Why Do Americans Flock From Banks For International Money Transfers?
If you have ever made an international money transfer using your bank, then you probably know that it seems to cost more than it perhaps should. In fact, transferring large amount of money abroad can prove very expensive indeed owing to bank fees and markups. In this post we are going to explain why this is and how bank international transfer fees work. We will also show you how to utilise money transfer companies and money transfer services in order to make cheap international transfers and in particular to transfer money from USA To UK for cheap.
Whenever an account holder uses their bank to make or receive an international payment, the bank applies a handling fee. Usually the fee is a set amount which varies quite drastically between different banks. In the US, big name banks typically charge between $2.50 - $10 although some do charge even higher amounts.
To clarify, banks charge this fee whether you are sending or receiving a payment - for example, if you wish to send $100 internationally, then the bank would debit your account for say $105 to cover the fee. On the other end, if you were expecting to receive $100 then the bank would deduct the $5 fee and you would receive only $95 instead.
This is not all though. If you are sending or receiving money to or from an account held in a foreign currency, then banks also apply foreign exchange markup. To explain, when you instruct your bank to send a payment to a foreign currency account, then the bank changes your dollars into the foreign currency amount before they make the transfer. However, they are very unlikely to use the standard, market foreign exchange rate and will instead apply their own “mark up” rate which allows them to make some extra money from the transfer (ie, from you). A typical mark up figure is 3% which means that the transaction will cost you 3% more than it should, in addition to the fees. To offer up a rough example, if you wanted to send $100 into a foreign currency account, then your bank could well charge you $108.
Of course, anybody making regular international payments or anybody transferring large amount of money abroad, will soon find that these fees add up. It is therefore little surprise that customers are looking for alternative solutions.
Inevitably, a whole sector of international money transfer and foreign exchange specialists has blossomed to fill the needs of savvy customers and there are now plenty of companies to transfer money internationally. These are financial services institutions with offices all around the world who can capitalise on their global presence to offer customers lower fees on transfers, better rates on exchanges and usually a faster, more friendly service to boot.
Let’s now take a look at 5 of the most common popular money transfer services for US customers.
Paypal primarily functions as an online payment gateway and is not specifically mooted as transfer specialist. Nevertheless, Paypal is possibly the most common, non-bank method to move money around the world.
This is because they operate in over 200 countries or areas, pretty much everybody has an account already, and they are easy to use.
However, whilst Paypal usually works out cheaper than the banks, their fees and markups are still a lot higher than those of proper money transfer companies and are set to get even higher.
One of the original names in forex and money transfer, Moneycorp is a multinational behemoth. They offer exchanges in 33 currencies and allow customers to make payments to over 190 countries.
MoneyCorp does not charge handling and transaction fees but they do apply a slight markup on currency exchanges.
The London based World First is a great provider to use to transfer money from USA To UK for cheap. These days, a lot of UK based freelancers get paid in USD and as such they are one of the beneficiaries of the falling Pound to Dollar exchange rate as they are getting more pounds than ever before for the dollars they are changing. In order to capitalise on this it is more important than ever for them to shop around and look for low costs transactions fees.
Another forex veteran, Currencies Direct is an established forex and money transfer specialist who can help customers send or receive over 40 currencies to 120 countries worldwide. Currencies Direct do not charge transfer fees but do apply a mark-up on currency exchanges.
As well as payment services, Currencies Direct can offer forwarding services too - this is where they allow customers to buy/or agree to buy a currency in advance to lock in an exchange rate.
Definitely the oldest and perhaps also best known and least revered money transfer prvier on earth, Western Union supports 145 different currencies and has offices in pretty much every non-sanctioned country in the world. Western Union’s transfer fees and markups are perhaps the highest industry and they are only generally used by the very desperate.
In summary, there are many money transfer companies offering cheap international transfers and cost effective alternatives to the banks; there is no reason to tolerate sub-sub-par exchange rates, high transaction fees and slow service any longer.
Next time you need to make an international money transfer or are transferring large amount of money abroad, it is worth contacting one of the money transfer services we listed here to see just exactly what they can do for you.