Money - The Best Ways to Transfer Funds Internationally
Sending money overseas can be a bit overwhelming, but don’t worry! There are many safe, reliable, and affordable ways to make international transfers. Whether you’re sending money to loved ones, paying for services, or managing your finances while abroad, knowing your options is key. Let’s explore the best ways to send money internationally and the things you should consider, from speed and security to costs and convenience.
Why Send Money Overseas?
The world’s getting smaller, with more people traveling, living abroad, or working remotely than ever before. There are lots of reasons why you might need to transfer money internationally, including:
Converting your own money for travel or living abroad
Supporting friends or family financially
Paying for goods or services
Managing business expenses or freelance payments
Watch Out for Exchange Rates
When sending money internationally, exchange rates matter. Many services will give you a quote with the exchange rate locked in. If possible, send the money in the currency of the receiving bank to avoid extra fees. Keep an eye out for companies that advertise low fees but compensate with poor exchange rates—sometimes the cost is hidden in the exchange rate markup.
Be Aware of Hidden Fees
Money transfer services often add fees that aren’t always obvious. These can include transfer fees, commissions, and even markup on the mid-market exchange rate (the rate banks use when trading with each other). A small difference in fees can significantly impact how much your recipient gets, especially with large transfers. It’s always a good idea to compare the final payout from at least three services to ensure you’re getting the best deal.
Tip: Make sure you compare the final amount the recipient will receive to get an accurate comparison across different services.
Keep Limits in Mind
Some transfer services are better suited for small amounts, while others offer more favorable terms for larger transfers. Check the limits in advance, especially if you’ll be making frequent or substantial transfers.
Avoiding Hidden Transfer Fees
Banks and transfer services often charge fees beyond the advertised rate. Here’s how you can keep those extra costs under control:
Compare the Mid-Market Exchange Rate: Know the mid-market rate and see how it matches the quoted rate from your transfer service. This will help you spot any hidden markups.
Look Out for Correspondent Fees: Some banks use intermediary banks to complete transfers, and these can tack on additional fees. To avoid this, consider services that provide transparent cost breakdowns upfront.
Check for Recipient Fees: Some banks charge the recipient a fee for receiving international transfers. To avoid surprises, choose a service that clearly outlines all costs.
Fastest Ways to Transfer Money
Need to send money quickly? There are a few services that specialize in rapid transfers, often within the same day:
Wise (formerly TransferWise): This service is known for almost instant transfers and competitive exchange rates. Click here to find out more.
MoneyGram: Offers FastSend, which lets you send money directly via text message, with same-day delivery in many cases.
Western Union: Great for cash pickups in countries where other services may not operate. Their fees vary depending on the country, but the extensive network is a big plus.
Keep in mind that you often pay more for speed, so faster services may come with higher fees or less favorable exchange rates.
The Cheapest Ways to Send Money
If keeping costs low is your priority, look for services with transparent fee structures and good exchange rates. Here are a few top picks:
Wise: Charges low upfront fees (typically under 1%) and always uses the mid-market exchange rate, making it a great choice for most transfers.
XE: This specialized foreign exchange broker offers efficient, low-cost transfers to over 200 countries.
OFX: Does not charge transfer fees, and their exchange rates can be competitive for amounts over $25,000. However, they may not be the fastest choice.
Safe Ways to Transfer Money
If security is your top concern, big-name services like Wise have a solid reputation for safe and reliable transfers. Online banks, often referred to as neobanks or digital banks, are also shaking things up in the world of international finance.
Exploring Online Banks and Neobanks
If you live abroad or travel often, digital banks can offer flexible solutions. With no physical branches, they focus on low-cost, user-friendly international services:
N26: A popular European option with free international withdrawals and access to the Wise network for transfers.
Revolut: Available in many countries, Revolut offers low-cost transfers, standard interbank rates on multiple currencies, and the ability to buy crypto and foreign exchange.
Traditional Bank Transfers: Pros and Cons
Pros: Widely accessible and highly secure, bank transfers are a reliable choice.
Cons: They tend to have higher fees and poorer exchange rates compared to specialized services.
Pros: Extensive coverage in over 200 countries, making it a great choice for regions where other services might not operate.
Cons: Fees and exchange rates can be higher compared to other options.
Can I Use PayPal?
Yes, you can send money internationally through PayPal. While it’s not always the cheapest, it’s very user-friendly and allows transfers to over 200 countries.
A Word of Warning: Scammers
Be cautious and never transfer money to someone you don’t know. Scammers often target international transfers because they can be difficult to reverse. Stick to reputable services and trust your instincts—if an offer sounds too good to be true, it probably is.
Glossary for Sending Money Abroad
Forex spreads: The spread is the difference between the buy (ask) and sells (bid) commission of the currency exchange. The bigger the spread, the more you lose on a transaction.
Mid-market rate: The exact midpoint between the buy and sell rates.
Spot rates: The exact exchange rate when quoted.
SWIFT/IBAN: Society for Worldwide Interbank Financial Telecommunication and International Bank Account Number. It is a unique ID number for every bank account in the world.
FX: Foreign Exchange abbreviation.
Mid-market rate: The exchange rate that big banks use to transfer money between one another.
Wire transfer: An electronic method of sending funds from one destination to another.
