Whether it’s buying a Spanish house, gifting a few quid to a Stateside nephew, or providing a backpacking daughter with emergency funds, transferring money overseas means double the currencies, complication and cost. 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.
The Two Big Costs
When moving money, costs fall into two simple categories: fees and the exchange rate. It’s crucial to check both out.
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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.
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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 I get for my pounds, after all charges?”
Yet, sadly, sometimes you won’t get an answer. Also remember exchange rates change every day or even every minute in some places, so to compare providers properly do it all in one go.
To benchmark a decent rate, use the Travel Money Maximiser. If you’re transferring a large amount, then at worst you should aim to equal the cheapest provider there.
How to find the best deal
Follow the system below; each one lists who it’s suitable for. It’s in order of cheapness and ease, so stop at the first method that suits you. The only exception is if you're sending over £5,000, in which case you'll need to use specialised Foreign Exchange (FX) brokers in order to get a good rate, so skip straight to step 4.
Step 1: Check out specialist plastic
For most people the easiest and cheapest system is to use one of the specialist cheap credit or debit cards. These let you pay for things overseas at the best possible exchange rate with minimum fees, often saving you six percent or more. While designed to be used for spending, they can be manipulated to work as a method to give money overseas cheaply.
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:
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Sending emergency or regular cash provisions to a UK citizen travelling the world.
Whether it’s someone on a gap year or a friend, provided it’s set up in advance, this system's cheapest. -
Paying overseas bills e.g. for second home owners.
If you own a foreign property and need to pay bills regularly use this, provided the companies you pay either accept debit or credit cards over the phone/web, or you visit often enough to withdraw the cash from an ATM overseas. For everyone else … skip to step 2
You get the best possible exchange rate…
These cards market themselves as being a really good value way to spend abroad, in the hope you’ll also use them in the UK where they’re not so competitive. Yet stick to this bespoke purpose and they’re super-cheap.
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; much cheaper than buying foreign currency. Plus unlike most cards, withdraw cash from an overseas ATM and they’ve either no or low fees.
If you use one of the credit cards, ALWAYS set up a Direct Debit to pay it off in full each month. Do that and you won’t pay interest on any spending, but will pay a month’s interest on credit card cash withdrawals, yet this is almost negligible compared to the benefits.
How to use them
The person who’s going should take the plastic with them and use it to spend on or withdraw cash. If it’s only an emergency provision, then they simply have access to the card, and as it’s a UK account you can pay in money as normal.
The best cards to use…
There are two main options, depending on the credit score of the person travelling.
A Nationwide Bank Account.
The person who’ll be spending abroad (so either the traveller or bill payer) can simply set up an account with Nationwide before they go, which gives them access to the Nationwide Debit card.
This is the best card possible for spending abroad, as you don't need a particularly great credit score and, as long as you don't set up an overdraft, it's impossible to go into debt and end up paying interest.If there’s a problem getting an account, or the person is already travelling abroad then instead use…
A specialist credit card.
Here you take advantage of the ‘second cardholder’ system. Someone with a good credit score can apply, then give a card to a second person. Yet it’s vital to understand all debts on that card belong to the main cardholder, this isn’t a joint card. So only use this with someone you trust implicitly.
The cheapest credit cards are Santander Zero, followed by the Post Office*, Nationwide and Saga cards.
There's also the added bonus of 'Section 75' protection if you use a credit card. In a nutshell, pay for something costing between £100 and £30,000 on a credit card and the card issuer's equally liable if something goes wrong. This is great extra protection, and applies overseas too. Read the full Section 75 guide.
A detailed review of card differences, more options & charges is in the Cheap Travel Money guide.
Step 2: Can you use free bank transfer services?
A number of banks allow you to transfer money to linked banks overseas without a fee; usually it’s simply the overseas version of the same banking group. Therefore if you and the person you want to send money to both open the accounts, you can cheaply move money between people.
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.
This gives you flexibility to send cash as and when you need.Payments for services on homes abroad.
If you’ve a service contract with someone who can’t accept plastic e.g. the person who looks after the property while you’re not there.-
For everyone else … skip to step 3
The top fee-free bank services…
A number of banks offer this service, they all work in different ways, and most importantly 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 require both the UK and the foreign account to be in YOUR name.
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Fees-free to anyone with a Citibank account.
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 23 mainstream countries including the US, India, China, Germany and Australia (see a full list).
Set up a Citibank Access Account, which unlike some of its other accounts has no monthly fee or the special Citibank UK Easy Current Account for Polish Nationals. 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. As long as you select to not receive in-credit interest, there's no minimum salary requirement.
Then ask the recipient to open a Citibank account in their home country, though not all countries have fees-free banking as in the UK. 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.
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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 need to be in your name. This means it's useful if you have a second home abroad and need to pay bills, but much less so for sending cash to friends and family.
To Spain. A number of banks offer this service for Spain due to the number of ex pats there. Halifax or Bank of Scotland transfers to Banco Halifax Hispania accounts. Lloyds TSB transfers to Lloyds TSB Spain accounts. Barclays transfers to Barclays in Spain (if over £500 for a regular payment or over £1,000 for a one-off payment).
To India. Indian citizens living in the UK with a UK Lloyds TSB account can send money to an ICICI bank in India. Indian citizens living in the UK with a UK Barclays account can transfer to a Barclays India savings account (for a minimum transfer of £250).
To France and Italy. Barclays transfers to Barclays in France or Italy (if over £500 for a regular payment or over £1,000 for a one-off payment).
US, Australia and Hong Kong, and more. HSBC offers fees free transfer to 41 countries, but you need its Premier bank account (which means you need £50k savings or a £250k mortgage with HSBC, or £75k salary going into an HSBC account), so it’s not worth it unless you make a lot of transfers.
Know any not here? If you know of another bank offering fees free transfers to a specific country, please let us know.
Step 3: Internet transfers under £5,000
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.
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.
If you want to pay someone overseas for goods, for example bought on eBay.Unexpectedly sending money to a friend/family overseas.
If you haven’t set up a card system (see step 1) and want to send money, but time's not crucial.For everyone else … skip to step 4
Sending less than £100…
The correct system depends on how much money you want to send. Online auction monolith eBay’s e-commerce payment system PayPal operates in 190 countries, in 18 currencies (see its list) and can be used for overseas money transfers. Both you and the recipient need an e-mail address (or just grab a free Gmail or Hotmail account) and to set up a free PayPal account.
Those who already use PayPal may have cash in it anyway. Newbies can simply add money via the credit card, debit card or bank account. The recipient then gets the money into their PayPal account.
Once it's in their account, they can then either spend online instantly or in many North American, Western European and Australasian countries withdraw the money to their bank account, which takes three to nine days. A few other countries facilitate bank transfers too (see the full list).
The Exchange Rate.
PayPal exchange rates are similar to good bureaux de change rates (use the Travel Money Maximiser for a rough idea) which isn’t too bad.
If you're sending to a country which doesn't use one of the 18 currencies provided, always send the money in pounds as then the money will only need to be converted once not twice, reducing the cost.
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Charges and fees.
Sending money is free with PayPal but the recipient is charged when receiving the money. The amount varies slightly country to country, but most are a similar scale of charges to UK recipients, which is 20p plus 3.9% of the value, e.g. on £30 it's £1.37.
In some countries there's also a fee for withdrawing cash to a bank account, yet again it's small e.g. the UK fee is only charged for those withdrawing less than £50 and even then it's only 25p.
The Cost of Paypal transfers
Action | Cost | Time Taken |
Setting up... |
None | Instant |
Storing details... |
None |
Credit card: Instant Bank Account: Instant (except first time) |
Transferring funds... |
2.5% loading on exchange rate | Instant |
Receiving funds... |
Up to 3.9% + 20p (varies with country) | Instant |
Other person accessing funds... | Online: Free.
Withdrawals: 25p . | Online: Instant. Withdrawals: 3-9 days depending on country |
| These are standard fees, they can vary depending on country and account type, but don't vary too much | ||
Sending £100 to £5,000…
There are a number of local 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.
Finding the cheapest
There are scores of transfer companies and the cheapest depends on the country and amount you’re sending, even then it varies daily. Comparison site sendmoneyhome.org, which the Department for International Development helped set up, lists some, but by no means all, sites.
After searching, you’ll see the exchange rate, the fee, the speed of transfer, whether you need an account set up and the method of transferring your money. However it doesn’t list any charges for the recipient, so check those yourself.
It's recently upgraded the system to be more accurate and up-to-date with the rates. We have very little user feedback though, so for now, just consider it a benchmark, take note of the cheapest four or five companies listed and then visit those sites to make the comparison yourself.
Please feedback on your experiences with SendMoneyHome.org
These firms aren’t regulated
Sadly internet transfer companies aren’t properly regulated. They do have to be registered with HM Revenue and Customs but only for anti-money laundering reasons, not to protect your cash. This means if it goes bust or loses your cash, you’ve no way of getting it back via the authorities, so this differs to protection for savings massively (read Savings Safety guide)
The sendmoneyhome.org website says it only picks reputable firms and has vowed to de-list any that are anything but kosher. Therefore, its list gives a decent idea of which are safe to use.
If you’re still nervous, an alternative is to use the similar, but more expensive services offered by a bank branch. HSBC tends to be the cheapest of those so check the relative price differences to see how much more it'll cost. This has the added advantage of being able to complain to the Financial Ombudsman Service if things go wrong, as it can only help if a company is regulated by the FSA.
How the costs add up…
Sending money via PayPal, for smaller amounts, is much cheaper than standard bank transfers or via currency exchange firms, but for larger amounts, specialised transfer companies take the cake.
Charges for sending money to the US
Send £30 | Send £100 | Send £200 | Send £2,000 | |
| Barclays standard transfer | £20(1) | £20(1) | £20(1) | £20 |
| Tranzfers (internet transfer) | £7 | £7 | £7 | £7 |
| Paypal | £1.37 | £4.10 | £8 | £68 |
| Moneygram | £12 | £12 | £18 | £73 |
| (1) Plus a charge from the receiving bank overseas | ||||
Step 4: Sending larger amounts (£5,000+)
When the amount you wish to transfer jumps to the 'serious' level, then the only players able to give a good rate are specialised Foreign Exchange (FX) brokers.
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.
If you’re buying a house or a car then this will usually be the best way.Paying off overseas mortgages.
If you’re getting a mortgage abroad, you can arrange a good deal with FX brokers for a monthly money transfer.If you’re moving abroad.
Those who are emigrating and want to convert their whole cash stock should find this the cheapest way.For everyone else … skip to step 5
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.
Stage 1. Benchmark the rate.
Quickly go to the Travel Money Maximiser to check out the best rates there. That finds the top rates for getting cash when going on holiday, so you should be aiming to beat its best, after all fees.
Stage 2. Ask your bank for a quote.
It's rare your bank will actually be the best buy. However, it's a very useful secondary benchmark and some have special facilities for existing customers, so it could come up trumps.
Stage 3. Use a specialist currency broker.
These are companies that 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.
Typically they offer within 1% of the ‘interbank rate’, 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 they take via the exchange rate.
Unfortunately, the less you transfer, the worse the rates available get, meaning this is only worth it for high value money switching.
Moving large sums to the US and Spain
| Cost of putting $100,000 into US bank account | Cost of putting €100,000 into Spanish account | How many dollars does £100,000 buy? | How many euros does £100,000 buy? | |
FX Broker |
£66,100 |
£85,230 |
$151,000 |
€117,000 |
Typical Bank |
£66,950 + receiving fee |
£86,600 + receiving fee |
$149,000 + receiving fee |
€115,000 + receiving fee |
Brokers also allow you to fix your exchange rate for up to two years. This is especially useful for anyone making mortgage payments as it means you know exactly what your outgoings are.
However, fixing is a gamble: if you think you’ve got the best rate possible, at that point, markets could shift, improving rates across the board meaning you lose out. Alternatively if it dropped you’d have done well. Foreign exchange traders make and lose millions betting on rate moves, and even they don’t always get it right.
The top FX brokers…
There is no hard and fast rule to which currency broker is best. It's worth getting quotes from all of them to see which is offering the best rate for that specific currency. The regularly quoted big brokers include such players as HIFX*, Currencies Direct*, Moneycorp and Foreign Currency Direct, so they’re the obvious places to start.
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 as close together as possible. And do remember, the golden question to ask is “how many Euros/Dollars/Yen will you give me for my £x,xxx after all fees and charges?”
Warning, FX brokers are unregulated …
Unlike banks, currency exchange businesses don't have to be regulated by the FSA so there’s always the possibility of problems. Yet the big established businesses tend to have good reputations and as they pay better rates they should be the best bet, though there are NO guarantees.
Knowing this, these companies work hard to prove their stability, and a little research should bear that out. HiFX, for example, stores your money in a Barclays account while it’s in transit before it hits your account overseas, to ensure it is safe. See a full checklist of questions to ask.
Please feedback on your experiences with FX brokers.
Step 5: Do you need to send cash instantly?
The above methods will all take a few days for the money to hit the destination. Yet if speed is paramount, a few companies that 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 need cash.
However do remember it's far better, if possible to set up the card system as explained 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 check that there’s an agent/branch where the recipient can pick up thecash. The two big operators are Western Union and Moneygram; if you’ve the luxury of a choice between the two, Moneygram’s usually the cheaper.
However there are firms which provide transfer 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.
How many dollars does £100 buy, including all fees?
Rate | Sender fee | Receiving fee | Total received | Speed | |
| Western Union | £1 = $1.415 |
£14 | £0 |
$122 |
Instant |
| Moneygram | £1 = $1.449 |
£12 | £0 |
$128 |
Instant |
| Top online transfer company | £1 = $1.481 |
£7 | £0 |
$138 |
3-4 working days |
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