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March 14, 2015
Sending money overseas may seem like a complicated, time-consuming, and expensive process, but it doesn’t have to be. Where banks used to be the only way to go, foreign exchange brokers are stepping in making it cheaper and simpler at the same time.
Using a foreign exchange broker to send money overseas makes the process a lot less costly and more convenient. Unfortunately, most Americans are still unaware of this option and tend to use their local bank branch. As the cross-border money transfer industry is becoming more transparent, it has become obvious that banks are the most expensive option and aren’t any more secure. In addition to the high fees often charged, upwards of $40, they are hiding poor exchange rates in the transaction.
It’s not uncommon for people sending money overseas to lose as much as 8% to 10% on the value of their money using one of the big banks. That drops down to about 2% or 3% when using a foreign exchange broker like Xoom or WorldFirst which specialize in international money transfers.
While each firm has their own unique way of doing things, they are follow a pretty similar process.
Step 1: Set Up an Account
The first thing to do is set up an account with your broker of choice using their website. You can see from the Xoom signup page that it’s a pretty standard form. Once you have an account, you can initiate a transfer.
Step 2: Initiate a Transfer
Now that your account is set up, you can initiate your first money transfer by picking the receiver location, the transfer amount, the receiving option, and choice of payments. Some common sending options include bank to bank transfers, bank to cash at specified locations, credit or debit card to bank, bank to Paypal, and more. Each transfer firm will offer their own options and fees.
Depending on the foreign exchange firm you choose, the whole transfer process should take anywhere from 15 minutes to 2 days. Take a look at four of the best ways to send money abroad which highlights each options sending time and fees.
That’s all it takes for a basic overseas money transfer, but there are more options for the savvy-minded focused on the best exchange rates.
While most of the foreign exchange firms charge little to no fees for common money transfers, one should always keep the exchange rate in mind. Almost all exchange firms will offer a better rate than banks for international money transfers handled at the same time, but exchange rates fluctuate from minute to minute. Consider using a forward contract to lock in an exchange rate for money to be sent at a later date. You can also set up a limit order which will automatically execute the transaction when the exchange rate hits a value of your choice.