Money Transfer FAQs

Author, Andrew Gibson

Last Updated on August 21st, 2024

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Please Sir, can I pay some more fees? Said no one, ever!

Well, one thing we can say for sure is that the financial world has progressed tremendously since the days of Oliver Twist!

However, one aspect of the process that has remained consistent during the evolution of international money transfers is that various costs have always been involved! 

In this article, I’ll outline all the costs you may encounter when making a money transfer abroad.

Most importantly, we will share our top tips on avoiding hidden fees and getting the best value for your transfer!

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What costs can I expect when making an international transfer with my bank? 

Your bank may appear the obvious choice, especially for those new to international money transfers. 

However, the obvious choice is not always the best one!

You may have had first-hand experience with how easy domestic transfers are online. Seems simple, right? 

But beware, when transferring money abroad with your bank, it’s not quite as straightforward as you think! 

Banks can hit you with some hefty fees, making your transfer considerably more expensive than anticipated. 

Every bank is different, but generally, you can expect them to take as much as 3-4% of your total transfer as a fee when you transfer money internationally. 

When sending money from a UK bank to another country, there are two significant costs you need to consider. 

1) Transfer Fees

Any high street bank will charge for processing an international money transfer for regular customers. 

It’s important to know that these fees can vary between UK banks. 

They can also be different depending on how you make the transfer, for example, online or in person. 

See below for the charges the Top 10 UK banks advertise for sending money abroad.

Bank	International Transfer Fees
Barclays	£15-£40
HSBC	Up to £35
Lloyds Bank	Up to £35
Natwest	£15-£30
Santander	£10-£25
RBS	£10-£30
Halifax	Up to £30
Nationwide Building Society	£20-£25
Co-op Bank	Up to £25
Metro Bank	Up to £25

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Sounds reasonable? Alert! The big costs tend to be hidden in the exchange rate! 

If you use your bank to transfer money abroad regularly, you must pay the above fee for each transaction. 

Consulting a currency broker can eliminate these fees once and for all! 

As easy and efficient as it may seem, banks are rarely the best option for transferring your money abroad. 

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2) Exchange Rate Fees

If you are not used to making international transfers, you are forgiven for not understanding exchange rates. 

Or knowing the difference between an interbank rate and a real-time rate. 

Let’s face it – not many people need to know this regularly!

I’ll break it down: 

• When you switch your pounds to another currency, your bank adds a margin. 
  
  
• This margin is the difference between their rate and the interbank rate. 
  
  
• The interbank rate is the standard rate at which banks exchange currencies with other banks only. 

Banks raise the exchange rate compared to the interbank rate to make extra money from foreign exchange currency transfers (which makes perfect business sense – to them!)

And here’s the kicker: they are not transparent about this!

For example, if you look at Santander’s UK currency conversion page – they quote a rate of 1.16 to transfer pounds to euros. 

Only the most eagle-eyed amongst us will spot the disclaimer in tiny letters stating: 

These are market indicators that carry a non-contractual rate. Contact your local desk to discuss rates. 

The above affects you because the total amount your recipient receives can be less than you had anticipated, which, let’s face it, isn’t making anyone happy! 

The moral of this story? Always speak to your bank in person for an up-to-the-minute rate to avoid any nasty surprises when making an international money transfer with your bank! 

In simple terms, you are being charged for converting your currency in addition to the interbank rate, which can be either a fixed fee or a percentage of the total amount received by your recipient. The rate at the time of the transaction determines the cost for you as the sender and the amount received by the beneficiary. 

For a real-time example, I asked my sister, who holds a current account with Barclays in the UK, to get a quote to send £100,000 to a La Caixa euro account in Spain. (in theory only, I am afraid!)

She called her local branch, who gave her a rate of 1.12. 

That’s a margin of 4% compared to the current interbank, which equates to a charge of £4000, a significant amount of her hard-earned money! 

But wait, there’s more! 

What other costs must you consider when transferring money abroad with your bank? 

Two other fees are worth knowing when making an international transfer with your bank. 

These are: 

Initiation Fee:

It is also known as a ‘setup fee’, and the cost will depend on which method you use to make your international money transfer. 

Tracer Fee:

If you want to keep an eye on the progress of your transfer, then be prepared to pay a small sum to do so! 

Again, each bank will vary here – so speak to your branch in person for full, total, clarification! 

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Why do banks charge so much for international money transfers? 

Now we have established the costs you can expect from your bank, you may wonder WHY the bank fees are so high. 

To find out, I decided to go straight to the source and posed the question to a friend who has been a branch manager at one of the top 5 high-street banks in the UK for over 20 years. 

This was her answer outlining the two major reasons why your bank fees for transferring money abroad are high: 

1. In general, banks prioritise handling money within their own country. This means extra work for them when dealing with international transfers. Therefore, they charge higher fees to cover the extra hours involved.
   
   
2. Timing and speed of money transfers abroad are also issues here, with banks taking between 2 and 5 working days to complete an international transfer. The bank might change the final amount your recipient gets based on how the currency market moves whilst your money is en route.  

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How much it will cost to transfer money abroad with online apps? 

Online money apps are fast becoming a part of everyday life and can be incredibly useful in everyday situations. 

Even my 12-year-old son has his own under-18 Revolut account, which can be used for pocket money! 

While they may claim to have small fees for transferring money abroad, these apps only work out best when you are sending small amounts.

Watch out for sneaky fees when sending a large amount of money! 

Let’s look at examples using four of the most popular online apps used in the UK and their fees for sending money abroad. 

Popular Online Money Transfer App Fees

Paypal advertises ‘free’ transfers, but when you do a little digging – that only applies to domestic transfers. 

When it comes to making an international transfer with Paypal they charge a hefty 5% currency conversion charge you would be looking at a charge of £750 for an international transfer of £15,000. Hardly what I call small change!

When I logged into my Revolut account and asked to send a transfer of £5000 from my GBP to my EUR account, the fee was £20. £1000 or under the transfer was free. 

Wise publishes on their website an international transfer fee of 0.43%. 

Now, that doesn’t sound a lot, but if you were looking to transfer £50,000 you would be looking at a fee of £215, which is a considerable dent in your transfer abroad. 

Western Union, the original pioneer of international transfers also has an online platform. Fees vary for different currencies but can be as much as 4% on international transfers outside of the European Union. 

If you were wanting to send £10,000 – the fee would be around £400.

Online Money Transfer Platform	International Transfer Charges (£1000 or under)	International Transfer Charges (£50,000)
Paypal	£1.99	Does not show due to limits in place. Assuming a 5% currency conversion charge this could be up to £2,500.
Wise	£4.30	£215
Revolut	Free	£200
Western Union	£2.90	Up to £2000

Further considerations with online money transfer apps 

Most importantly, be aware of what I consider to be the most stressful issue when using online apps. 

There are no real people to talk to!

Do you have a problem with your Revolut transfer for example? Forget about popping into your local branch for help – there isn’t one!

As for customer support – you are stuck with only a chatbot to answer your questions, and they are only able to give very generic answers. 

This can be difficult to negotiate for even the most tech-savvy amongst us and very stressful in my own experience! 

A problem you will not encounter when using a specialised transfer company – where your personal account manager is on the end of the phone to help you manage queries straight away! 

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Want to Read More? 

• Top 5 Do’s and Don’ts of Transferring Foreign Currency
  
  
• How Much Money Can I Transfer Out of the UK?
  
  
• How to Transfer Money When Moving Abroad
  
  
• Tips on Transferring Money to Buy Property Overseas

Author, Andrew Gibson

Last Updated on August 27th, 2024

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If you inherit money from overseas, you are probably worried about the tax and how to transfer the money safely into your bank account without much hassle or cost.

Below I’ll give you a summary in plain, jargon-free English!

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How do I transfer money from overseas inheritance? 

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It’s not complicated. I promise.

The best way to transfer inheritance from overseas is to use an international bank transfer.

It’s safe, quick (takes a few days) and cost-effective.

An international bank transfer, as the name suggests, is when you send money from a bank account located in one country to another bank account located in a different country.

To be clear – you don’t need to set up a new bank account in a foreign country.

Your inheritance will be converted into the currency you want as part of the international bank transfer and then sent directly to your existing bank account.

You can carry out an international bank transfer using a bank or money transfer service.

Using a bank might seem convenient, but a money transfer specialist will typically be a lot cheaper, more helpful, and more efficient.

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How much will it cost me? 

There is no standard cost to sending money internationally.

As a ballpark, big banks typically charge in the region of 3-5% of the money you transfer. 

This will be a combination of fees and exchange rate charges, just to make things difficult.

It can get tricky to tally up the various fees of different providers, so it might be easier just to find out how much money you will receive at your end and compare that figure.

The highest number is the best.

The alternative to a bank is a money transfer service.

The most obvious benefit of using a money transfer service is it tends to be a lot cheaper than banks on fees and changes. They wouldn’t exist otherwise. 

The downside is there is a little bit more setting up at the start. A good money transfer service should do most of this work for you.

Both banks and money transfer companies tend to set their exchange rates based on how much you send.

The larger the sum, the better the exchange rate. I think the fancy term for that is a sliding scale.

Broadly speaking, you can expect to save 60-70% in overall charges using a money transfer specialist instead of a bank. 

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How to choose a money transfer company

Having been on your side of the fence, I know it can be confusing trying to decide which money transfer company to choose.

One thing you need to know from the outset is that a lot of money transfer companies these days are just ‘apps’ you download on your phone. This may not be ideal for someone receiving an overseas inheritance.

The reason is that money transfer apps offer no human help. They’re kind of like a ‘do-it-yourself’ service.

The main money transfer apps are Wise, Revolut, PayPal, Venmo, Zelle, Remitly, and WorldRemit. They all do pretty much the same thing.

If anything goes wrong, it can be difficult to resolve the problem because you can’t speak to anyone. It’s all via webchat or email.

I guess that most people receiving inheritance don’t need any more stress in their lives. They just want it done right.

In my experience, money transfer apps are better suited to small remittance amounts or for those who just love playing around with new technology (usually someone under the age of 30!).

For inheritance payments, you are best using a money transfer company with human support.

Most people receiving inheritance from overseas want to know if their international payment is set up correctly, the exact amount they will receive, and when they will get it. 

Don’t forget that the timing of your currency exchange can be an important decision too.

Exchange rates and timing

Day-to-day, exchange rates move every few seconds.

Even small movements in currency values can make a big financial difference to the value of your inheritance, particularly for larger sums.

At Key Currency, we’ve dealt with inheritance payments of all sizes and from dozens of different countries.

We will work to get you the best conversion rates, avoid losses, and reduce costs.

And whilst we’re specialists in this area, we appreciate you may not be.

That’s why we will always explain the options available in straightforward, jargon-free language.

Inheritance distribution

One thing I know has helped customers is we can accept inheritance proceeds directly from the solicitor or executor and even distribute the inheritance money to multiple beneficiaries should you wish.

Note: To open an account with a money transfer company you need to be over 18.

So if the beneficiaries in the will are children, an adult would need to receive the payment from overseas and then distribute the inheritance money.

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What information do you need to provide? 

Whether you use a bank or money transfer company, you will need to provide some ID before the money is sent.

It’s not because you are a suspected drug lord.

It’s because there are global anti-money laundering rules (serious stuff) that must be adhered to.

For inheritance payments, the paper trail is pretty obvious, so it’s normally quite straightforward.

In most cases you will need to provide:

1. Proof of identity (passport)
   

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2. Proof of address (a bill)
   

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3. Source of funds (will probate – a solicitor will provide)

These can be emailed over as a photo or scanned. Once received, you should be in a position to transfer money within an hour or so.

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Inheritance tax (a quick overview)

Receiving inheritance money from overseas may trigger inheritance taxes.

Inheritance taxes differ all around the world and like all taxes, there are usually little exemptions and nuances that make them complicated.

Generally speaking, inheritance taxes are imposed in the country in which the money or assets are located, not where they are received.

Sometimes inheritance tax is imposed on the estate and sometimes on the beneficiaries.

Because inheritance tax can be complex, I would lightly nudge you to pay an accountant to do your tax return. It’s not worth the risk of getting things wrong.

Here’s a brief overview of the inheritance tax rules in different countries:

United Kingdom

Inheritance tax is only payable if the deceased was domiciled in the UK or if you were left assets within the UK.

The deceased was domiciled in the UK if the either lived in the UK for 15 of the last 20 years or had a permanent home in the UK at any time in the last 3 years of their life.

If their permanent home was abroad, inheritance tax is only paid on their UK assets (e.g. property or bank accounts located in the UK).

No inheritance tax is due if the estate is below the £325,000 nil-rate band or if the money is left to a spouse/civil partner or charity.

If you’re a child or grandchild, the nil-rate band increases to £500,000.

The standard tax rate is 40% of any amount above your nil-rate band.

You still need to report your inheritance to HMRC if you are above or below the threshold.

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Ireland

If you are a resident of Ireland, you will be subject to the Irish Capital Acquisitions Tax on the inheritance you receive from abroad.

Like the UK, Ireland has a tax-free threshold, and payments to a spouse/civil partner are exempt from inheritance tax.

For children, the threshold is €320,000. For siblings, it’s only €32,500. And for all other cases, the threshold drops to €16,250.

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USA

If you are a US citizen and receive an inheritance from overseas, there are no taxes imposed by the IRS (Internal Revenue Service), but if the amount exceeds $100,000 you need to report it (Form 3520).

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Australia

I need an easy one, so here it goes. Australia has no inheritance tax. You beauty.

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Canada

There is no inheritance tax in Canada either. Nice one.

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Quick Summary

1. An international bank transfer is the best way to transfer money from overseas inheritance because it’s safe, quick, and cheap.
   

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2. You don’t need to open a bank account in the country where you receive inheritance. A bank or money transfer company can send the money directly to your account.
   

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3. Money transfer companies are usually a fair bit cheaper than banks and are easier to deal with.
   

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4. For inheritance payments, it’s best to use a money transfer company that can provide human help and guidance.
   

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5. Every country has different rules on inheritance tax. It can get quite complicated, as sometimes the estate pays the tax, and sometimes the beneficiaries. Best to use an accountant.

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More money transfer guidance…

• Selling Overseas Property (complete guide)
  

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• Euro to Pound Forecast (advice for 2023)
  

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Author, Mike Smith

Last Updated on June 4th, 2024

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When you need foreign currency, the exchange rate is one of the most crucial factors to bear in mind.

This is equally important whether you’re planning a holiday, investing in property abroad, or sending funds to family overseas.

Securing a favourable exchange rate will significantly impact how you maximise your finances.

This comprehensive guide offers clear and concise advice on finding the best exchange rate.

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What Do I Need to Know About Exchange Rates? (Before making decisions!)

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An exchange rate is a rate at which one currency will be exchanged for another currency. Most exchange rates are defined as floating and will rise or fall based on the supply and demand in the market. Usually, exchange rates change every 2-3 seconds.

There are a huge number of factors that drive exchange rates which makes them hard to predict.

Should you need expert advice, a currency broker can offer professional and well-informed guidance on your international exchange.

How Can I Get the Best Exchange Rate? 

Before you commit to exchanging foreign currency, whether for travel, business purposes, or other personal reasons, remember that thorough research is key. A good place to begin is looking at the current exchange rates on offer, which you can do by speaking to your bank or viewing online currency transfer companies.

It’s vital to remember that rates can vary between providers, so by comparing multiple sources, you can get a wider perspective on the prevailing exchange rates.

Below, we have outlined a simple step-by-step guide on how you can the best exchange rate.

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1. Compare Providers.

Compare rates from different providers, including banks, specialised exchange platforms, and money transfer services.

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2. Consider Fees.

Factor in any potential fees, including foreign transaction fees or currency conversion charges.

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3. Hedging Strategies.

For large transactions, explore hedging strategies to mitigate the risk of unfavourable rate movements. In such cases, we would strongly advise speaking to a currency broker.

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Why are Exchange Rates so Important?

Simply put, you are effectively losing money on every pound if you transfer money abroad or exchange currency at anything other than the best foreign exchange rate.

This is much more relevant should you make large transfers, for example, the purchase or sale of a property abroad.

In these cases, even the slightest shift in the rate will considerably impact the final funds.

Exchange rates are typically quoted in pairs, such as GBP/EUR, indicating the value of one currency in terms of another.

The ‘base’ currency is the one you have, while the ‘quote’ currency is what you want to acquire.

For example, if the GBP/EUR exchange rate is 1.20, this means that one GBP is equivalent to 1.20 Euros.

Researching rates thoroughly and using a currency broker with a team of experts working on your behalf will always be a good way of navigating unpredictable FX market fluctuations.

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Where to Get the Best Currency Exchange Rates? 

• Speak to your Bank

You can speak to your bank either in person or by telephone and ask for a rate on a certain amount of currency you wish to exchange.

Sometimes banks can offer decent rates for account holders. But, watch out for those hidden transfer fees!

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• Get a quote from a Currency Broker

Currency brokers, such as Key Currency can be the best way to transfer a large sum internationally.

Especially where costs, communication and timing are so important. They can give a live trading price (customer rates!) which avoids any unpleasant surprises along the way.

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• Use currency conversion apps

Apps like XE, OANDA, or Currency Converter Plus give you real-time rates. These can be a lifesaver when you’re on the move.

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• Monitor the Market

Exchange rates fluctuate daily. Monitor the market trends and strike when the rate is favourable.

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• Plan ahead

If you know you’ll need foreign currency for a scheduled trip, plan! Rushing to exchange money at the last minute usually leads to poor rates.

Remember the ‘best’ rate can vary depending on your specific needs and how long you have to choose the best time, so take some time to research and compare options.

It could save you a tidy sum when you need to make an international money transfer or any other financial transaction!

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Timing is crucial! 

Exchange rates change rapidly due to various factors, including economic reports, geopolitical events, and market sentiment.

For example, consider a scenario where you plan to transfer £10,000 to euros for a business transaction.

If the exchange rate shifts from 1.20 to 1.15, you will receive 500 euros less due to the timing of your transaction.

This example is an excellent way of understanding why monitoring rates and acting at the opportune moment is crucial.

If this all seems confusing, an expert currency broker can talk you through the finer details.

If you are looking at changing money over some time, with a currency specialist, you can protect yourself against such a disappointment by locking in a reasonable exchange rate to use for up to two years.

This simply means that you won’t miss out even if the rate shifts out of your favour by the time you’re ready to make your international money transfer.

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What to avoid when deciding on exchange rates 

For both travel and international money transfers, unfavourable exchange rates and hidden fees can eat into your funds.

You will most often find these two issues when using traditional methods of exchanging money, such as banks or credit unions.

One surefire way to make your money work harder for you and avoid these pitfalls is to consider alternative options like money transfer services.

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Lock-in an Exchange Rate

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Want to Read More?

• Tips on Finding the Best Australian Dollar Rate
  

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• How Long do IBAN Transfers Take?
  

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• International Money Transfer Methods (which is the best?)