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Five key considerations when moving money abroad

If you’re starting a new life overseas, one of the things you’ll need to think about is how you plan to manage your international currency transfers. In this article one of our experts looks at the five key considerations.

Written by Laura Parsons on 12 November 2015

If you’re starting a new life overseas, one of the things you’ll need to think about is how you plan to manage your international currency transfers.

For many expats, the world of foreign exchange will be completely new to them and it can be daunting knowing where to start. For that reason, we’ve highlighted some of the top things to consider and various money-moving methods to help you get the best return.

Foreign Exchange Providers 

When moving money overseas the two most popular kinds of foreign exchange providers are banks and specialist currency brokers.

An increasing number of people are choosing to use currency brokers to manage their international currency transfers as they employ industry experts with the knowledge to support and inform clients effectively, helping them get more for their money.

While there are several currency brokers to choose from, you should always look for one which focuses on fund security and customer care. For peace of mind, pick a broker which is authorised by the Financial Conduct Authority (FCA) operates segregated client accounts and is highly recommended by existing clients. 

The Exchange Rate

A foreign currency transfer involves exchanging one currency for another, with their relative value being the exchange rate. For example, if the Pound Sterling to Euro exchange rate was 1.3624 you would receive 1.3624 Euros for every one Pound you exchanged.

Exchange rates are far from static and can move by up to 5% in a matter of days as a result of a wide range of stimuli, from economic developments to political news and environmental disasters. If you move your money when the exchange rate is strong you could be thousands better off than if you made your transfer when the exchange rate was lower.

Keeping an eye on the rate can make a big difference to how much your funds are worth but it can be a time consuming and confusing job if you’re not familiar with the currency market. Some foreign exchange providers will monitor exchange rates on your behalf for free and keep you informed of the latest developments so you can make your transfer at the best time.

You could really benefit from receiving regular market updates and the guidance of industry experts whether you’ve got small or large international currency transfer requirements.

Foreign exchange providers also work off different margins, which means some can offer you a more competitive exchange rate than others. If you want to make sure your transfer is being conducted at the best possible rate, get quotes from several providers and see how they compare. 

Avoiding Transfer Fees

Some foreign exchange providers, including many banks, charge fees for transferring your funds abroad. Others, like leading currency broker TorFX, will conduct your transfer free of charge. By taking this into account and using a fee-free service you can ensure you’re getting the most for your money.

The combination of moving your money at a more competitive exchange rate and avoiding fees can see you save up to 90% of the typical costs attached to sending funds overseas so it really pays to look into your options.

The Impact of Currency Risk

As highlighted above, the currency market is a highly volatile trading platform and leaving your transfer exposed to currency risk (sudden or dramatic shifts in an exchange rate) could cost you thousands.

Some foreign exchange providers can offer you access to risk management services, like the option of fixing a favourable exchange rate up to two years in advance of a trade, so you can protect your transfer from market movements and budget more effectively.

Foreign Exchange Services

The ability to fix an exchange rate up to two years in advance is known as a forward contract and is just one of a number of specialist services leading currency brokers like TorFX are able to offer their clients.

Other services you may wish to find out more about include using an online platform (so you can transfer money 24/7) setting up an automated Regular Overseas Payments account to manage your recurrent transfers and additional risk management services like Stop Loss and Limit Options.

If you get in touch with a currency broker they’ll be happy to outline the benefits of all the services available to you and help you pick the most suitable ones for your needs. Opening an account with a currency broker should also be free and come with no obligation to trade, so you can get everything set up long before you need to start transferring funds overseas. 

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