The pound has plummeted to less than 1.15 against the euro and 1.3 against the dollar, the cheapest for a long time. So locating the currency and transfers is much more essential than ever before. But this information is not about holiday money. It’s about people that have to send small sums regularly, and others making large one-off transfers, like buying a holiday property. It reveals that some providers are ideal for large sums, but pricey for smaller transfers – and yes it informs you to protect yourself from PayPal, which arrived particularly poorly in your price survey.
Consumers should first cut through any nonsense about “no fees” or “no commission”. Your key question should be: “After all the charges, the amount of euros/yen/dollars etc can i get for X pounds?” To achieve this, check just how much you might be offered against the mid-market “interbank rate”, the pace 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 be pretty lousy, unless you are a “premier” type customer transferring large sums.
James Daley of Fairer Finance says: “Almost all major banks charge a lot of money for transferring money overseas, and offer an inadequate exchange rate on top of that. The good news is that a variety of alternatives provide you significantly better value.”
Our third golden rule is the fact, if transferring a sizeable sum in to a foreign account, first send a little sum and appearance it really has been received, just as much to ensure you have sent it to the right account as anything else. Only then should you really send the complete amount.
Just about all major banks charge a fortune for transferring money overseas, and offer a poor exchange rate to boot
James Daley, Fairer Finance
Finally, remember there may be relatively limited protection should things get it wrong. The currency brokers may be “authorised” through the Financial Conduct Authority (FCA) or just “registered”. Authorised firms ought to keep clients’ money outside of the company’s own funds. When a firm is merely registered with the FCA there’s a risk every one of the money is with the same pot and may be lost when the company went bust.
“Even when a firm is FCA authorised, it’s crucial that you recognize that there is absolutely no defense against the Financial Services Compensation Scheme in this sector,” says Daley. “So when a firm goes bust because of fraud, there’s still an opportunity which you won’t get your money back. However, the health risks if you’re employing a big brand are fairly small.”
During 2010, Crown Currency Exchange, situated in Hayle, Cornwall, went bust, leaving 3,000 people owed £20m. It used new customers’ cash to repay existing clients, and also fund the purchase of a luxurious home. Three people involved in the scam are already jailed.
We obtained quotes for moving £200, £2,000 and £150,000 into euros and dollars. We conducted the exam on 29 July if the pound was fetching €1.19 and $1.32 respectively, but sadly it provides since fallen further.
Great for small sums When transferring £200 we found UKForex best for euros and TransferWise ideal for dollars. UKForex is FCA authorised as an alternative to registered, and is also a subsidiary of your Australian group, OFX. TransferWise is really a peer-to-peer service (see below), headquartered in London and run by Estonians. Investors in the industry include Richard Branson.
Worst with this bracket were MoneyGram and NatWest, which will go to show the reason why you shouldn’t automatically use well known names. For £200, NatWest will give us only $229.31, in contrast to $260.94 from TransferWise.
Best for mid-size sums When transferring £2,000, the Currency Account (for euros) and TransferWise (dollars) were best. The Currency Account is a fairly new and small company, formed in 2014, and it is authorised through the FCA. It describes itself as being 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 will be seriously upset if something went wrong. Again, the Currency Account came top for euros, though there is minimal between it and also the other brokers. HiFX came top within the bracket for dollars. HiFX was established in 1998 and is amongst the largest brokers, having transferred around £100bn since that time.
Currency brokers There are numerous currency brokers or money transfer specialists. Some examples are MoneyCorp, Currencies Direct, CaxtonFX, TorFX, HiFX, UKForex, FairFX, Azimo and Xendpay. They basically all advertise “bank beating” rates, but how do they really compare against the other person?
Some currency comparison sites are available, nonetheless they won’t necessarily find the best deal. If you’re looking for the most value for your money you will be more satisfied likely to individual companies, getting a quote and asking how much time the transfer will require. Once you see a business offering a good deal, take a look at its reputation by making use of FXCompared, TrustPilot or a general Internet search.
Established firms are usually, yet not always, probably the most reliable. Some smaller brokers and “disruptive” web platforms temporarily stopped trading through the EU referendum aftermath.
Peer-to-peer services TransferWise is among one of a fresh breed of peer-to-peer operators which reduce the banks and brokers through providing a web-based meeting location for people seeking to buy each other’s currencies. You don’t send your hard earned money directly, rather for the foreign currency exchange firm which then passes it on.
“Our exchanges derive from free or extremely low-cost local bank account transfers. We don’t send money overseas, so can cut out 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. In cases where there are no customers providing a decent rate for your exchange, CurrencyFair will element of and match with you. The site claims customers typically pay .35% of your amount exchanged plus a fixed €3 transfer fee.
Other available choices
If you want to pay in cash or transfer money quickly, Western Union and MoneyGram both have branches around the high-street – however their services usually are not cheap and just suited to small amounts. And although the businesses are legitimate, they are usually employed by scammers, so be wary of strangers requesting payment in this way.
PayPal will make it easier to deliver money overseas, but was the most expensive option in two 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 correct the entire year when the Currency Account was put in place. It ought to have said 2014, not 2011.
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