Author, Andrew Gibson
Last Updated on June 6th, 2024
Transferring foreign currency, especially large amounts, can seem overwhelming, particularly if you’re new to the process.
This article outlines 5 of the most important Do’s and Don’ts when deciding how, when, and where to transfer foreign currency.
The 5 Must-Do’s for Transferring Foreign Currency
1) Listen to Real People’s Experiences!
Whether using your bank, an online platform, or a professional currency broker, remember:
Personal reviews from existing customers are like gold dust.
Choosing a company with outstanding reviews will give you the confidence and knowledge to ensure your foreign currency transfer is as cost-efficient as possible!
When preparing this article, I asked several traders in our office for their expert options.
All of them said they would give a new client this one particular piece of advice when choosing who to use to make their international transfer:
“Always research by checking the FCA Register, check TrustPilot and Google reviews to help make an informed decision.”
2) Familiarise Yourself with Exchange Rates
Let’s talk about the exchange rate – one thing that could always catch you off guard without serious research, as outlined in the previous must-do.
Defining the exact rate and making comparisons can be tricky, especially if you are not a financial expert, as most of us are not!
This is because some providers don’t openly publish their actual customer rates.
Using their customer service or going into the branch of your bank in person are the best options, rather than relying on the rates published on their website.
For example, if you look at Santander’s exchange rate calculator – it gives you what might seem like a very fair rate.
However, note the somewhat sneaky disclaimer in VERY small letters at the bottom of the page which states:
“The exchange rate shown is merely indicative and is not the exchange rate that might be applied in transactions with the Bank.”
Cheeky. And easy to miss!
One way to navigate this potential problem is to ask your bank in the most simple terms:
“After factoring in all the fees, how many euros will I get for my Pound Sterling?”
They are then obliged to give you a straightforward answer, which will certainly not be what was displayed on that currency calculator!
It may seem tiresome to do so much research, but in fact – here comes the technical part:
Shifts in the exchange rate affect how people, businesses, and the government decide things. Altogether, this impacts economic activity, inflation, and the balance of payments.
Of course, no one can predict how the market trends will affect the exchange rate – if we could, we would all be sitting on a beach in Barbados sipping cocktails!
However, talking to an experienced currency broker can offer you expert insight into the market trends and even allow you to lock in an exchange rate when the market is in your favour.
3) Consider Timing and Daily Transfer Limits
Timing is everything when it comes to transferring foreign currency.
Be very clear about how fast you need the transfer to happen when speaking to your bank, currency broker, or online platform.
Take into account weekends and bank holidays in both your home country and your recipient’s country, as this can affect the time the transfer takes to complete.
High street banks can take up to 5 Days to process an international transaction, depending on the currencies involved.
Using a specialist currency broker can speed things up to 24-36 hours for the transfer to be completed.
There will also be a daily limit on how much you can send with some providers, particularly banks, so if you transfer a large amount, your bank, for example, will likely not be permitted to send it all in one go.
Below are examples of daily limits some of the UK’s banks set for international money transfers, which is not ideal if you need to send a large sum urgently!
- Natwest: £25,000.
- HSBC: £50,000.
- Barclays: £50,000.
- Lloyds: £30,000.
The amount of money you need to send and how fast you need to send it will play a crucial role in deciding which method to transfer your foreign currency.
This is another prime example of the benefits of using a currency specialist who can transfer all your funds in one smooth transaction.
4) Watch out for Hidden Fees
Don’t get blindsided by sneaky fees.
Look beyond the apparent transaction fees – other aspects such as bank fees or not altogether exchange rates!
Hidden fees can mess up your budget.
Knowing all the costs helps you make an informed choice and keeps more of your money where it belongs.
5) Set a Clear Budget
Before you start, define your budget.
Determine the exact amount you need to send, and keep that figure as a solid benchmark for your transaction.
Ever-fluctuating exchange rates will affect your budget, and surprise fees can raise their ugly head if you are not fully prepared.
If we use an example of exchanging 10,000 Pound Sterling for Euros:
Exchanging £10,000 today to EUR will net €11,560*.
However, if you were exchanging £10,000 at the recent low of the rate in September 2022 it would have worked out at only €10,790.
A substantial difference, which demonstrates the importance of being aware of the current daily rate and how it can impact your budget.
A definitive budget will allow you to choose the best, most cost-effective transfer option for your circumstances.
The 5 Must Don’ts for Transferring Foreign Currency
1) Don’t Ignore Overall Costs
It’s easy to become fixated on exchange rates, but don’t forget all the other costs involved.
Some providers may give you a great rate but slam you with high fees.
Look at the big picture, including fees, to get the actual cost.
Ignoring costs can mean unexpected hits to your wallet.
A sweet exchange rate isn’t so sweet if the fees enter your transfer.
When engaging in foreign currency transfers, it’s crucial to be mindful of potential fees that can impact the overall cost. Consider the following:
- Bank charges: Your bank will impose fees for processing the transfer – the fees will vary depending on the amount of the transfer.
- Exchange rates: As previously displayed in the article, fluctuations can influence the value of your transferred amount.
- Recipient fees: Your recipient’s bank may apply charges depending on the country of the recipient.
- Third-Party fees: Intermediaries involved in the transfer process will introduce additional costs.
Ask your provider to clarify these charges before making your exchange.
2) Don’t Rely on Banks
Banks might seem like the prominent first port of call, but they’re not always the best bet.
In my many years of living and working abroad, I have seen too many people lose a substantial amount of money by sending money abroad using bank-to-bank transfers.
This happened a lot because they were unaware of any other option!
Not everyone is familiar with other solutions, such as currency specialists, and therefore, use their bank as it appears to be easy and trustworthy.
However, your bank will often have hidden fees, and their rates might not be as reasonable as they initially seem.
Considering alternative service providers allows you to discover better rates and lower fees.
Specifically, currency brokers excel in these aspects and present an intelligent option compared to high street banks.
3) Don’t Forget About Taxes
Yes, taxes may not be the most exciting topic, but they DO matter.
Transferring money abroad may trigger taxes, depending on the destination country’s regulations.
- Certain nations tax incoming funds, for example on income or capital gains.
- However, depending on your location, exemptions or reduced tax rates may well apply – such as for gifts, inheritance, or personal allowances.
We recommend speaking to a local tax advisor for clear and definitive advice on what taxes you may be liable to pay for your transaction and avoid any unpleasant surprises!
Ignoring taxes can mean trouble later on – knowledge is power here!
4) Don’t Leave it to the Last Minute!
As Liam, one of our traders, puts it – “Preparation is King!”
Providing you have the luxury of time to plan, be sure to do so.
Last-minute currency transactions pose risks due to fluctuating rates and higher fees.
Pre-planning and getting professional advice can ensure you avoid unnecessary bank charges and secure the best exchange rate ahead of your transfer.
Planning allows for better negotiation, allowing for a smoother process with minimised unexpected costs.
5) Don’t Forget to Double-check Every Detail
When you’re about to transfer foreign currency, steer clear of the classic blunder of inputting the wrong bank details.
Always double-check your recipient’s details, whether you’re using a bank or a currency broker for your foreign currency transfer.
Getting those details right ensures your hard-earned money lands where it’s supposed to, not someone else’s account.
It may seem simple, but one wrong digit can make all the difference!
Key Currency is a leading international money transfer specialist, serving clients across the UK, EU, the Middle East, and Australasia in 39 currencies. With competitive exchange rates and zero transfer fees, we prioritise personal service. No trading platforms, just dedicated account managers guiding through, step-by-step. Trust and transparency are our foundations; meet our team on our website. We offer excellence because we are authorised by the FCA (no.753989) and boast a 5-star Trustpilot rating. For support and a free quote on your foreign currency transfer, click below!Why use Key Currency when Transferring Foreign Currency?
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