How to Save Money on International Transfers
Finance terms such as exchange rate, currency exchange, and money transfer might evoke unease, but they represent a realm of knowledge and experience. For example, sending money overseas is expensive due to fees, unfavourable exchange rates, and concealed charges. This might appear burdensome for individuals who have never engaged in international transfers.
Just as every lock has a key, every seemingly challenging situation has a solution or two. With the right tools and knowledge, substantial savings can be achieved on international transfers. Let's explore how you can simplify your experience with international money transfers.
8 Ways To Save Money While Making An International Money Transfer
Compare transfer providers: Research and compare different money transfer providers to find the one with the lowest fees and most competitive exchange rates for international transfers. Online platforms often offer better rates than traditional banks.
Watch out for hidden fees: Read the terms and conditions of the transfer provider carefully to ensure you're aware of all potential expenses. Look out for hidden costs in the exchange rate or additional charges that may apply.
Opt for online transfers: Online money transfer platforms generally have lower fees than traditional banks or offline services. They also provide more transparent exchange rates, allowing you to save money on your international transfers. Azasend offers swift and seamless online money transfers to your loved ones worldwide.
Timing matters: Exchange rates fluctuate constantly, so keep an eye on the rates and try to transfer money when the rates are favourable. Use currency exchange rate tools or apps to monitor the rates and make your transfer at the most reasonable time.
Consider peer-to-peer transfers: Peer to Peer (P2P) payments is a mechanism through which the user can transfer funds from his bank account to another individual's account via a digital medium, i.e. Internet or a mobile device. One benefit of using transfer services like Azasend is the low-cost transaction fee and convenience. So click Get Started and enjoy the simple, modern way to send and receive money from your phone.
Avoid unnecessary services: Some money transfer providers offer additional services like express transfers or insurance, which can incur higher fees. You can use the primary transfer service to save money unless you have specific requirements.
Use forward contracts or limit orders: If you frequently make international transfers, consider using forward contracts or limit orders. These tools allow you to lock in a favourable exchange rate in advance or set a target rate for your transfer, reducing the impact of rate fluctuations.
Consolidate transfers: Instead of making multiple small transfers, consider consolidating your transactions into one more significant transfer. Many providers charge a flat fee per transaction, so reducing it can help you save on costs.
Here's a standard breakdown of the total price of international online money transfer fees:
Transfer Cost.
The transfer of funds incurs a charge from the repayment provider. This can involve an additional inflated cost or a percentage based on the transferred amount.
Conversion charge or Currency Exchange Rate Margin.
International bank-to-bank transfers are frequently conducted between countries with different currencies. Money transfer companies typically generate revenue by capitalising on slight variances between the mid-market exchange rates (you can verify the actual rates on a government-approved portal) and the rates they charge you for your transaction. Essentially, they offer you a higher rate than they acquire, and the difference ends in their profits.
Other fees.
The specific service you choose can determine whether you incur additional fees for an online money transfer when using a credit card instead of a debit card or a bank transfer.
Regarding global bank transfers, intermediary financial institution fees may apply. These fees are charged by the financial institutions responsible for facilitating the connection between your local and foreign banks. Furthermore, your receiving bank imposes costs for inbound international transfers.
How to choose among the best ways to send money internationally
When selecting an exceptional money transfer service, it is essential to consider various factors. You can avoid paying for unnecessary features by clearly understanding your specific needs. Keep the following points in mind as you make your decision:
Convenience: On the internet, transfers are usually more accessible than waiting in line at a shop. One digital service may be simpler to use and comprehend than another.
Payment: The transfer amount, the transfer speed, and the payment and distribution methods chosen all impact the cost involved.
Here are definitions of money transfer terms and some general advice to help you choose.
Money Transfer Rates
The cost of your money transfer and the amount received by your recipient is determined by three rates.
Exchange rate: An exchange rate represents the value of one currency about another. For instance, when converting U.S. dollars to euros, it is essential to determine the equivalent value of one U.S. dollar in euros.
Midmarket rate: The mid-market rate, also known as the interbank rate or interbank exchange rate, refers to the exchange rate utilised by significant banks when they engage in currency swaps.
Exchange rate markup: Most providers incorporate an exchange rate markup when determining the cost of your transfer. They offer customers an exchange rate that includes the mid-market rate and an additional percentage or markup, allowing them to generate profit from the transaction.
Let's consider an example to understand the impact of an exchange rate markup. Suppose the mid-market rate for converting GBP to Nigerian Naira is 578 Naira for 1 GBP. Then, if a money transfer provider applies a 2% exchange rate markup, they will offer you 566.44 Naira per GBP.
For a transfer of £1000 using the mid-market rate, you would send 578,000 Naira. However, with a 2% markup, you would send 566,440 Naira. It's important to note that the higher the markup, the less your recipient receives in their currency.
General advice for international money transfers
Understand how exchange rates function (and how to find the best rates). Money transfer providers often generate profits by adding markups to exchange rates. Usually, these providers offer a different exchange rate on dedicated currency exchange platforms such as Bloomberg.com or Reuters.com. However, these platforms can serve as valuable references for identifying competitive rates. For example, when assessing the exchange rate for an international transfer through services like Western Union, pay attention to the markup by examining the foreign currency amount. A higher amount signifies a lower markup, resulting in more funds your recipient receives.
Need to send money abroad?
Discover the potential savings you can enjoy using Azasend for your international money transfers. Simply enter the desired amount, and you'll notice our highly favourable comparison to traditional banks regarding fees and exchange rates.
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