Millions of individuals all over the world participate in international money transfers every day. To a migrant worker wanting to send money home to their families to a family wanting to purchase a home in Spain to a global corporation needing to pay international expenses in Dubai. Transferring funds is something most people need to do on a regular basis.
However it can be a very daunting task and costly if not done with care. The majority of individuals aren’t aware of all the hidden fees associated with international transfers. Whenever you use a money transfer company, Foreign exchange broker or Bank for sending money abroad, usually there are two costs that are involved. The cost for transferring your funds is the most obvious one, with the not so obvious expense being converting your funds from one currency into another.
Your money is converted by these service providers based on what the inter-bank exchange is and they make their profit through exchanging your currency at a lower rate. Usually the profit they make from this difference is referred to as the ‘Spread.’ It is a common practice and a critical revenue stream for these providers. However, you do need to be careful since they aren’t upfront always about the costs, and you might be incurring high costs without even being aware of them. The following is a list of ways you can make safe international money transfers.
The most common way to send money is through a Bank
These large financial institutions are regulated and are very effective in transferring large amounts of funds based on security. Individuals, small businesses and large corporations all use banks for making these transfers every day. This is still the most common money transfer method. However, banks are being scrutinised more frequently due to the hidden transfer fees they charge. There are also less expensive methods of conducting of doing this, especially when you are not sending extremely large amounts. Typically banks charge individuals from $32 up to $80 AUD for each transfer, and usually costs increase as the amount of the transfer goes up. If you want to use a bank to transfer money all you need to do is visit your local branch and ask to speak with a customer service adviser. However, be sure to do your homework first. Banks all charge different amounts.
Foreign Exchange Brokers
These brokers act as the middleman between the banks and the customer. Usually they have relationships with several banks and try to offer the most competitive rates for trading one currency for another one. They deal in currency exchange primarily, but for a fee they can transfer funds also. However, opening an account can take several days, and it is a slow process. Foreign exchange services can be beneficial for small businesses needing to make international payments or for buying property abroad. When making a transfer of over $5,000 they do offer competitive exchange rates and for over that amount usually don’t charge for their transfer services.
Money Transfer Providers
Despite the fact that money transfer providers charge the same two costs that foreign exchange firms and banks do, they are a much cheaper option when you have a transfer to make that is less than $5,000.
Bank to bank transfers are commonly used, although some offer other receiving methods, including picking up cash at branches. These types of providers have been around for quite some time.
Online Money Transfer Providers
The internet makes it possible for online money transfer providers to let users make money transfers very inexpensively and still manage to make a profit for themselves.
They have various ways of accomplishing this. There are some providers that use a mid market rate for decreasing costs for their users. There are others that will match those that want to exchange the same currency sets which is another way to limit currency conversion costs. There are also transfer charges as low as $1 and even some that completely wave the fee.
Finally, usually they are regulated by the financial authorities from within their country of origin. They have secure methods for receiving and sending funds using the most modern financial technology. Some providers will take two or three days for receiving funds, however the number of providers that promise same day transfers continues to increase. The money transfer market has been revolutionized by sending money online as customers are discovering that the process of sending money via a mobile phone or computer is fast and easy compared with having to visit a local branch and deal with all of the hassles.
Before You Send Money Compare Your Money Transfer Market Options
Due to the internet, every year the number of providers continues to increase and compete with one another to attract new customers. When you do a Google search on international money transfers these days or anything having to do with sending money, you will be provided with millions of pages from the search engines that lists providers that promise to do the exact same thing: transfer funds at a low cost.
However, as you know after reading this article, providers are not all exactly the same and the best thing for you to do is shop around. Not every provider offers the same price for a specific transfer, has a same day transfer policy or sends to all the same exact countries.