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Sending Money Abroad How to send cash overseas cheaply

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Whether gifting a few quid to a Stateside nephew, or emergency funds to a backpacking daughter, sending money abroad means double the currencies, complications and costs - banks may charge up to £25.

This is a step-by-step guide to the cheapest way to send or pay money abroad, both regular payments or one-offs, saving you serious cash.

What will it cost?

When moving money, costs fall into two simple categories: fees and the exchange rate. It's crucial to check both out.

  • Fees. The obvious charge.

    A multitude of fees, charges or commission can apply, both for the sender and the recipient. Many providers levy lots of small charges to disguise exactly how much it costs.

  • Exchange rates. The hidden charge.

    Many companies claim to be 'commission-free' then load the exchange rate so you get less buck for your pound. Worse still, it's often teeth-pullingly difficult to get hold of the exact rate and compare it, as some providers simply don't provide the data.

The best way to compare...

The minefield of complications actually boils down to a very simple question...

"How many euros/yen/dollars will be received, after all charges?"

Sadly, sometimes it's hard to get an answer. Also, exchange rates change very regularly (possibly by the minute). So to compare providers properly, do it all in one go.

To benchmark a decent rate, check the Travel Money Maximiser. If you're transferring a large amount, then at worst you should aim to equal the cheapest provider there.

To find the best deal, follow the steps below; each one lists who it's suitable for. Stop at the first method that suits you.

Use top credit card for regular transfers

These are designed to be used for purchases, so if you can, the easiest and cheapest system is to spend on specialist credit or debit cards. You can pay for things overseas at the best possible exchange rate with minimum fees.

By giving the card to a person you trust who is going overseas, as it's a UK account, you can pay off the balance in full each month for any purchases or withdrawals they make.

Who's it suitable for?

This works when you, or another UK resident, need to spend money in shops or withdraw cash in another country. Typical examples include:

  • If you or your partner need to spend cash while abroad.

  • Paying overseas bills eg, for second home owners, provided companies you pay accept plastic, or you visit often enough to withdraw cash from ATMs.

You get the best possible exchange rate

Most normal cards add a 3% 'load' on the exchange rate so £100 of foreign currency actually costs you £103. These don't, so you get the Visa / Mastercard wholesale rate, which is about as good as it gets and cheaper than buying foreign currency.

Plus unlike most cards, withdraw cash from an overseas ATM and they've either no or low fees.

The person who's going should take the plastic and use it to spend on or withdraw cash. As it's a UK account, you can pay money off the balance as normal.

ALWAYS set up a direct debit to pay it off in full each month, to avoid paying interest on any spending. You will pay a month's interest on credit card cash withdrawals, but this is almost negligible compared to the benefits.

The best card to use

Halifax Clarity Credit cardhalifax

The Clarity card from Halifax* has no foreign exchange fee anywhere in the world, so you can get the best rate possible. Plus it doesn't charge for cash withdrawals, although you will be charged interest even if you repay in full.

The rate for cash withdrawals is a fairly low 12.9% APR (see official rate example) but this rate is representative , which means two-thirds of those accepted will get it, the rest will be charged up to 21.9%. This works out as around £1 per month for every £100 withdrawn.

For many more alternative options, including bank accounts, and detailed reviews of card differences & charges, read the Cheap Travel Money guide.

Free bank transfers - BOTH need the account

A number of banks allow you to transfer money to linked banks overseas without a fee; usually it's just an overseas arm of the same banking group. So both if you and the person you want to send money to open accounts, you can cheaply move money between them.

Who's it suitable for?

This is best for regular movements of money to people who stay in one country. Typical examples include:

  • Regular cash to family members who live overseas.

  • Payments for services on homes abroad.

The top fee-free bank services

A number of banks offer this service. They all work in different ways, and most importantly they let you transfer to different countries.

There is one major point of difference, though. One allows you to send money to anyone who holds an account with the same bank overseas, while frustratingly the other group requires both the UK and the foreign account to be in YOUR name.

Fees-free to anyone with a Citibank account Citibank

This fees-free transfer service usually has a good exchange rate, adds no 'load' and is only marginally worse than the best plastic. In addition, your money will usually arrive in the relevant account within five minutes. It works for 26 countries including the US, India, China, Germany and Australia (see a full list).

To avoid a £5/month fee, you must maintain an average monthly balance of £2,000 (or the equivalent in foreign currency), or be a Citibank Plus or Citigold holder (see Best Premier Current Accounts and Best Bank Accounts to compare).

Set up a Citibank Foreign Currency Deposit account. Unlike some of its other accounts, it has no monthly fee. As these aren't the market's top interest offerings (see Best Bank Accounts) it's worth grabbing one just for overseas payments and moving money into it from your normal account.

Then ask the recipient to open a Citibank account in their home country, though not all countries have fees-free banking as the UK does. It's also worth checking the exchange rate when converting anything except euro to dollar (and vice versa), as rates can creep down a little.

Fees-free to your foreign account

A number of banks also have relationships that allow you to send money without a fee at good exchange rates. However, both the UK account, and the one in the country you are sending to, usually need to be in your name.

This means it's more useful if you have a second home abroad, for example, and need to pay bills, but less so for sending cash to friends and family.

  • To Spain. A few UK banks allow you to transfer from a UK to a Spanish account fees free. Halifax and Bank of Scotland transfer to Lloyds Bank International SAU accounts.

  • To India. If you open a State Bank of India UK Instant Access Savings Account and maintain a minimum balance of £500, you can send money to an Indian bank account via the SBI express remittance service.

  • USA, Hong Kong, and more. HSBC offers fees-free transfers to 36 countries, but you need its Premier bank account (to qualify for this account you need £50k savings or a £250k mortgage with HSBC, or £75k salary going into your HSBC Premier account).

  • Know any not here? If you know of another bank offering fees-free transfers to a specific country, please let us know.

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Online services for one-off small payments

A number of companies offer transfer payments over the internet, either through e-commerce systems or simply by moving your money into someone else's bank account, but the correct system depends on how much money you want to send.

Who's it suitable for?

This is generally suitable for non-urgent transfers of smaller amounts of money. Typical examples include:

  • Payments for goods received, eg, on eBay.

  • Sending one-off money to a friend/family member overseas.

It is very important to be aware that no compensation scheme exists if these firms were to go bust - read full details in Am I protected?

There are a number of UK firms designed specifically for international money transfers. You pay them in sterling, usually via internet transfer, which they convert and send to the receiving bank within two to four working days. You'll need to set up an account and have your address verified first, which can take a few days.

It's also worth noting all credit card companies and some debit cards charge you a cash withdrawal fee when using them to pay for foreign currency, usually it's a pound or two. There's a full list of which cards do this in the Travel Money Maximiser.

Currencies Direct*: Fee-free from £500 Online, rates match top travel cash, arrives in up to 2 days

Currencies Direct
  • Rates: Good - same as you'd get for holiday money
  • Min transfer: £500
  • Max transfer: £15,000 online (more if you call)
  • FCA: Authorised (What does this mean?)

The online transfer service from Currencies Direct* allows you to send £500 to £15,000 fee-free, an exclusive via this link only (usually it's only fee-free on £5,000+), and the rates are almost as good as travel cash.

You may be able to get a better rate if you're sending more too, but you'll get an indication of the rate before you begin the transfer. Transfers can be made into around 25 currencies, including euros, US dollars, SA rand, and Indian rupee.

Currencies Direct is fully authorised by the Financial Conduct Authority, so any money you send is kept separate from the company's accounts. If it falls into difficulty, your money should be returned to you. See Is my money protected? for more details.

FairFX: Fee-free from £600 Online, good rates, arrives in up to 3 days

FairFX
  • Rates: Good - same as you'd get for holiday money
  • Min transfer: £600
  • Max transfer: £50,000 online
  • FCA: Authorised (What does this mean?)

Usually known for its prepaid travel card, FairFX also has a fee-free money transfer service. You can transfer £600 to £50,000 online, though higher amounts are possible if you call them. The cash will arrive in one to three days.

Better rates are also available the more you send, but you'll get an indication of the rate before you begin the transfer. It's available in 11 main currencies, including euros, dollars, Indian rupees and Japanese yen. Other currencies are available on request.

FairFX is fully authorised by the Financial Conduct Authority, so any money you send is kept separate from the company's accounts. If it falls into difficulty, your money should be returned to you. See Is my money protected? for more details.

Travelex: Fee-free if sending £2,500+. Min £600, good rate, arrives in up to 3 days

Travelex
  • Rates: Good - same as you'd get for holiday money.
  • Min transfer: £600
  • Max transfer: £200,000 online
  • FCA: Authorised (What does this mean?)

Sending cash via International Payments from Travelex offers better rates than the options below, but there's a £600 minimum. It'll cost £7 to transfer less than £2,500, but more than that is fee-free. The money will arrive in one to three days and you can send up to £200,000 online.

However, you'll have to register for the service before you'll get an indication of the rate, though this is free. You'll need to enter your account details as well as the receiving's account details and you may have to provide ID. It's available in over 40 currencies, including US dollars, Australian dollars and euros.

It also offers a price promise, guaranteeing to beat a competitor's quote if you find one cheaper within 30 minutes of getting one from Travelex.

Travelex's International Payments service is run by UKForex, which is fully authorised by the Financial Conduct Authority. This means any money you send using the service is kept separate from company accounts, so if it falls into difficulty, you should get your money back. See Is my money protected? for more details.

PayPal: Instant transfers. Low fees, available in 18 currencies.

Travelex
  • Rates: Good, just below holiday money rates.
  • Fees: You pay 2.5% load fee. Recipient pays 'transaction fee'
  • Min transfer: No min
  • Max transfer: £55,000
  • FCA: Not UK regulated - EU-regulated in Luxembourg. Opts into Financial Ombudsman Scheme.

More commonly associated with online shopping, PayPal also allows you to send money overseas. It'll charge you a 2.5% load fee to send the money, as well as a 'cross-border transaction' fee for the person receiving the funds.

You and the recipient both need PayPal accounts, which are free to open. Then you can transfer money into it from a bank account or credit card.

Funds will be instantly credited to the receiver's PayPal account and can be spent from there instantly. If the recipient needs to withdraw the cash to a bank account, it will take three to nine days.

As well as the 2.5% fee for sending cash, the recipient will pay up to 4.9% plus 20p, depending on the country it arrives in - for a full list of charges, see the fees section in PayPal's User Agreement.

PayPal is regulated in Luxembourg, so it's not on the Financial Conduct Authority's register. But it's a voluntary member of the UK's independent Financial Ombudsman Scheme, so you can complain there if you're not satisfied. See below for more details.

Cheapest way - but via new 'peer-to-peer' system

Transferwise*: Send from just £1 Low fees, good rates, arrives in up to 3 days

Transferwise
  • Rates: Good - they use the mid-market rate.
  • Min transfer: £1
  • Max transfer: £1 million
  • FCA: Authorised (What does this mean?)

New provider Transferwise* is a peer-to-peer currency service (click the link below for an explanation) that lets you transfer as little as £1 online for the lowest fees we've seen. The money should arrive in one to three days.

Currencies include euros, US dollars, Indian rupees, New Zealand and Australian dollars (but they'll trade around 20 in total). The exchange rate is OK, but the fees stand out - just £1 on transfers up to £200 and 0.5% above that. The exact fee will be shown when you make the transfer.

Transferwise is authorised by the Financial Conduct Authority. This means any money you send using the service is kept separate from company accounts. So just like the non peer-to-peer services, if the firm falls into difficulty, your money should be able to be returned to you. See Is my money protected? for more details.

IMPORTANT! NO compensation scheme if firm goes bust

This is crucial to understand - if you use an online transfer company (or any transfer company that holds your money) and it goes bust while it has your money, there's no guarantee you will get it back. The regulation of these companies has become tighter in the past few years, but the risk of losing cash still remains.

  • 'Authorised' - your money is kept separate. A larger firm, trading over €3 million a month, must be authorised by the Financial Conduct Authority (FCA). Each day, at the close of business, these firms must separate your money from the firm's own accounts (known as safeguarding). This protects your cash, so you should get it back if the firm gets into difficulty.
  • 'Registered' - no safeguards for your cash. Smaller firms can choose just to be registered. This means there's no safeguarding process and if something goes wrong with the firm, your money isn't protected at all.

If a firm loses your money (but it hasn't actually gone bust), you have the right to complain to the Financial Ombudsman Service if the company can't sort it out for you. It will investigate on your behalf and if the company's in the wrong, you should get the money back. See Your Financial Rights for more details.

To check how a firm is regulated (whether it's authorised or just registered), search for its name on the FCA register. For more information on your protection (or lack of it), this Sending Money Safely leaflet from the Money Advice Service is useful.

If you're nervous, an alternative is to use the similar, but more expensive services offered at bank branches. HSBC tends to be the cheapest of these, so check the relative price differences to see how much more it'll cost.

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Sending larger amounts (£5,000+)

When the amount you wish to transfer jumps to the 'serious' level, the only players able to give a good rate are specialised foreign exchange brokers. There are a lot of companies, and the same lack of protection applies as above - so be very diligent in checking, as there could be massive amounts at risk

Who's it suitable for?

This method only really adds up for sending a few thousand pounds at least, or making slightly smaller, but regular payments. It's possible to use this method for smaller amounts too, but then it's costlier. Typical examples include:

  • Making large purchases abroad, such as a house or a car.

  • Paying off overseas mortgages - you can arrange monthly transfers.

  • If you're moving abroad and want to convert all your cash.

It is very important to be aware that no compensation scheme exists if these firms were to go bust - read full details in Am I protected?

How to do it?

When transferring larger sums, it's important to remember that even small differentials in exchange rates can make an enormous difference.

Think about it - a 1% rate improvement on £100,000 is a £1,000 gain. So finessing the very best rate takes on even more significance.

  1. Benchmark the rate.

    Quickly go to the Travel Money Maximiser to check out the best rates. That finds the top rates for getting cash when going on holiday, so you should be aiming to beat its best rate, after all fees.

  2. Ask your bank for a quote.

    It's rare your bank will actually be the best buy. But it's a very useful second benchmark. Some have special facilities for existing customers, so it could actually come up trumps.

  3. Use a specialist currency broker.

    These companies buy and sell vast sums of foreign currency which allows them to offer excellent exchange rates because, even if they only make a small percentage profit on every pound, that soon adds up when you're dealing in hundreds of millions of pounds.

  4. There is no hard and fast rule to which currency broker is best, so get quotes from all of them to find the the best rate for your currency. The regularly quoted big brokers include Currencies Direct*, HiFX*, and Moneycorp*, so they're the obvious places to start - though of course, they're still no more protected than any of the others.

    Typically, they offer within 1% of the interbank rate - at which banks borrow from each other - whereas your bank will normally be up to 3% worse than that, equating to £3,000 for a £100,000 transfer. In addition, most don't charge fees to send money, and the broker pays for any receiving fees, so all you pay is the margin it takes via the exchange rate.

    The rates for these change constantly, often by the minute, so to find out which gives the best rate to your chosen country, you need to get quotes in as short a space of time as possible. Remember the golden question: "How many euros/dollars/yen will you give me for my £x,xxx after all fees and charges?"

    Unfortunately, the less you transfer, the worse the rates get, so this route's only worth it for high-value money switching. Plus, if you're looking to transfer more than £20,000, you'll often get a better rate by calling to negotiate.

WARNING! There's no compensation scheme

Unlike banks, currency exchange businesses are not covered by the Financial Services Compensation Scheme, so there's always the risk, if something goes wrong, you won't be guaranteed full compensation.

However, bigger businesses, trading over €3 million a month, must be authorised by the Financial Conduct Authority. This means your money is kept separate from company accounts, a process known as safeguarding. If something was to go wrong with the company, your money should be paid back to you.

Smaller firms can choose to be registered, which means there's no safeguarding process as above. If something goes wrong, your money isn't protected at all.

Both systems allow you to take complaints to the independent Financial Ombudsman Service, if you think the firm hasn't dealt with it appropriately. The FOS will then investigate on your behalf.

Knowing this, these companies work hard to prove their stability, and a little research should bear that out. For example, HiFX stores your money in a Barclays account while it's in transit before it hits your account overseas, to ensure safety.

See a full checklist of questions to ask.

Please share your experiences with Foreign exchange brokers.

Need to send cash instantly?

The methods above will all take a few days for the money to hit the destination, although check first - some may only take a day and you'll be far better off if you can wait. But if speed is paramount, a few companies offer instant cash transfers to thousands of locations anywhere in the world. However, they ain't necessarily cheap...

Who's it suitable for?

Those who need to move cash at speed, or where the recipient doesn't have a bank account in that country. Typical examples include:

  • Emergency funds for a friend/family overseas. If a backpacking son or daughter, or a friend who's had all their cards nicked, needs cash.

It is very important to be aware that no compensation scheme exists if these firms were to go bust - read full details in Am I protected?

Do remember it's far better, if possible, to set up the card system in step 1.

How does it work?

You either go into a branch (there are many in newsagents, post offices and banks) or pay the money online. The recipient then picks it up at an agency at the other end once it's done - they don't need to be there that moment. They can either present ID or, if that's a problem, a code can be used to legitimise the transfer.

The cheapest instant transfers

The word "cheapest" should only be used advisedly here. This isn't a cheap service, and should only be done if necessary. It's extremely expensive, especially for small amounts, though the recipient won't normally need to pay a fee.

The most important thing to do in this case is to check that there's an agent/branch where the recipient can pick up the cash. The two big operators are Moneygram and Western Union.

If you've the luxury of a choice between the two, check both and choose the cheapest for the amount and country you're sending money to. Moneygram's usually cheaper for smaller amounts, at from £4.50 to send £100, but Western Union may be better for amounts up to £4,000, and for sending to America or outside the eurozone.

However there are firms which provide transfers from the UK to specific countries, which can often be found in areas where there's a large community of those of that ethnic origin.

Both the big firms here are Financial Conduct Authority-authorised, which is the highest protection a currency broker can have, but still not brill - read full details in Am I protected?

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