When living or moving overseas, it is likely you will occasionally need to transfer funds from one country to another. The way you handle these transfers will make a significant difference to how far your money will go. Many people assume their bank to be the best place to exchange currency, unaware that the banks usually offer fairly uncompetitive rates, slower transfer speeds, increased transfer charges and limited access to the various foreign exchange products available.
By using a specialist currency broker you can significantly improve the financial efficiency of your overseas payments, and get access to products that may be hugely beneficial to you.
Benefits of Brokers
Save clients between 0.5% and 4% on the amount they transact
Faster international payments (same day in many cases)
No commission and no bank receiving charges
Bespoke and professional service with a dedicated broker
Free rate and market watch service
Access to products that the banks may not offer
Currency Transaction Types
If you already have the funds in place, you could arrange a spot transaction. This is simply the exchange of one currency for another at the current market price where the settlement happens within two working days. A broker should be able to get you a significantly better exchange rate for this transaction.
A forward contract allows you to fix a rate now for a date in the future (up to 2 years ahead). This means the rate is fixed regardless of exchange rate moves, thereby protecting you if the exchange rate moves against you.
A currency option, like a forward contract, allows you to exchange one currency for another on a future date, thereby protecting you from negative movements in the exchange rate. However, with an option, if the rate moves in your favour you can still take advantage of this. There are very few brokers that can offer these to clients as it requires special FSA authorisation. One such broker is World First.
If you will be exchanging a set amount of funds on a regular basis for mortgage payments or pension transfers, you can set up a regular payment order which will automatically transfer the funds on a regular basis.
It is worth noting that most of the above transactions cannot be made through the bank, and you would need to talk to a specialist currency broker to see what would be best for your specific needs. Using a broker will also allow you to receive commercial exchange rates, free market updates and a personal service with professional market knowledge, otherwise reserved for major global investors.