I have bought a house in France which I am slowly renovating, with the aim to retire out there in the future.
What’s the best and easiest way to send money abroad regularly to pay for the restoration?
I have seen several services online offering cheap rates but can I trust them? Or should I just use my bank?
French fantasy? Restoring a house abroad may require large or frequent money transfers, so it’s important to make sure you get the best rate to make your cash stretch further
Emma Gunn of This is Money replies: Most of us will have dreamed of packing it all in and moving abroad at some point in our lives, particularly after a dreary day at work and or a good episode of Channel 4’s Escape to the Chateau.
For anyone who does have the guts to follow their dream of moving to sunnier climes, the exchange rate and other costs of sending your money abroad can be a real deal breaker – now more than ever thanks to the weak pound.
Typically moving abroad involves opening a local bank account.
However, if you have not yet made the move full-time, chances are you will be regularly sending cash from one account to the other, or sending payments to suppliers while you restore your new property and pay for running costs.
The golden rule when it comes to moving money overseas is don’t automatically use your bank.
Most banks will apply a one-off fee for payments and the cost usually depends on how you request the transfer as well as how quickly you need to send the cash.
Typically the fees are higher if you make payments over the phone or request them by post, and of course if you want the money there the same day.
HSBC charges nothing when sending cash to another if its customers, but you will pay £4 to send money abroad through online or mobile banking, or up to £30 if you do it by post.
Santander on the other hand charges £15 for slower payments or up to £25 for same day transfers, while Nationwide charges £20 and Barclays charges up to £40.
On top of these upfront fees, many banks and transfer companies set their own exchange rate – which will typically be a lot worse than the actual Forex market rate charged elsewhere and eat into the sum being transferred significantly.
There are however now a whole host of currency exchange specialists online, including some new companies you may never have heard of, promising eye-catching rates, convenience and fewer fees which are worth considering instead.
You can find out more about these currency exchange specialists and the rates they offer here.
But are they safe and how much does it really save you to use an alternative to your bank?
We spoke to Daniel Webber, the founder and chief executive of Fxcompared, a leading currency exchange comparison site, to find out.
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Daniel Webber, of FxCompared, says: While it may be tempting to send payments via your high street bank, a variety of alternative currency providers exist to help you transfer your money overseas.
Because banks offer a vast array of services to their customers, fair international exchange rates often take a low priority.
Currency providers focus only on foreign exchange rates, so you will receive a fairer exchange rate and often lower fees than a high street bank.
For a £250,000 house purchase, our research shows you can expect to save an average of £2,500 by using a currency specialist instead of your bank.
Working with a currency provider has other benefits beyond just the exchange rates.
You can automate payments for items such as your overseas mortgage, allowing you to regularly send money overseas without any hassles and often fixing the rates.
Unlike a high street bank, you will also often be assigned a dedicated account manager.
Additionally, currency providers offer more sophisticated financial tools to help you save money in your transaction, such as a currency forward contract.
This gives you the opportunity to lock in the current exchange rate for a future transaction. For example once you may have decided and agreed to buy the property, this could typically be three to six months until you complete the transaction.
This is invaluable for planning ahead financially, and helps avoid the pitfalls of currency volatility.
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Some people are nervous at the prospect of using a currency provider over a bank but all the major currency providers are regulated by the Financial Conduct Authority in the UK, affording you protection.
They must all adhere to the strictest regulatory standards and they ensure your funds are appropriately segregated from their business funds in line with requirements.
Which are the best money transfer companies?
Emma Gunn, of This is Money, continues: At the time of writing, the market rate from sterling to euros is 1.14255, which would get you €11,425.49 if you were to exchange £10,000.
We have put together a table showing the top rates of the companies FXCompared’s Webber recommends, including an example of the rate you would get at the time of writing, what the fees are and how many Euros you would get for a £10,000 transfer.
Below the table you can read more about the companies themselves and why Webber recommends them.
Remember, as the table below shows you need to consider both the exchange rate and any fees will determine which is the best deal.
|Transfer service||Euros for £10,000 exchanged||Rate||Fee||Time frame||Estimated saving vs banks|
|Currencies Direct||€11,287.92||1.1288||–||1-3 days||£179.32|
|FC Exchange||€11,310.75.||1.1311||–||1-3 days||£199.32|
|TransferWise||€11,386.23||1.14270||£35.68 (0.35% of the amount converted plus 80p)||90% of transfers completed within 1 day||£220.93|
|World First||€11,319.31||1.1319||–||1-3 days||£206.82|
Daniel Webber, of FxCompared, continues: Currencies Direct has been open since 1996 and trades in over 100 currencies. It offers spot contracts, forward contracts, and assistance with recurring payments.
FC Exchange purchases currency wholesale, and can in turn offer faster transfers and better exchange rates to its customers. Founded in 2005 it caters to small to medium-sized businesses and single consumers. Features include forward contracts, single payments, and recurring transfers.
Moneycorp is a well-established UK firm and started in 1962. In addition to both spot and forward contracts, Moneycorp customers are able to make use of personalised cards that allow them to obtain money without pre-ordering it.
Australian-based OFX helps consumers with immediate transactions, recurring payments, limit orders and forward contracts. It has branches all over the world, but its strongest reach by far is in Australia, where it was founded in 1998.
RationalFX is based in the UK and was founded in 2005; the company was among the first to offer an online payment system. It’s aimed at consumers and offers low fees, competitive exchange rates, and stop and limit orders.
TorFX has been around since 2004. It serves both single and corporate users, offering forward contracts up to two years in advance, market analysis and monitoring plus flexible payment plans.
TransferWise was founded in 2011. It uses a mid-market rate on every transaction and then adds a fee on top of this. It is an online and mobile-only platform.
World First was founded in 2004. It offers a variety of services including automated payments, multi-currency accounts and forward contracts.
WorldRemit, established in London in 2010, serves individual customers, allowing them to send varying amounts of money to over 50 countries worldwide with ease, via their mobile phone or tablet.
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