The pound has plummeted to lower than 1.15 up against the euro and 1.3 from the dollar, the lowest for years. So finding the currency and transfers is more essential than ever. But this information is not about holiday money. It’s about individuals who have to send small sums regularly, and others making large one-off transfers, for example getting a holiday property. It reveals that some providers are perfect for large sums, but pricey for smaller transfers – and it lets you know to protect yourself from PayPal, which arrived particularly poorly in our price survey.
Consumers should first cut through any nonsense about “no fees” or “no commission”. Your key question should be: “After all the charges, just how many euros/yen/dollars etc can i get for X pounds?” To do this, check simply how much you will be offered against the mid-market “interbank rate”, the pace used when banks trade between one other. You can examine the live interbank rate on XE.com.
Secondly, you could be reasonably certian the deal available from your high street bank is going to 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 terrible exchange rate on top of that. The good news is that a variety of alternatives give you a lot better value.”
Our third golden rule is, if transferring a sizeable sum in a foreign account, first send a tiny sum and view this has been received, all the to make sure you have sent it on the right account as whatever else. Only then should you really send the complete amount.
Just about all major banks charge big money for transferring money overseas, and provide a bad exchange rate on top of that
James Daley, Fairer Finance
Finally, remember there is certainly relatively limited protection should things go wrong. The currency brokers could be “authorised” by the Financial Conduct Authority (FCA) or perhaps “registered”. Authorised firms need to keep clients’ money apart from the company’s own funds. If a firm is just registered with all the FCA there’s a danger all of the money is within the same pot and may be lost if the company went bust.
“Even in case a firm is FCA authorised, it’s essential to know that there is not any protection from the Financial Services Compensation Scheme in this particular sector,” says Daley. “So when a firm goes bust because of a fraud, there’s still an opportunity that you simply won’t get a refund. However, the risks if you’re utilizing a big brand are fairly small.”
During 2010, Crown Forex, based in Hayle, Cornwall, went bust, leaving 3,000 people owed £20m. It used new customers’ cash to get rid of existing clients, and also fund the purchase of a luxurious home. Three people active in the scam have been jailed.
We obtained quotes for moving £200, £2,000 and £150,000 into euros and dollars. We conducted the test on 29 July once the pound was fetching €1.19 and $1.32 respectively, but sadly it offers since fallen further.
Best for small sums When transferring £200 we found UKForex ideal for euros and TransferWise perfect for dollars. UKForex is FCA authorised instead of registered, and it is a subsidiary of your Australian group, OFX. TransferWise is actually a peer-to-peer service (see below), headquartered in London and run by Estonians. Investors in the industry include Richard Branson.
Worst within this bracket were MoneyGram and NatWest, which would go to show why you shouldn’t automatically use well-known names. For £200, NatWest will give us only $229.31, in comparison with $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 a fairly new and small company, formed in 2014, which is authorised by the FCA. It describes itself being a “hybrid” peer-to-peer plus direct market access company.
Best for large sums We checked rates on moving £150,000, a sum where you will be seriously upset if anything went wrong. Again, the Currency Account came top for euros, though there was clearly almost no between it and also the other brokers. HiFX came top inside the bracket for dollars. HiFX was established in 1998 and is one of the largest brokers, having transferred around £100bn since then.
Currency brokers There are numerous 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 will they compare against one another?
A handful of currency comparison sites are available, but they won’t necessarily locate the best deal. If you’re looking for the best value for your money you will be happier going to individual companies, receiving a quote and asking the length of time the transfer will take. Once you see a firm offering a great deal, look at its reputation through the use of FXCompared, TrustPilot or a general Google search.
Established firms are generally, yet not always, one of the most reliable. Some smaller brokers and “disruptive” web platforms temporarily stopped trading during the EU referendum aftermath.
Peer-to-peer services TransferWise is one of a new type of peer-to-peer operators which eliminate banking institutions and brokers by offering an internet meeting spot for people planning to buy each other’s currencies. You don’t send your hard earned dollars directly, rather for the currency exchange firm which then passes it on.
“Our exchanges are based on free or extremely low-cost local banking accounts 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 within a similar way, even though the exchange rates are set by its users. In the event that you can find no customers providing a significant rate for your exchange, CurrencyFair will part of and match with you. The website claims customers typically pay .35% of your amount exchanged plus a fixed €3 transfer fee.
If you have to pay in cash or transfer money quickly, Western Union and MoneyGram both have branches on the high-street – however their services are certainly not cheap and only suitable for small amounts. Even though companies are legitimate, they usually are used by scammers, so be suspicious of strangers seeking payment in this way.
PayPal might make it easy to deliver money overseas, but was the most costly option in two the Guardian calculations. It whacks with a hefty conversion fee in order to pay someone in another currency.
This post was amended on 22 August to fix the entire year when the Currency Account was set up. It ought to have said 2014, not 2011.
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