If you need to transfer money abroad or between different currencies, there are lots of options available and just as many different charging and commission levels. Some of these are outrageously expensive, notably banks and currency exchange offices, especially at airports. Finding the cheapest way of sending money abroad is likely to save you considerable amounts.
If you’ve ever bought foreign currency from a local bank or exchange bureau, or tried to receive or send money in a different currency, you’ll know that the exchange rate you get is usually rubbish when compared to what’s known as the mid-market rate that you will see on websites like XE.com. So even if there is ‘no commission’, you will be paying through the nose because of a poor exchange rate.
So what is the cheapest way to send money abroad?
I’ll be honest; since I started using Transferwise, I stopped shopping around (I researched several options before choosing them) so there is a chance that an even cheaper way of transferring money abroad exists but I doubt it. Especially since they recently reduced their rates for the most popular currency conversions and pledge to work towards zero fees.
Disclosure: I am an affiliate partner for Transferwise so if you sign up for and use the service through a link on my site, I may receive a small one time referral fee. I use their currency exchange service and Borderless bank account (see below) myself so have no hesitation in recommending them to you.
How can they be so cheap?
Essentially, Transferwise uses peer to peer matching technology to pair your request with someone who needs your currency. The sender’s money goes into a local bank account in their currency and the recipient is paid from an account in the local currency. This video explains it better than I can:
Note: You need to be comfortable setting up currency transfers online, yourself. It’s very simple and they have support staff who can help you if you get stuck at any point. However, if you are not comfortable making online financial transactions and prefer to have a real person to be your dedicated account manager and place the transfer orders at the optimum time on your behalf, this is not the service for you.
How much does it cost to transfer money abroad?
Because of the way their system works, Transferwise can keep fees really low, up to 8 times lower than high street banks.
On most transfers you’ll pay a tiny percentage of the amount you’re transferring, e.g. 0.35%, plus a minimal transfer fee, e.g. €0.80, per transaction. These amounts vary per currency so check the fee information on their website or use their pricing calculator to see how much you will end up paying for a specific transaction.
Help your visitors save money on currency exchange
If you live abroad, with a bit of forward planning, you and your loved ones can help each other avoid paying extortionate bank exchange rates or commissions.
Instead of exchanging money before going on holiday, visiting friends and relatives can transfer money into your bank account using Transferwise. Then you can give them local currency so that they get the best available exchange rate. And vice versa.
How long does it take to send money abroad?
It takes just a few minutes to set up your account and place the order for a currency transfer. Once that’s done, the currency usually hits the foreign account by the next business day.
Set a rate alert for fluctuating currencies
If you are transferring a significant amount of money abroad, it pays to keep an eye on the exchange rate so you can take advantage of fluctuations. You can set up an email rate tracker alert with Transferwise so that you can make your transfer at the most advantageous time.
What’s the cheapest way to get paid in different currencies on an ongoing basis?
Perhaps your salary or pension is paid in a different currency from where you live. Maybe you need to receive money from family or friends, send some to them, or pay foreign institutions on their behalf.
If, like me, you have clients and business partnerships in other countries, it can get very expensive to use PayPal (or similar) to receive payments.
With a Transferwise Borderless account, you can can get personal account numbers and bank details for certain currencies, e.g. US Dollars, Euros, Australian Dollars and Pounds, so that people can pay you directly in their currency as if it were a local account. You can also send and receive money in up to 40 different currencies.
How to spend your money
In some countries (currently the EEA and UK, except Greece and Ireland), the personal Borderless account comes with a debit Mastercard so you can use that to make purchases online using the currencies you have in your account or pay a small conversion fee to get the real exchange rate for other currencies. I already use my debit card for buying stuff from Amazon and other online stores.
You can also use this card in physical locations just as you would any other debit card.
The only limitation is with cash withdrawals – only the first £200 is free. After that, you pay 2%.
Note about cash withdrawals: If you have sufficient funds in the currency you are trying to withdraw from an ATM, say ‘no’ when the machine asks you about setting an exchange rate as it is not applicable.
If you don’t currently qualify for a debit card, you can transfer money from your personal Borderless account to your normal bank account for free. There’s a small transaction fee for withdrawals from the business account (around €0.60).
How to open a Transferwise Borderless account
It costs nothing to set up a Borderless account and is very simple to do – just follow the instructions on this page. If you already have a personal Borderless account, you can add a business profile to it and keep your business money separate from your personal funds.
Note: If you start off by opening a business account, you’ll also be asked to create a personal profile – I don’t think it’s possible to get a business account without this.
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