Whether you are buying property abroad or making large investments overseas, your funds have to be sent to another country. Having too many options to choose from can be intimidating. There are lots of things to consider such as speed, support, security, and cost of the different mechanisms financial institutions implement for transferring funds abroad.
The following paragraphs will explain how someone can make a transfer securely, and why it is important to take all factors into account when sending large sums of money.
Transferring the money
The best ways to send large sums of money abroad are through banks or currency brokers (FX firms).
When making the payment, one of the most important factors to consider is getting the best exchange rate possible. If the amount is large, even small alterations in the exchange rate can make a huge difference. When the payment leaves the account, the amount that is taken can be fixed, this means the received amount on the other end will depend on the current rate at the time of sending. It is also possible to set the foreign currency’s amount beforehand so that the original amount paid by the sender will depend on the current exchange rate. Some specialist brokers offer the service to lock the rate at the time you wish to use the money abroad. This protects the customer against unwanted fluctuations on the market. In any case, the main concern should be the safety and security of the transaction.
Before deciding whether to choose a bank or a currency broker, finding out the transfer fees is essential. In general, banks charge higher amounts. Currency brokers offer lower transaction fees, some of them are fee-free.
With currency specialists, most transfers are completed within the same day of the transaction. Payments are made via bank transfer to the brokers, then they arrange a transfer for the funds to be sent to the provided beneficiary.
Keep the fees as low as possible
For high-value transactions, it is very important to find the best deals, which can save several thousands of pounds, compared to more expensive services.
High street banks can charge up to 3-4% more than currency brokers and also charge an additional £15-25 fee per transfer.
Exchange specialists use interbank rates - the rate at which banks buy and sell to each other - to trade, and they make their money on the difference between the amount they buy the currency and the rate offered for the client. This is usually around 1% of the transaction.
Dedicated currency consultants can assist the clients by advising on when is the best time to execute the transaction.
Make sure the money is safe and protected
The top priority for anyone transferring large amounts of money should be safety and security. Banks and major currency specialist firms are regulated by the Financial Conduct Authority, which means the money will be protected in the event that the company managing the transfer crashes. Most major FX firms also provide segregated client accounts, this means the funds are ring-fenced and protected in the unlikely event of failure or default by the company.
Confirming all the relevant details
If you have found a financial institution that you can trust, with low fees, and acceptable terms and conditions, you will need to confirm your and the transfer’s details.
Always keep track of your trading activities and details in writing, whether it is via post or email. Make sure you keep all the paperwork and receipts as well.