Why Choose A Wire Transfer vs Bank Transfer?
Despite the ease of money transfers, many people continue to exchange their paychecks, pensions, and money from home through their banks or financial brokers. Instead of using a money transfer online, they meet with a banking representative and agree to exorbitant commissions and fees. Most of the time they do this because it’s familiar: They’ve always trusted their bank and have used them for years — why should they change?
In actuality, the banks aren’t specialists in currency exchange, and are often charging customers more than they can afford. Keep reading to learn why you should skip the bank and use online money transfers when traveling abroad.
You Get the Best Exchange Rate for Your Money
If you’re telecommuting or making money off of your investment property, your employer and tenants are likely to pay you in your home currency, which you then transfer into your current bank. This can help or hurt your income levels depending on the exchange rates, and even depending on the money transfer service you use. If you’re counting on receiving a certain amount each month, you could see a dip in your income.
If you’re exchanging money through your bank, you’re probably not getting the best deal on exchange rates as you would through specific money transfer services. Your bank offers many products and services, and might not be as focused on international exchange rates as you would like.
Further, your bank’s currency exchange might be outdated, or they could set their own buy and sell offers around them. Most institutions follow the Interbank rate, and then base their own exchanges around it. You may see a difference of up to five percent that the bank is pocketing.
Instead, money transfer companies work to find the best exchange rates possible. CurrencyFair even has an open market where users can propose deals on their own terms. Instead of relying on your bank because you’ve always worked with them, try out the exchange rates here instead.
You Pay a Flat Fee Instead of a Percent of Total
Most banks charge customers a small percentage of the international money transfer as a fee for the services. They can charge as much as three to five percent and label it a “processing fee” for exchanging and transferring money.
These small fees might not seem like much, but they add up. If you have to pull an extra five percent out of your paycheck every month, you could be losing thousands annually. This is especially important for those traveling and living off their retirement or student loans. You already have to stretch your funds, so why are you giving so much away to your bank?
Instead, look for international money transfers that only charge flat fees on your transaction. Not only will this help you budget your expenses for the month (and year), but it will also save you significantly.
For example, CurrencyFair only charges a 3 EUR fee on any transfer. If you transfer 3,000 EUR per month for a year, you will only pay 36 EUR in fees.
If you went through a bank that charged four percent per transaction, you would spend 1,440 EUR in fees over the course of a year.
With those savings, you could buy a plane ticket home.
To see how your financial institution stacks up against CurrencyFair, check out our comparison guide of Money Transfer Companies. We reviewed everything from PayPal to banks and brokers all over the work to see who offers good deals, and who tries to skim cash from customers.
You Can Keep a Safety Net Back Home
If there’s anything to be learned from the Brexit, other than the fact that CurrencyFair is so awesome we remained open during the turbulence, it’s that even the most stable currencies can take a tumble during political and economic instability. While the stock market dip wasn’t as bad as it could have been, many expats living around the world haven’t been as lucky. If you find yourself in a region where your currency is suddenly devalued, it helps to have a safety net of funds back home to get by on — whether you’re trying to ride out the storm or buying a ticket to a new country.
This safety net can also help if your bank account falls prey to scammer and hackers. Even the most savvy travelers can get robbed or tricked into parting with their money, and it’s good to know you have a backup source that you can use to transfer money internationally. (We discussed some tips to stay secure abroad in a previous post.)
Even if you don’t fall prey to dire economic times or a scammer, keeping a safety net makes it easier to move around the world if you need a change of scenery. Instead of dealing with two banks in different foreign countries, you can send money out of your international bank account, close it, and start afresh somewhere new.
All You Need is An Internet Connection
The safety net issue also brings up the ease of accessing international funds when you need to transfer money abroad. Not all banks are as friendly to online banking you might want them to be, and you may have to find a physical location and try to communicate with someone in a foreign language to order a money transfer. It’s easy to learn phrases such as “where is the bathroom” in your new home, but “what fees and commissions do you charge?” is a little harder.
By using an online money transfer, you can exchange funds wherever you are that has a secure Internet connection, whether you’re meditating with monks in Bangkok or cage diving with great white sharks in Cape Town. Don’t drop everything you're doing to spend the day in a foreign bank; move your money and then move onto more interesting activities.
If you’re balancing a life between your home country and your current adventure, don’t let your money get lost in between. There are plenty of organisations looking to skim fees and commissions off the top, so opt for a reliable money transfer service instead.