The pound has plummeted to under 1.15 against the euro and 1.3 versus the dollar, the cheapest for years. So finding the money transfer is more essential than ever before. But this article is not about holiday money. It’s about people who should send small sums regularly, and those making large one-off transfers, such as purchasing a holiday property. It reveals that some providers are ideal for large sums, but pricey for smaller transfers – and it tells you to protect yourself from 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 ought to be: “After each of the charges, how many euros/yen/dollars etc will I get for X pounds?” To accomplish this, check how much you happen to be offered from the mid-market “interbank rate”, the pace used when banks trade between an additional. You can check the live interbank rate on XE.com.
Secondly, you will be reasonably certian that the deal offered by your high street bank will be pretty lousy, unless you happen to be “premier” type customer transferring large sums.
James Daley of Fairer Finance says: “Almost all major banks charge lots of money for transferring money overseas, and present a bad exchange rate to boot. Fortunately that numerous alternatives provide you much better value.”
Our third golden rule is the fact, if transferring a sizeable sum into a foreign account, first send a small sum and appearance it really has been received, just as much to ensure you have sent it off to the right account as other things. Only then should you send the complete amount.
Almost all major banks charge big money for transferring money overseas, and offer a poor exchange rate to boot
James Daley, Fairer Finance
Finally, remember there is relatively limited protection should things go wrong. The currency brokers could be “authorised” from the Financial Conduct Authority (FCA) or simply “registered”. Authorised firms need to keep clients’ money outside of the company’s own funds. If your firm is simply registered using the FCA there’s a risk all of the money is with the same pot and could be lost when the company went bust.
“Even when a firm is FCA authorised, it’s essential to realize that there is absolutely no defense against the Financial Services Compensation Scheme with this sector,” says Daley. “So if your firm goes bust because of a fraud, there’s still an opportunity that you won’t get a refund. However, the hazards if you’re by using a big brand are fairly small.”
During 2010, Crown Forex, based in Hayle, Cornwall, went bust, leaving 3,000 people owed £20m. It used new customers’ cash to settle existing clients, as well as fund the purchase of an extravagance home. Three people active in the scam have been jailed.
We obtained quotes for moving £200, £2,000 and £150,000 into euros and dollars. We conducted the test on 29 July once the pound was fetching €1.19 and $1.32 respectively, but sadly it provides since fallen further.
Perfect for small sums When transferring £200 we found UKForex perfect for euros and TransferWise great for dollars. UKForex is FCA authorised as opposed to registered, which is a subsidiary of the Australian group, OFX. TransferWise is really a peer-to-peer service (see below), headquartered in London and run by Estonians. Investors in the commercial include Richard Branson.
Worst with this bracket were MoneyGram and NatWest, which will go to show the reasons you shouldn’t automatically use famous names. For £200, NatWest gives us only $229.31, compared with $260.94 from TransferWise.
Great for mid-size sums When transferring £2,000, the Currency Account (for euros) and TransferWise (dollars) were best. The Currency Account is actually a somewhat 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 would be seriously upset if something went wrong. Again, the Currency Account came top for euros, though there was clearly almost no between it along with the other brokers. HiFX came top inside the bracket for dollars. HiFX was established in 1998 and is probably the largest brokers, having transferred around £100bn since that time.
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 just about all advertise “bank beating” rates, but how can they compare against one other?
A number of currency comparison sites are available, nonetheless they won’t necessarily locate the best deal. If you’re looking for the most value for your money you would be more well off planning to individual companies, obtaining a quote and asking how much time the transfer will require. When you see a business offering the best value, have a look at its reputation by utilizing FXCompared, TrustPilot or a general Google search.
Established firms are often, although not always, by far the most reliable. Some smaller brokers and “disruptive” web platforms temporarily stopped trading during the EU referendum aftermath.
Peer-to-peer services TransferWise is just one of a whole new breed of peer-to-peer operators which reduce banking institutions and brokers through providing an internet meeting spot for people seeking to buy each other’s currencies. You don’t send your hard earned dollars directly, rather to the forex firm which in turn passes it on.
“Our exchanges are derived from free or extremely low-cost local bank account transfers. We don’t send money overseas, so can reduce the crazy fees that banks charge consumers,” says Taavet Hinrikus, co-founding father of TransferWise.
Another peer-to-peer platform, CurrencyFair, works inside a similar way, though the exchange rates are positioned by its users. When you can find no customers providing a reliable rate for the exchange, CurrencyFair will step in and complement you. The web page claims customers typically pay .35% in the amount exchanged as well as a fixed €3 transfer fee.
If you have to pay in cash or transfer money quickly, Western Union and MoneyGram have branches in the high street – however services are not cheap and only ideal for a small amount. Even though the companies are legitimate, they are usually made use of by scammers, so be skeptical of strangers requesting payment by doing this.
PayPal might make it simple to send out money overseas, but was the most expensive option by 50 percent the Guardian calculations. It whacks on the hefty conversion fee if you would like pay someone in another currency.
This article was amended on 22 August to fix the entire year wherein the Currency Account was set up. It should have said 2014, not 2011.
… there exists a small favour to ask. 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 build a paywall – we should keep our journalism as open since we can. So you can understand why we need to ask for your help. The Guardian’s independent, investigative journalism takes a lot of time, money and work to produce. But perform it because we believe our perspective matters – as it might well become the perfect perspective, too.