The pound has plummeted to lower than 1.15 versus the euro and 1.3 against the dollar, the cheapest for a long time. So locating the currency exchange is much more essential than in the past. But this post is not about holiday money. It’s about individuals who must send small sums regularly, and the ones making large one-off transfers, for example purchasing a holiday property. It reveals that some providers are ideal for large sums, but pricey for smaller transfers – plus it tells you to protect yourself from PayPal, which became available particularly poorly in your price survey.
Consumers should first cut through any nonsense about “no fees” or “no commission”. Your key question ought to be: “After all of the charges, the number of euros/yen/dollars etc will I get for X pounds?” To do this, check exactly how much you might be offered up against the mid-market “interbank rate”, the rate used when banks trade between another. You can check the live interbank rate on XE.com.
Secondly, you may be reasonably certian the deal provided by your high street bank will probably be pretty lousy, unless you happen to be “premier” type customer transferring large sums.
James Daley of Fairer Finance says: “Almost all major banks charge a lot of money for transferring money overseas, and provide a bad exchange rate to boot. The great thing is that numerous alternatives provide you with a lot better value.”
Our third golden rule is, if transferring a sizeable sum in to a foreign account, first send a compact sum and appearance it really has been received, just as much to ensure you have sent it on the right account as other things. Only then in case you send the entire amount.
Nearly all major banks charge big money for transferring money overseas, and present an inadequate exchange rate to boot
James Daley, Fairer Finance
Finally, remember there exists relatively limited protection should things get it wrong. The currency brokers could be “authorised” from the Financial Conduct Authority (FCA) or maybe “registered”. Authorised firms ought to keep clients’ money outside of the company’s own funds. If a firm is merely registered with all the FCA there’s a risk all the money is in the same pot and might be lost if the company went bust.
“Even if a firm is FCA authorised, it’s essential to understand that there is not any defense against the Financial Services Compensation Scheme within this sector,” says Daley. “So if a firm goes bust because of fraud, there’s still the opportunity that you simply won’t get a refund. However, the hazards if you’re employing a big brand are fairly small.”
During 2010, Crown Currency Exchange, operating out of Hayle, Cornwall, went bust, leaving 3,000 people owed £20m. It used new customers’ cash to settle existing clients, as well as fund the purchase of an extravagance home. Three people in the scam happen to be jailed.
We obtained quotes for moving £200, £2,000 and £150,000 into euros and dollars. We conducted the test on 29 July when the pound was fetching €1.19 and $1.32 respectively, but sadly it offers since fallen further.
Perfect for small sums When transferring £200 we found UKForex perfect for euros and TransferWise ideal for dollars. UKForex is FCA authorised as opposed to registered, and is also a subsidiary of your Australian group, OFX. TransferWise can be a peer-to-peer service (see below), headquartered inside london and run by Estonians. Investors in the market include Richard Branson.
Worst in this particular bracket were MoneyGram and NatWest, which would go to show reasons why you shouldn’t automatically use famous names. For £200, NatWest gives us only $229.31, in contrast to $260.94 from TransferWise.
Perfect 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 recent and small company, formed in 2014, and is authorised from the FCA. It describes itself as being a “hybrid” peer-to-peer plus direct market access company.
Great for large sums We checked rates on moving £150,000, a sum where you would be seriously upset if something went wrong. Again, the Currency Account came top for euros, though there was hardly any between it and also the other brokers. HiFX came top from 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. These include MoneyCorp, Currencies Direct, CaxtonFX, TorFX, HiFX, UKForex, FairFX, Azimo and Xendpay. They basically all advertise “bank beating” rates, but just how do they really compare against the other person?
A handful of currency comparison sites can be found, but they won’t necessarily look for the best deal. If you’re looking for the most value for your money you will be more well off likely to individual companies, obtaining a quote and asking how much time the transfer will take. Once you see a firm offering a great deal, check out its reputation through the use of FXCompared, TrustPilot or perhaps a general Internet search.
Established firms tend to be, yet not always, by far the most reliable. Some smaller brokers and “disruptive” web platforms temporarily stopped trading in the EU referendum aftermath.
Peer-to-peer services TransferWise is just one of a new type of peer-to-peer operators which eliminate banking institutions and brokers by offering an online meeting place for people seeking to buy each other’s currencies. You don’t send your cash directly, rather towards the foreign exchange firm which in turn passes it on.
“Our exchanges are derived from free or extremely low-cost local bank account transfers. We don’t send money overseas, so can reduce the crazy fees that banks charge consumers,” says Taavet Hinrikus, co-founder of TransferWise.
Another peer-to-peer platform, CurrencyFair, works inside a similar way, though the exchange rates are set by its users. In the event that there are actually no customers providing a reliable rate for the exchange, CurrencyFair will part in and complement you. The site claims customers typically pay .35% in the amount exchanged including a fixed €3 transfer fee.
Other available choices
If you want to pay in cash or transfer money quickly, Western Union and MoneyGram both have branches about the high street – however their services usually are not cheap and merely appropriate for small amounts. And while the companies are legitimate, they are usually made use of by scammers, so be skeptical of strangers requesting payment by doing this.
PayPal will make it simple to send out money overseas, but was the most expensive option by 50 % the Guardian calculations. It whacks over a hefty conversion fee in order to pay someone in another currency.
This article was amended on 22 August to fix the entire year where the Currency Account was set up. It must have said 2014, not 2011.
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