The pound has plummeted to under 1.15 versus the euro and 1.3 against the dollar, the best for many years. So locating the foreign exchange is far more essential than in the past. But this article is not about holiday money. It’s about people who must send small sums regularly, and others making large one-off transfers, for example buying a holiday property. It reveals that some providers are perfect for large sums, but pricey for smaller transfers – plus it notifys you to avoid PayPal, which became available 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, how many euros/yen/dollars etc will I get for X pounds?” To achieve this, check exactly how much you happen to be offered up against the mid-market “interbank rate”, the velocity used when banks trade between one other. You should check the live interbank rate on XE.com.
Secondly, you can be reasonably certian that the deal available from your high-street bank will likely be pretty lousy, unless you are a “premier” type customer transferring substantial sums.
James Daley of Fairer Finance says: “Almost all major banks charge a fortune for transferring money overseas, and present a terrible exchange rate on top of that. The good thing is that a variety of alternatives provide you much better value.”
Our third golden rule is that, if transferring a sizeable sum in a foreign account, first send a little sum and appearance this has been received, as much to make sure you have sent it to the right account as everything else. Only then in the event you send the complete amount.
Almost all major banks charge big money for transferring money overseas, and present a poor exchange rate to boot
James Daley, Fairer Finance
Finally, remember there may be relatively limited protection should things go wrong. The currency brokers might be “authorised” through the Financial Conduct Authority (FCA) or maybe “registered”. Authorised firms ought to keep clients’ money apart from the company’s own funds. If a firm is definitely registered with all the FCA there’s a danger all of the money is within the same pot and can be lost when the company went bust.
“Even in case a firm is FCA authorised, it’s vital that you recognize that there is no protection from the Financial Services Compensation Scheme with this sector,” says Daley. “So if a firm goes bust due to a fraud, there’s still an opportunity that you simply won’t get your money back. However, the potential risks if you’re employing a big brand are fairly small.”
During 2010, Crown Foreign Exchange, operating out of Hayle, Cornwall, went bust, leaving 3,000 people owed £20m. It used new customers’ cash to repay existing clients, along with fund purchasing a luxury home. Three people working 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 exam on 29 July if the pound was fetching €1.19 and $1.32 respectively, but sadly it has since fallen further.
Ideal 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 is a subsidiary of any Australian group, OFX. TransferWise is a peer-to-peer service (see below), headquartered in the uk and run by Estonians. Investors in the market include Richard Branson.
Worst within this bracket were MoneyGram and NatWest, which goes to show the reasons you shouldn’t automatically use well known names. For £200, NatWest will give us only $229.31, compared to $260.94 from TransferWise.
Ideal for mid-size sums When transferring £2,000, the Currency Account (for euros) and TransferWise (dollars) were best. The Currency Account is actually a relatively new and small company, formed in 2014, which is authorised from the FCA. It describes itself as being a “hybrid” peer-to-peer plus direct market access company.
Great for large sums We checked rates on moving £150,000, a sum where you will be seriously upset if anything went wrong. Again, the Currency Account came top for euros, though there is minimal between it along with the other brokers. HiFX came top in the bracket for dollars. HiFX was established in 1998 and is probably the largest brokers, having transferred around £100bn ever since then.
Currency brokers There are loads of currency brokers or money transfer specialists. Some examples are MoneyCorp, Currencies Direct, CaxtonFX, TorFX, HiFX, UKForex, FairFX, Azimo and Xendpay. They pretty much all advertise “bank beating” rates, but just how do they really compare against one another?
A number of currency comparison sites are offered, nonetheless they won’t necessarily find the best deal. If you’re looking for the most bang for your buck you will be more well off planning to individual companies, acquiring a quote and asking how long the transfer will require. When you notice a company offering a good price, have a look at its reputation through the use of FXCompared, TrustPilot or perhaps a general Google search.
Established firms are often, but not always, one of 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 a whole new type of peer-to-peer operators which eliminate banking institutions and brokers by offering an online meeting area for people looking to buy each other’s currencies. You don’t send your hard earned dollars directly, rather on the currency exchange firm which then 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 cut out the crazy fees that banks charge consumers,” says Taavet Hinrikus, co-founder of TransferWise.
Another peer-to-peer platform, CurrencyFair, works inside a similar way, though the exchange rates are positioned by its users. In case there are no customers providing a good rate for your personal exchange, CurrencyFair will step in and complement you. The internet site claims customers typically pay .35% in the amount exchanged as well as a fixed €3 transfer fee.
If you need to pay in cash or transfer money quickly, Western Union and MoneyGram both have branches in the high-street – however services are not cheap and only suited to small amounts. And while companies are legitimate, they are often made use of by scammers, so be skeptical of strangers asking for payment this way.
PayPal might make it easier to send money overseas, but was the costliest option by 50 % the Guardian calculations. It whacks on the hefty conversion fee if you wish to pay someone in another currency.
This informative article was amended on 22 August to fix the season when the Currency Account was set up. It ought to have said 2014, not 2011.
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