With the best information, you can make your international transfer with confidence
Full information and answers to your questions on currency transfers are listed below:
Q Why does it matter?
A. The exchange rate used in the overseas currency transfers is very important and will make a considerable difference to the overall cost. For example, lets assume you are buying a home in Florida for US$300,000. If you get an exchange rate of US$1.75 for the currency conversion, the Sterling cost will be £171,429. If, however, you can achieve an exchange rate of 1.77, the Sterling cost would fall to £169,492 - This is a saving to you of £1,937.
Q. Why are there different exchange rates?
A. In the currency markets, there is what is called an inter-bank rate. This is the exchange rate that is used for large transaction in the market, typically between big banks and institutions. This exchange rate will fluctuate throughout the day in line with changing market conditions and currency demand. Transaction sizes are usually at least $1,000,000. This could be considered a 'wholesale rate'.
Q. What rate will I get?
A. Customers and individuals will not have access to a wholesale rate and will get what can be considered a 'retail rate'. The crucial factor is how close you can get to the wholesale currency rate. The nearer you can get to the wholesale rate the lower the cost of the transfer. Individual institutions have no control over the wholesale rate, but they can quote what they like for a retail rate that they will quote to you.
Q. My bank will give me the best rate won't it?
A. NO! Although the high street banks have access to the wholesale exchange rate, it is very unlikely that they will pass this rate on to you. It is much more likely that they will give you a poor, uncompetitive rate and pocket the difference!.
Q. Why are currency brokers different?
A. Brokers also have the ability to deal at wholesale rates given the number of transactions they carry out, but they are much more likely to pass on the benefits on. They also have lower overheads which enables them to quote a more competitive rate.
Q. Are all brokers the same?
A. NO!. As in any business you will get different quotes from different brokers.
Q. Can I find out what rate I should get.
A. YES. Great care is needed as currency rates are changing all the time. If you use our rate checker service, you can find out what rate you should be getting. Please click Rate checker for further details.
Q. Are there any other costs?
A. There will be no commission payable and, if the transaction size is over £20,000, there should be no costs as the broker will also waive the telegraphic transfer fee which is typically around £20. If the transaction size is below £20,000, you may have to pay the £20 fee, but this should still be a lower charge that the banks charge for a transfer.
Q. What currencies can be covered.
A. Transfers into all major currencies and a total of at least 70 currencies can be covered. The main difference is the time that the transaction takes. For Euro and US dollar payments, you can make the transfer on a same-day basis. For other currencies, it is likely to take up to 2 working days. For some exotic currencies, it could take 3-4 working days.
Q. What are the other benefits?
A. Once you have registered with the broker, you will be able to deal immediately. You will be able to speak to the broker direct and agree the exchange rate price in real time. You will then have the certainty of knowing the rate you will get and not worry about the exchange rate. With the ability to deal by phone, you can also avoid the hassle of having to visit your bank.
Q. Is it complicated to register?
A. The registration process is normally simple with one or two forms to be filled in. You will need to comply with money laundering regulations and offer proof of identity.
Q. Is there a minimum transaction size?
A. There will be a minimum size of £1,000 - £10,000. There is no real benefit for transaction amounts of below £1000.
Q. Am I making a commitment by registering?
A. NO!. Once you are registered you are in a position to make the transfer, but there is no obligation to deal through the broker. You can also sign up to more than one broker.
Q. I am worried the exchange rate might get worse. What can I do?
A. If you have major concerns over the exchange rate, you can agree to do a forward contract with your currency broker. If, for example, you have a deal to complete in six weeks time, you can agree to a contract which is settled six weeks from now. The exchange rate will be fixed in advance so you cannot lose if the exchange rate gets worse in the meantime. You will not, however, gain any benefit if the exchange rate moves in your favour. For further details on forward deals, please see Currency protection.
Q. I have got lots to do, why should I act now?
A. International transfers do not take place in real time. By preparing in advance you will be able to ensure that the transaction can be completed on time, avoiding the potential for embarrassment, financial loss or breach of contract. Once you have registered with your broker, you will be able to deal when it suits you. You can also take advantage of a favourable exchange rate at any time and not miss an opportunity.
Q. What do I do now?
A. We suggest that you contact a broker listed to find out more details of their services. We recommend that you look at Global Currency Solutions.
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