International money transfers have become an important part of the economic landscape of many countries, and a wide variety of people use them. These range from expats and those sending family support back home to freelancers and businesses.
One of the major problems with moving money internationally is the hidden fees and poor exchange rates offered by many providers.
In this article, we will provide practical tips for reducing or even eliminating these costs completely.
Understand the Types of Charges Involved
Several different types of fees are often involved. One of the most predominant is transfer fees. These tend to be either a flat-rate fee or a percentage-based fee charged on the whole amount being moved.
Another way people are charged on their transfers is through exchange rate markups. This is when providers don’t give their customers the best exchange rates on their money, therefore taking what is often quite a hidden fee.
Then there are the intermediary or recipient bank fees to take into account. Not only might you have already paid fees in multiple ways on the money, but the recipient’s bank may also charge them, or one of the other banks the money has passed through may also charge fees. This is often the case when it comes to SWIFT transfers.
The final type of charges that you fall prey to is local or country charges. Some local taxes or fees may apply when transferring money to different countries, and it is important to investigate this in advance.
Choose the Right Transfer Method
There are different ways to transfer money abroad. Today, people even in the most distant locations can receive money from abroad without the need to go to the bank or wait for days till the money arrives in their account. Thanks to reliable online fintech platforms, international and domestic money transfers have become faster, more secure, and cost-effective. For example, you can send money to Mexico right from your mobile phone at competitive exchange rates and low or even zero fees for your first transfers.
Traditional bank transfers offer another secure way to send money abroad, but they are often laden with expensive fees. Although they are very secure, the downside is the cost that is often attached to them.
Sending via cryptocurrency is another new option that has become available in recent years and offers potentially lower fees, as the money is stored on the blockchain, rather than converted in the usual ways. Cryptocurrency faces far less regulation than other options, and because of this, users may face a higher risk of losing their money.
Another interesting option is peer-to-peer money transfer platforms. These include some big names and enable one person to send money to the other person involved. These tend to have fees on the transactions, and some users report that their accounts periodically get frozen for suspicious activity, even when nothing untoward has happened.
Compare Providers
When choosing how to send money abroad, it is important to carefully scrutinize the offerings from the various companies. Be sure to read the small print on all of the potential deals, so that you are aware of all the charges. Try to look at the total cost, including bank charges and exchange rates, before making the decision on which provider to go with.
Be Strategic with Transfer Timing
Many people fail to take into account that exchange rates fluctuate and that it can actually be possible to get “more bang for your buck” by being slightly more strategic. Currency alerts can let you know when it is a good time to send money.
In addition to the fluctuating exchange rates, some providers will let you lock in a particular rate for a period of time. This can be a great way to feel confident that you won’t be caught out by any unexpected shifts in the currency markets, but like with anything else, values can go both up and down, and you may be locking yourself out of a better rate.
If you choose your timing well, you can avoid the busy periods, which can help you avoid paying higher charges. For example, banks tend to charge more during the weekends and holidays. This is usually due to increased staffing costs at these times.
Send Larger, Less Frequent Transfers
Many of the fees you may encounter are per transaction, so it can make sense to send fewer but larger transactions if you want to minimize the fees you pay. This can look like one large transaction per month or a single transaction per week. Either way, sending payments in fewer transactions makes sense to avoid paying more in fees.
Check for Hidden Fees
It is very important to be on your guard against hidden fees. You can check for these by double-checking the final amount and querying it if it doesn’t look right. If an offer advertises zero fees, be aware that they may be trying to make up for this loss via the exchange rate. You should also be sure to read the small print regarding intermediary bank deductions, as this is where many clients are blindsided.
Conclusion
There are several ways that you can avoid paying more expensive fees. Choosing the right transfer method for your needs and being aware of the different ways that fees can be imposed are good steps toward ensuring that your recipients receive the maximum amount of money every time you make an international money transfer payment.