Better than a bank? Use a Dedicated Currency Broker
If You’re living abroad, receiving income or cash from the UK regularly, you need to ensure you get the most out of regular transfers and are not hit by high fees, poor conversion rates that erode the value of your transfer.
In the current turbulent economic climate it is imperative that overseas retirees and expats sending funds regularly from the UK get the most out of their money transfers.
With the value of the pound having plummeted, every expat now knows that there is a benefit to be potentially gained from shopping around and comparing currency exchange rates.
The purpose of this article is to explain - in simple terms - how foreign exchange specialists can offer the most competitive rates, the most flexible products and ultimately the most cost-effective solutions for receiving your state pension or other payments when you’re living abroad.
Why use an International Payment Specialist over a Bank?
By using the standard banking system, money saving options are often overlooked and unnecessary charges can be issued and poor currency conversion rates applied. This all adds up to you losing out when you transfer money overseas.
“You often hear headlines such as ‘the recession is not over’…. ‘Sterling weakens’…. ‘Expats abroad are returning home’…. These are all fast becoming regular headlines in the media as unpredictability in global markets continues. "
“People commonly have the misconception that their bank is the safest and easiest way to transfer their monies without realising that the banks are applying exorbitant rates as well as placing additional charges on these transactions."
Typically, international payment specialists offer exchange rates that are guaranteed to beat the rates provided by the bank.
But why?
Well, banks often set their buying and selling rates for currency first thing in the morning – when you visit a branch, you’ll see them hanging on the wall. Specialists however, don’t set the rates in advance but call into the market floor to obtain the best rate possible at the time of the transaction.
When using a bank, on average a pension holder can lose around £30-£50 unnecessarily on each transfer – this can amount to actually giving away £600 a year – and in some cases, much more!
For many expats or pensioners, wherever they are in the world, watching the value of their sterling pension depreciate over the last year must have been soul-destroying.
Sterling strength and stability is to most a distant memory clouded by dampening economic reports.
Keith Spitalnick alludes to the fact that: "to British expats living abroad, this is perhaps even more of a concern, as volatility of sterling in the foreign exchange market means one thing… the value of the pound affects the value of one’s income and as this continues to plummet, so too does the affordability of living abroad."
Having extensively compared the market, Daniel Abrahams from independent price comparison site, www.sendmoneyhome.org confidently asserts that: "using an FX specialist over the banks can lead to savings of between 2 and 5% on the value of regular transfers overseas. Cumulatively, this can amount to a substantial amount of money."
A further selling point is the fact that brokers will offer the customer a dedicated account manager to ensure a personalised and hand-held service throughout the process.
Although he or she will tailor the type of transfer to each individual’s specific requirements, one must be careful of a pushy salesman like approach that some FX brokers will adopt.
It pays to shop around for a reputable Foreign Exchange provider therefore, and one who will offer you the best service and the best rates.
Thus, as money transfers are the core business of international payment specialists and only a capability rather than a core product provided by banks, using a foreign currency specialist can save a substantial amount of money each year on both fees and in terms of much better exchange rates.
Why is it beneficial for an overseas retiree or expat to fix their rate of exchange?
Foreign Exchange brokers will allow you to ‘fix’ an exchange rate for up to 24 months.
The best way to explain the value of this service offered by international payment specialists is by taking a real life example.
Take Mr Client who retired to Spain at the end of 2007. He needed to receive his Sterling pension in Euros. In January 2008 he explained that his monthly pension amounted to £1,134 and wanted to know which options were available.
After a brief conversation, he decided to set up a regular payment with a fixed exchange rate of 1.33 for the next 24 months until the end of 2009. In January he received €1,508.22 in his Spanish bank account and will continue to do so every month until December 2009.
If Mr Client had decided against fixing a currency exchange rate, his monthly amount would have decreased along with the weakening sterling rate - and by December 2008 his monthly transfer would have fallen to €1,190.70 - a 21% drop in value.
Conclusions:
Many expats living abroad unknowingly lose money when receiving their monthly pension payments using banks. Due to the peripheral nature of which international money transfers are provided by banks, they do not offer or even mention options such as fixing currency exchange rates for a fixed period of time.
In our dire economic climate, with the loss in value of sterling over the last 18 months, it is highly recommended to consult an international payment specialist when sending or receiving regular payments overseas.
