Fees and exchange rates – sending money abroad explained

There are as many reasons under the sun for sending money abroad as there are reasons for using your money in your own country. Normally, we think of spending money abroad for one off expense such as paying for all of the associated costs of a beach wedding or purchasing a car or property. However, there are multiple reasons that you may need to send regular payments overseas or across borders – perhaps after saving some money. This could include making payments into a foreign bank account or pension fund, or ongoing mortgage payments and bills. Whatever your reason for seeking international money transfer services, you are going to come across fees and charges – often called hidden charges. Let’s take a closer look at what exactly is going on behind the scenes of your international money transfer that could result in you paying much more than you had originally hoped or expected. For further information, see how international bank wires work: rates, fees, and transfer times.

Fees – the upfront and ‘obvious’ charges

 

Depending on your international money transfer service provider, the fees you can expect to pay will vary. However, the fees are fixed charges that will be made clear to you at the point of services. This will naturally include a fixed money transfer fee on the amount being sent but may also include fees relevant to the currency you are sending compared to the recipient’s currency (certain currencies incur higher fees), and there may be an extra fee if you wish for your transfer to be expedited. Non-bank money transfer services may also apply fees relevant to the type of account from which the monies are being sent (e.g. bank account, credit card). These standard ‘international’ fees may be further increased by the addition of daily transfer rate fees (normally around 5%, but this can be timed throughout the year to aim for better rates).

Exchange rates that may be hidden

 

Watch out for international money transfer services from banks or other suppliers that claim to be commission-free, only to offer a lesser currency to currency rate as a way to increase their income and lessen the amount of exchange currency you receive. This isn’t an easy thing to avoid, but you can do your research on daily exchange rates and do your best to find a service that offers as close to the exchange rate as possible. Also beware any further exchange rate charges applied by the account provider of the recipient.