As the world (and economy) becomes more global, people send money across borders more often. This increase includes both, personal and business-related money transfers. So what is the cheapest way to send money internationally?
According to data released by the Pew Research Center, more than $133 billion was sent from the U.S. to countries worldwide in 2015. While instances of overseas money transfers are on the rise, the need for cost-effective overseas money transfer options rises as well. Fortunately, following a few simple measures may lead to savings.
3 Ways to Send Money Internationally
Before you select an overseas money transfer service provider, determine what your options are and how much they might cost.
- Banks. Most banks in the U.S. provide international money transfer services. This gives you the ability to send money directly to overseas bank accounts. However, the average fee for overseas money transfers in the U.S. is around $40. Poor exchange rates offered by banks can also be a deterrent. If you’re not in a hurry to get the money across the border, you may consider getting a bank draft. This usually costs lesser than a bank-to-bank transfer, but takes longer.
- Forex brokers. If you plan to transfer a large sum of money to buy a home, invest in a business, or for any other reason, using the services of a Forex broker may work well for you. Working with a Forex broker typically allows you to choose from different hedging options. These include forward contracts, limit orders, and stop loss orders. This can provide the ability to make the most of exchange rate fluctuations. If you use hedging tools in the right manner, you may end up saving a tidy sum, especially with a large value transfer.
- Money transfer companies. FinTech money transfer companies appear to be at the top right now, giving banks and Forex brokers a run for their money. Several of these companies have mushroomed since the turn of the last century, and most offer bank-beating exchange rates on an ongoing basis. You will also pay few (or no) fees depending on the company you select. FinTech companies such as WorldRemit, TransferWise, OFX, TorFX, Currencies Direct, and WorldFirst let you transfer money to overseas bank accounts easily and some offer hedging tools as well. Some companies such as Azimo, MoneyGram, and Western Union let recipients collect transferred funds from physical locations.
More Ways to Save When Sending Money Overseas
While choosing a specialist money transfer company is your best bet, there are other aspects that require your consideration.
- Select the right payment method. Depending on the company you select, you might be able to pay using a bank transfer, a debit card, or a credit card. Paying through a bank transfer is usually the most cost effective method. Conversely, using a credit card will cost the most.
- Track exchange rates. Keep an eye on exchange rate fluctuations as this gives you the ability to time your transfer when the market is in your favor. Remember that while you may get live rates on weekdays, this is not possible during weekends and public holidays.
- Express vs. regular. Unless you’re in a hurry to make a transfer, wait for a few days to save money. Fees for express transfers are higher, so patience can save you money. If you’re worried about a long turnaround time, try to initiate your transfer early in the week.
- Use coupons. Some money transfer companies offer fee-free coupons that lead to additional savings.
It is possible to save money when you transfer funds from one country to another. This is especially true if you’ve been solely relying on a bank so far. Compare fees that different companies charge and look for fee-free transfer limits ahead of time. To determine which company offers better exchange rates, consider running a comparison shortly before your transfer.