Money transfer, especially overseas, is a rather frustrating experience, which comes with a fair share of challenges – from delays to hidden fees, double charges and bad exchange rate. Most people end up losing hundreds of dollars when sending a meager sum of money abroad. However, you should not have to pay high transaction fees just to send money.
Here is a look some tips on how to dodge big fees for your money transfer.
Send your money using foreign exchange companies
Foreign exchange companies, commonly known as Forex or FX companies are one of the most common methods of sending money abroad. FX companies have gained a lot of popularity in the past few years, especially with the increased complaints of high charges and delay in payments when transferring money with banks.
Foreign exchange companies charge very low transaction fees when sending money abroad, as little as 0.5%. Their money
transfer services are also very fast, and they tend to offer very good exchange rates. However, most of these benefits can only be reaped if you use a reputable company – there are still some FX companies that offer high charges or very poor exchange rates. Before you send money with an FX company, you should thus conduct a thorough research on the services provided, and compare them with those of the other companies offering similar services.
Online money transfer services
Online money transfer companies, for example, PayPal and AlertPay are reliable and secure way of transferring money. These services offered by these companies are cheaper than those of the banks, and very few delays are experienced. For example, when sending money with PayPal you will incur a charge of 3.5% to 4% of the money being sent, and it appears in the recipients PayPal account immediately. From there, the recipient can receive the funds by withdrawing them to his/her bank account.
Card to card transfers
Another way of sending money abroad is by use of credit cards or debit cards. This usually involves loading money into one card directly from another one. The service is very fast, with money appearing into the recipients’ card almost instantly. However, it might be a bit expensive than other alternative methods such as FX companies. To reduce the costs incurred, the best option is to ensure that both the sender’s and receiver’s card are issued by the same bank/company. Some of the cards you can use to send money abroad cheaply include the Payoneer Prepaid MasterCard, a global prepaid card that charges approximately 3.5%.
Wire transfers
Bank wire transfer is another method you can use to send money overseas. While most bank transfers are characterized by high transaction charges, there are still banks that offer affordable services. The only challenge will be in identifying such banks. When using bank wire transfers, the following are tips on how to dodge big fees for your money transfer:
- Compare the fee (transaction charges, commissions, etc) offered by various banks. Some banks offer small but several charges to disguise the high costs of their services. Comparing all the fees charged will help you choose a bank with lower charges.
- Compare the exchange rates offered – banks earn money by charging a spread on the current exchange rates on the market. When choosing a bank to send money with, always ensure that the spread charged is small to ensure the recipient gets as much money as possible.
- Use banks that offer free transfers – a number of banks offer money transfer services to other banks at little or no cost at all. However, this is usually possible if both the sender and receiver have accounts in the same bank or banks that are related.
Choosing the cheapest transfer method
While all the above money transfer methods can come in handy when sending money abroad, the only way you can be able to avoid big transfer fees is by choosing the cheapest method.
- Choose the methods that do not charge any fees, for example, FX brokers.
- Compare the exchange rates of all methods and go with the one offering the best rates.
- Ensure you have the actual charges you will incur when sending the money – most money transfer services attract customers with disguise of cheaper fees only to have very high hidden fees, which you do not realized are there until you have sent the money. Researching all the hidden fees beforehand will help you in identifying the cheapest service.
- Consider sending money from your credit card – most services, for example, FX brokers, PayPal, bank transfers and services such as Western Union can allow you to send money from your credit card. This might be cheaper method if the recipient is receiving the money in the same currency as the one sent.
- If sending money to someone without a bank account or to a high risk country, consider using Hawala senders. These are likely to be a bit cheaper, but they might be more risky.
Conclusion
The high transfer fees incurred when sending money abroad can make the experience to be a very unpleasant one. However, with the above tips, you can be able to dodge the exorbitant fees that are charged by most companies/banks.
About the author: Razvan has a Master degree in Strategic Marketing and is heavily invested in online marketing with www.InternationalMoneyTransfers.org for more than 5 years. But in the free time he loves to play team sports, read the latest finance news and drink artisanal beers.
