Is it worth hiring a professional foreign exchange broker when you move internationally?
Moving across countries is one of life’s most stressful experiences. You’re forced to juggle changes to your job, your home, the culture around you and perhaps even learning a new language.
It’s no wonder then that many international movers rely on their existing bank to handle transferring their currency overseas, and for sending money back home. However, relying on your existing bank may end up costing you more than you realise. In fact, Experts for Expats called it the ‘most significant hidden cost of living abroad.’
Fortunately, using a dedicated foreign exchange broker instead of a bank can save you money at a time when every penny – or cent – counts.
How does a foreign exchange broker save you money?
There are a number of ways using a professional foreign exchange agency – also known as an FX specialist or currency broker – can save you money while transferring funds.
The first is by offering better exchange rates than high street banks. The best value possible exchange rate for two currencies is referred to as the mid-market rate. This is the rate that traders are willing to both sell and buy the currency at on both sides of the transaction. Banks typically charge 4-5% above this rate, while dedicated brokers can charge as little as 0.5% over the mid-market rate.
Banks also charge fees for their exchange services, while many foreign exchange brokers either offer lower fees or fee-free transactions. High street banks can use deceptive tactics like charging a transfer fee both at the sender’s end and to the recipient, essentially charging twice for the same service. Some retail banks can charge more than €30 in fees.
These costs might not seem much when considering a single large transfer, but if you’re considering regularly sending money to friends or family overseas, paying into investment funds or adding to existing savings, they can quickly add up.
The third way a currency broker can save you money as compared to a retail bank is by using market expertise to secure you the best possible rate. The value of currencies fluctuates constantly, and if you are able to time your transfer to take advantage of this, you could find the same funds are worth a lot more in your new home if timed properly. An expert FX trader can use market analysis to predict when rates will be favourable for your transfer, getting you more bang for your buck (or pounds for your yen).
How much could you save?
The potential savings depend on how much money you hope to transfer, but easily add up to thousands – or even tens of thousands – of pounds. The Good Money Guide points out that the difference in exchange rate alone would save you £4,500 when transferring £100,000 with a foreign exchange service rather than a bank.
This doesn’t account for additional savings in avoiding fees or the extra value gained by securing the best possible timing for the exchange.
How to find an expert foreign exchange broker
When comparing foreign exchange brokers, look for a company that is approved by the FCA (Financial Conduct Authority). This independent body is responsible for checking the safety and veracity of financial companies, from their compliance procedures to the company’s current financial position.
You can also check reviews from other consumers to find a firm with good customer service, transparent offerings and a proven track record of offering value to their clients.
