If you are buying a property overseas, sending money to a friend or relative in a foreign country or sending money back to the UK to pay bills or other such financial commitments, you will use the foreign exchange markets in order to transfer money from one currency to another. In 2009 exchange rates fluctuated as much as 10% during some weeks meaning that from one week to the next the price of a property or item overseas altered dramatically. Although this may seem rather daunting fear not! There are many companies out there who can help you ensure you buy foreign currency at the best time, with the best rates and the lowest costs. Online currency brokers can help you buy currency as cheaply as possible and without any hassle.
Becoming an Expat
Regular money transfers
Most Brit’s who decide to move abroad after retirement will still need to make regular money transfers to the UK to pay bills as well as possibly receiving a rental income and a pension on a monthly basis. Many foreign currency brokers offer a great service to cater for this type living. They remove the hassle of having to set up a new money transfer each month and simply allow you to arrange regular transfers through them via a simple direct debit from your bank account each month. The broker will simply change the funds into foreign currency and transfer it into the relevant account abroad. Most foreign currency brokers will arrange regular transfers for amounts above £250.00 and depending on the amount you will be transferring each month some will even waiver any fees.
For more information about what fees currency brokers charge check out our money transfer comparison tables here.
If you do need to make regular money transfers here are three options you may wish to consider:
1. Always send a fixed amount of sterling to the currency broker. This will allow you to know the cost of every transaction, however the amount of foreign currency you will receive will fluctuate.
2. Always specify the fixed amount of foreign currency you want to receive. This will allow you to budget in your new country, however the cost of the transaction will vary as exchange rates fluctuate.
3. Fix your exchange rate for every transaction up to 2 years in the future. This option empowers you with certainty on how much each transaction will cost and how much foreign currency you will receive for up to the next two years. The benefit of this is that you now have certainty in your life and if rates drop you are in a better position than most. Do bear in mind that exchange rates can also move upwards and a better rate may be available somewhere down the line. If you purchase forward contracts you are contractually obliged to complete the contract with your foreign currency broker and will not be able to benefit from the advantageous exchange rates.
Making small one-off money transfers
Many expats need to make small money transfers before they move to a new country to pay for things such as new furniture or removal firm fees. For any transaction below £1,000 you can either try to consolidate the money transfer and send it via a foreign exchange broker or alternatively you can use your bank.
Do be aware – Banks charge a hefty fee for money transfer services, exchange rates are likely to be poor and you will find yourself having to pay a premium to have your funds arrive in a swift efficient manner!
If you can consolidate the funds you need abroad and make one money transfer via a foreign exchange brokerage you will achieve a far better exchange rate and much smaller fees!
Large money transfer
Buying a property abroad will mean exchanging a large amount into a foreign currency which can be slightly unnerving. In 2009 the Financial Services Authority (FSA) began to regulate foreign exchange brokers meaning that any funds up to £50,000 transferred to a foreign exchange broker are protected by the Financial Services Compensation scheme. All reputable foreign exchange brokers will also hold any client money in a separate trustee account meaning that the funds are kept separate from the companies assets. If the foreign exchange broker was to fall into insolvency your money would not be available to liquidators.
For more information on making an international money transfer visit our money transfer guide and use the compare currency money transfer table to see what services are available from the UK’s leading foreign currency providers.
