with this sector,” says Daley. “So if your firm goes bust as a result of fraud, there’s still a chance that you won’t get a refund. However, the health risks if you’re by using a big brand are fairly small.”
During 2010, Crown Currency Exchange, operating out of Hayle, Cornwall, went bust, leaving 3,000 people owed £20m. It used new customers’ cash to pay off existing clients, as well as fund the purchase of a luxurious home. Three people in the scam have already been jailed.
We obtained quotes for moving £200, £2,000 and £150,000 into euros and dollars. We conducted the test on 29 July if the pound was fetching €1.19 and $1.32 respectively, but sadly it offers since fallen further.
Great for small sums When transferring £200 we found UKForex great for euros and TransferWise ideal for dollars. UKForex is FCA authorised as an alternative to registered, and is also a subsidiary of an Australian group, OFX. TransferWise is actually a peer-to-peer service (see below), headquartered in London and run by Estonians. Investors in the market include Richard Branson.
Worst in this particular bracket were MoneyGram and NatWest, which goes toward show the reason why you shouldn’t automatically use well known names. For £200, NatWest gives 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 actually a fairly new and small company, formed in 2014, and it is authorised by the FCA. It describes itself like a “hybrid” peer-to-peer plus direct market access company.
Ideal 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 was clearly very little between it and the other brokers. HiFX came top from the bracket for dollars. HiFX was established in 1998 and is among the largest brokers, having transferred around £100bn ever since then.
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 basically all advertise “bank beating” rates, but exactly how will they compare against the other person?
A few currency comparison sites are offered, nonetheless they won’t necessarily look for the best deal. If you’re looking for the best value for your money you would be better off going to individual companies, receiving a quote and asking the length of time the transfer is going to take. Once you see a business offering the best value, take a look at its reputation by making use of FXCompared, TrustPilot or perhaps a general Google search.
Established firms are usually, however, not always, by far 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 fresh type of peer-to-peer operators which cut out the banks and brokers by offering a web-based meeting place for people looking to buy each other’s currencies. You don’t send your money directly, rather on the forex firm which in turn passes it on.
“Our exchanges derive from free or extremely low-cost local bank account transfers. We don’t send money overseas, so can remove the crazy fees that banks charge consumers,” says Taavet Hinrikus, co-founding father of TransferWise.
Another peer-to-peer platform, CurrencyFair, works in a similar way, even though the exchange rates are set by its users. When there are actually no customers providing a good rate for your exchange, CurrencyFair will element of and complement you. The website claims customers typically pay .35% of your amount exchanged plus a fixed €3 transfer fee.
If you wish to pay in cash or transfer money quickly, Western Union and MoneyGram have branches in the high-street – but their services will not be cheap and simply ideal for a small amount. And although the firms are legitimate, they are generally utilized by scammers, so be wary of strangers looking for payment by doing this.
PayPal will make it easy to transmit money overseas, but was the highest priced option by 50 % the Guardian calculations. It whacks with a hefty conversion fee in order to pay someone in another currency.
This informative article was amended on 22 August to improve the year in which the Currency Account was setup. It must have said 2014, not 2011.
… we have a small favour to inquire. More people are reading the Guardian than in the past but advertising revenues over the media are falling fast. And unlike many news organisations, we haven’t put up a paywall – we wish to keep our journalism as open since we can. To help you discover why we have to request your help. The Guardian’s independent, investigative journalism takes lots of time, money and perseverance to make. But perform it because we know our perspective matters – because it might well become the perfect perspective, too.