Save Money When Sending Money Abroad

This guide will show you how to avoid losing money to poor exchange rates and unnecessary fees when sending money abroad. By understanding how currency exchange works and knowing where to look, you can ensure more of your hard-earned money reaches its destination. We’ll cover everything from comparing providers to timing your transfers for the best value, helping you save on international money transfer costs.

Getting Ready to Send Money Abroad

This guide is designed for beginners, so no prior experience with international money transfers is required. You’ll need a computer or smartphone with internet access and an email address. You’ll also need to have the recipient’s bank details ready, such as their name, bank name, account number, and SWIFT/BIC code.

Estimated Time to Complete:

• Researching Providers: 30-60 minutes
• Setting Up Accounts: 15-30 minutes
• Making Your First Transfer: 10-20 minutes

Difficulty Level: Beginner

Prerequisites: Basic computer or smartphone literacy and access to the internet. You should be comfortable entering personal and financial information online.

Preparation Steps for Smart Transfers

Before you dive into making your first transfer, take these essential preparation steps to ensure a smooth and cost-effective process.

Time Needed: 25-90 minutes

1. Gather Necessary Information

   You’ll need your own bank account details and the complete bank details of the person you are sending money to. This includes their full name, address, bank name, bank address, account number, and the SWIFT/BIC code of their bank. Having this ready will speed up the process and prevent errors.

2. Research Potential Providers

   There are many services that allow you to send money abroad. Don’t just go with your bank; they often offer the worst exchange rates and the highest fees. Look for reputable online money transfer services. Some popular and well-regarded options include Wise (formerly TransferWise), Remitly, Revolut, and OFX. You can find reviews and comparison sites online by searching for “best money transfer services“.

   Why this matters: Different providers have different fee structures and offer varying exchange rates. Comparing them upfront is the single biggest way to save money.

3. Understand the Mid-Market Rate

   The mid-market rate is the real exchange rate, sitting between the buy and sell rates of currencies on the global market. Many providers will advertise a rate that is close to this but then add their own markup, effectively hiding a fee within the exchange rate itself. Aim to find services that offer rates very close to the mid-market rate. You can check the current mid-market rate on Google, XE.com, or Reuters.

   Why this matters: Understanding the mid-market rate helps you identify hidden charges and ensures you’re not overpaying for currency conversion.

4. Open an Account with Your Chosen Provider

   Once you’ve chosen a provider, you’ll need to sign up for an account. This usually involves providing your email address, creating a password, and then verifying your identity. This verification process often requires uploading a photo of your ID (like a passport or driver’s license) and sometimes proof of address. This is a standard security measure.

   Why this matters: You can’t send money without an account. Identity verification is a legal requirement for most financial services to prevent fraud and money laundering.

Step-by-Step Instructions for Sending Money Abroad

Follow these steps to make your international money transfer. The exact interface may vary slightly depending on the service you choose, but the core process is very similar.

Time Needed: 10-20 minutes per transfer

1. Initiate a New Transfer

   Log in to your chosen money transfer service’s website or app. Look for a button or link that says “Send Money,” “Transfer,” or something similar. Click on it to start a new transfer.

   Why this matters: This begins the process of telling the service how much you want to send and where.

2. Enter Transfer Details

   You will be asked to specify:

   • The amount you want to send (e.g., 1000 USD).
   • The currency you want the recipient to receive (e.g., EUR).
   • The country you are sending to.

   The service will then show you the estimated amount the recipient will get in their currency, along with the exchange rate they are offering and any upfront fees. This is your chance to compare it to the mid-market rate you checked earlier.

   Why this matters: This is where you confirm the core details of your transaction and see the total cost.

3. Add Recipient Details

   Enter the bank details of the person you are sending money to. This will include their full name, bank name, account number, and often their address and the SWIFT/BIC code. Double-check all these details carefully.

   Why this matters: Incorrect details can lead to delays, additional fees, or the money being sent to the wrong account, which can be very difficult to recover.

4. Choose Payment Method

   You’ll need to decide how to fund the transfer. Common options include:

   • Bank transfer (from your bank account).
   • Debit card.
   • Credit card (often incurs higher fees).

   Select your preferred method and enter the required payment information.

   Why this matters: The payment method can affect how quickly the money is sent and the fees you incur.

5. Review and Confirm

   Before you finalize, you will see a summary screen. It should clearly show:

   • The amount you are sending.
   • The exchange rate used.
   • The total fees (including any hidden exchange rate markup).
   • The estimated amount the recipient will receive.
   • The expected delivery time.

   Carefully review this summary. If everything looks correct and you are happy with the rate and fees, click “Confirm” or “Send.”

   Why this matters: This is your last chance to catch any errors or unexpected charges before the money is sent.

6. Track Your Transfer

   Once the transfer is confirmed, you will usually receive a confirmation email and a tracking number or reference. Most services allow you to track the progress of your transfer online or through their app. You will often receive notifications when the money has been sent and when it has been received by the recipient.

   Why this matters: Tracking provides peace of mind and allows you to anticipate when the recipient will receive the funds.

Common Mistakes and How to Avoid Them

When sending money abroad, it’s easy to make small errors that can cost you money. Here are common pitfalls and how to steer clear of them.

• Using Your Bank for Transfers

  Mistake: Assuming your bank offers the best rates or fees for international transfers.

  
  Avoidance: Always compare your bank’s offer with dedicated online money transfer services. Banks often have significant markups on exchange rates and higher fixed fees, leading to substantial remittance costs.

• Ignoring Hidden Exchange Fees

  Mistake: Focusing only on the advertised upfront fees and not the exchange rate.

  
  Avoidance: Always compare the provider’s exchange rate to the mid-market rate. A rate that looks good might have a large margin built in, which is a form of hidden exchange fees.

• Not Verifying Recipient Details

  Mistake: Rushing through the process and entering incorrect bank account numbers or SWIFT codes.

  
  Avoidance: Double-check every digit and letter. Ask the recipient to confirm their details. If the money is sent incorrectly, it can be very difficult and expensive to retrieve.

• Choosing the Fastest Option Blindly

  Mistake: Opting for the quickest delivery without considering the cost.

  
  Avoidance: Faster transfers often come with higher fees or poorer exchange rates. Decide if the speed is worth the extra cost. Many services offer a good balance of speed and cost.

• Failing to Check Transfer Limits

  Mistake: Not knowing the maximum or minimum amounts you can send per transaction or per day.

  
  Avoidance: Check the provider’s limits before you start. If you need to send a large sum, you might need to break it into smaller transfers or use a service with higher limits.

Tips, Tricks, and Optimization for Better Rates

Want to get even more value from your international money transfers? Try these advanced strategies.

• Time Your Currency Transfers

  Currency markets fluctuate constantly. If your transfer isn’t urgent, monitor the exchange rates for a few days or even weeks to see if you can catch a favorable movement. Some services offer “rate alerts” to notify you when a target rate is reached.

• Consider a Multi-Currency Account

  Services like Wise offer multi-currency accounts. You can hold money in various currencies, convert between them at favorable rates when you choose, and then send it to others. This is ideal if you frequently deal with specific foreign currencies.

• Look for Fee-Free Promotions

  New customers or specific transfer types may sometimes have promotional offers, like fee-free first transfers or a certain amount transferred without fees. Keep an eye out for these when signing up with a new provider.

• Understand the Difference Between Transfer Types

  Some services offer different speeds for transfers. A “standard” transfer might take 1-2 business days and have lower fees, while an “express” transfer might arrive in hours but cost more. Choose based on your urgency.

• Use a Comparison Website Regularly

  For recurring transfers, make it a habit to use comparison websites every time. Rates and fees can change, and what was the best deal last month might not be today. This ensures you’re always getting the most competitive option.

Alternative Approaches to Sending Money Abroad

While online money transfer services are often the most cost-effective, other methods exist. The best approach depends on your specific needs.

• Traditional Banks

  Pros: Familiar, often perceived as secure, can be convenient if you’re already there for other banking needs.

  
  Cons: Generally offer the worst exchange rates and highest fees, making them the most expensive option for sending money abroad.

• Money Transfer Operators (e.g., Western Union, MoneyGram)

  Pros: Extensive physical agent networks, can be good for cash pickups in locations where bank accounts are less common.

  
  Cons: Often have high fees and less favorable exchange rates compared to online specialists. Rates can vary significantly based on the payout method (cash pickup vs. bank deposit).

• Peer-to-Peer (P2P) Transfer Platforms

  Some platforms connect individuals who need to exchange currencies, potentially offering very competitive rates. However, these can be less regulated and require more caution. Research thoroughly before using.

• Cryptocurrency

  Pros: Can be fast and have low transaction fees for large amounts if you know what you’re doing.

  
  Cons: Highly volatile, requires technical knowledge, and the recipient needs to be able to convert it to their local currency. Not recommended for beginners due to complexity and risk of losing value.

For most individuals looking to send money to a bank account, online specialist money transfer services offer the best combination of low fees, competitive exchange rates, and user-friendliness.

Troubleshooting Common Issues

If you encounter problems with your international money transfer, here’s how to address them.

• Transfer is Taking Longer Than Expected

  Possible Causes: Public holidays in either country, weekends, incorrect recipient details, additional verification required by the provider, or delays at the receiving bank.

  
  Solution: Check the tracking information provided by your service. If there’s no update or it’s significantly delayed, contact the customer support of your money transfer provider. Be prepared to give them your transfer reference number.

• Recipient Didn’t Receive the Full Amount

  Possible Causes: Intermediary bank fees, fees charged by the recipient’s bank, or a less favorable exchange rate than initially displayed.

  
  Solution: Ask the recipient to check their bank statement and inquire with their bank if any charges were applied. Compare the final amount received with the estimate provided by the transfer service and contact customer support if there’s a significant discrepancy you can’t explain.

• Account Verification Issues

  Possible Causes: Photos of ID are blurry, proof of address is outdated, or information doesn’t match what you entered.

  
  Solution: Re-upload clear, legible documents. Ensure all details you provide match your identification. Contact customer support if you’ve tried multiple times without success.

• Transfer Rejected

  Possible Causes: Insufficient funds in your account, card declined, or the transfer triggers a security flag (e.g., unusual amount or destination).

  
  Solution: Check your funding source. Contact your bank or card issuer if it’s a payment issue. If it’s a security flag, the provider will usually contact you for clarification. You might need to provide more information.

• Cannot Find SWIFT/BIC Code

  Solution: The recipient can get this from their bank directly. Alternatively, you can usually find it by searching online for “[Bank Name] SWIFT code [Country]”. Ensure you use a reliable source, like the bank’s official website.

If you are consistently facing issues or dealing with a very large sum, consider contacting a financial advisor or the customer support of both your bank and the transfer service.

Next Steps and Building Your Skills

Once you’ve successfully navigated your first few international money transfers, you’re well on your way to saving money consistently. To further enhance your skills:

• Set Up Regular Transfers

  If you send money abroad regularly, look for services that offer automatic or recurring transfers. This saves time and ensures you don’t forget important payments.

• Explore Advanced Features

  Many services offer features like recurring payments, recipient lists, and even API access for businesses. Explore these to streamline your operations.

• Learn About Currency Hedging (For Businesses)

  If you’re dealing with significant amounts of foreign currency for business, explore more advanced financial tools like forward contracts or options for hedging against currency fluctuations. This is beyond the scope of basic personal transfers but is a crucial skill for businesses operating internationally.

• Stay Updated on Regulations

  Financial regulations can change. Keep an eye on any updates from your chosen provider or from financial authorities in your country and the recipient’s country, as these can sometimes impact transfer processes or costs.

Frequently Asked Questions About Exchange Rates

Q1: How often should I check exchange rates when sending money abroad?

Check exchange rates every time you plan to send money, especially if the transfer is not urgent. Rates fluctuate daily, and even hourly, so comparing providers just before you send can save you a lot on exchange rates and reduce remittance costs.

Q2: What is the difference between the mid-market rate and the rate offered by a transfer service?

The mid-market rate is the actual exchange rate between two currencies. Money transfer services typically add a margin to this rate, creating a less favorable rate for you, which is a form of hidden exchange fees. The difference between the two is how they make a profit.

Q3: Are online money transfer services safe for sending money abroad?

Yes, reputable online money transfer services like Wise, Remitly, and others are generally very safe. They are regulated financial institutions that use advanced security measures to protect your data and funds, similar to banks.

Q4: Can I get a refund if I make a mistake with my transfer?

Refunds depend on the stage of the transfer. If you catch an error before the money is sent, you can often cancel and correct it. Once sent, it can be much harder and more costly to reverse or recall. Contact customer support immediately to see what options are available.

Q5: What are currency conversion fees?

Currency conversion fees are charges applied when you exchange one currency for another. These can be presented as explicit fees or, more commonly, as a markup on the exchange rate, meaning you get fewer units of the destination currency than the mid-market rate would suggest.

Q6: How can I be sure I’m using the best money transfer services?

To find the best money transfer services, compare multiple providers based on their exchange rate, upfront fees, and estimated delivery time. Always check the final amount the recipient will get and compare it to the mid-market rate. Online comparison tools can be very helpful here.