The pound has plummeted to below 1.15 versus the euro and 1.3 against the dollar, the best for many years. So finding the foreign currency transfer is a lot more essential than in the past. But this information is not about holiday money. It’s about individuals who need to send small sums regularly, and those making large one-off transfers, such as buying a holiday property. It reveals that some providers are ideal for large sums, but pricey for smaller transfers – plus 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 should be: “After each of the charges, just how many euros/yen/dollars etc can i get for X pounds?” To accomplish this, check just how much you will be offered from the mid-market “interbank rate”, the velocity used when banks trade between an additional. You can examine the live interbank rate on XE.com.
Secondly, you may be reasonably certian how the deal made available from your high street bank is going to 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 provide an inadequate exchange rate to boot. The good thing is that several alternatives provide you with a lot better value.”
Our third golden rule is, if transferring a sizeable sum right into a foreign account, first send a compact sum and check this has been received, as much to make sure you have sent it off to the right account as whatever else. Only then in case you send the full amount.
Nearly all major banks charge a lot of money for transferring money overseas, and offer a terrible exchange rate to boot
James Daley, Fairer Finance
Finally, remember there is certainly relatively limited protection should things go awry. The currency brokers can be “authorised” by the Financial Conduct Authority (FCA) or just “registered”. Authorised firms ought to keep clients’ money separate from the company’s own funds. In case a firm is merely registered using the FCA there’s a danger all the money is incorporated in the same pot and could be lost if the company went bust.
“Even in case a firm is FCA authorised, it’s vital that you understand that there is absolutely no protection from the Financial Services Compensation Scheme in this sector,” says Daley. “So in case a firm goes bust as a result of fraud, there’s still the opportunity that you won’t get your money back. However, the health risks if you’re utilizing a big brand are fairly small.”
In 2010, Crown Foreign Currency Exchange, situated in Hayle, Cornwall, went bust, leaving 3,000 people owed £20m. It used new customers’ cash to settle existing clients, in addition to fund purchasing a luxurious home. Three people working in the scam have been jailed.
We obtained quotes for moving £200, £2,000 and £150,000 into euros and dollars. We conducted the exam on 29 July as soon as the pound was fetching €1.19 and $1.32 respectively, but sadly they have since fallen further.
Best for small sums When transferring £200 we found UKForex perfect for euros and TransferWise best for dollars. UKForex is FCA authorised as an alternative to registered, and it is a subsidiary of an Australian group, OFX. TransferWise is really a peer-to-peer service (see below), headquartered in London and run by Estonians. Investors in the business include Richard Branson.
Worst in this bracket were MoneyGram and NatWest, which goes toward show why you shouldn’t automatically use popular names. For £200, NatWest will give us only $229.31, compared with $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 through 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 will be seriously upset if anything went wrong. Again, the Currency Account came top for euros, though there was hardly any between it along with the other brokers. HiFX came top within the bracket for dollars. HiFX was established in 1998 and is among the largest brokers, having transferred around £100bn consequently.
Currency brokers There are loads of currency brokers or money transfer specialists. Such as MoneyCorp, Currencies Direct, CaxtonFX, TorFX, HiFX, UKForex, FairFX, Azimo and Xendpay. They basically all advertise “bank beating” rates, but exactly how do they really compare against one another?
A number of currency comparison sites are offered, however they won’t necessarily look for the best deal. If you’re looking for value for your money you will be happier likely to individual companies, getting a quote and asking the length of time the transfer can take. When you see an organization offering a good price, look at its reputation by using FXCompared, TrustPilot or a general Google search.
Established firms are generally, although not always, the most reliable. Some smaller brokers and “disruptive” web platforms temporarily stopped trading through the EU referendum aftermath.
Peer-to-peer services TransferWise is one of a fresh type of peer-to-peer operators which remove the banks and brokers by providing a web-based meeting spot for people looking 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 banking accounts 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 within a similar way, even though the exchange rates are positioned by its users. In cases where you will find no customers providing a good rate for your personal exchange, CurrencyFair will part of and complement you. The site claims customers typically pay .35% of your amount exchanged along with a fixed €3 transfer fee.
If you wish to pay in cash or transfer money quickly, Western Union and MoneyGram have branches about the high street – however their services usually are not cheap and merely appropriate for a small amount. Even though the companies themselves are legitimate, they are often utilized by scammers, so be suspicious of strangers seeking payment using this method.
PayPal will make it easy to deliver money overseas, but was the most costly option in half the Guardian calculations. It whacks with a hefty conversion fee if you want to pay someone in another currency.
This informative article was amended on 22 August to correct the season when the Currency Account was set up. It must have said 2014, not 2011.
… we have a small favour to question. More people are reading the Guardian than ever but advertising revenues across the media are falling fast. And unlike many news organisations, we haven’t set up a paywall – we would like to keep our journalism as open when we can. So you can see why we have to ask for your help. The Guardian’s independent, investigative journalism takes considerable time, money and effort to generate. But we all do it because we believe our perspective matters – as it might well be your perspective, too.