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March 31, 2015
Two things stand out as the most important aspects to anybody spending or sending money overseas; getting the most bang for their buck without losing a lot in fees or exchange rates and, specifically for international money transfers, the speed at which their money is accessible to the recipient.
With these two things being the most vital aspects of a smart international money management policy, it surprising so many people still use their bank for their services as they tend to be the slowest, have the worst exchange rates, and have the highest fees.
Other than using a bank for their international money transfer needs and money exchanges, let’s look at some other common mistakes people make when spending and sending money abroad.
We completely understand that there are times when an emergency situation forces you to make a last minute money transfer without regard to fees, but if you have the luxury, planning ahead can help you save. Not doing any research on the best way to transfer or exchange money is basically guaranteeing you pay the most for the service.
Spend some time online finding out about the best places in your destination to exchange money or what company offers you the cheapest way to send your money. Avoid the tourist hotspots as they generally have the worst exchange rates and check with an independent online currency converter to get an idea of how much you should be getting for your money.
Most people don’t realize that they often lose more of their money to a poor exchange rate in an international money transfer than to fees charged for the service, especially if the transaction involves a large amount of money. Consider the implications of getting 2% less for your money on a $5,000 money transfer. That would equal a $100 loss!
Don’t just assume your bank or that first currency exchange booth you see will give you a competitive rate. If you are setting up an international money transfer, look at the servicers available to you online. World First and XOOM have been known to give 3% or 4% more for your money than banks. You might find a similar difference in currency exchange booths at the airport versus one found in town somewhere.
You can use Send Money Cheaper’s comparison tool to find out which company offers you the best rate for your international money transfer.
Whether you are transferring money overseas or withdrawing cash from an ATM abroad, lots of little transactions equal big fees. ATMs don’t take into account the amount of money being withdrawn, rather they charge a set fee from your home bank, and most often, the ATM’s bank. If you were to go to an international ATM five times and withdraw $200, you might wind up with as much $50 in fees, but if you went to the same ATM for two $500 withdrawals, you could end up with just $20 in fees.
When it comes to international money transfers, you may find that some foreign exchange companies charge no fees at all for transfers meeting a certain minimum amount. Many also offer a better exchange rate on larger transfers. If you were considering handling two $1000 transactions over a two month period, ask your servicer of choice what you would save by sending the whole $2000 at one time.
At first glance, it may seem like a credit may be a good option for overseas purchases, but take a deeper look and you’ll notice some fees that aren’t readily apparent. While a credit card company may claim to only charge you a 3% transaction fee for your international purchase, they often don’t mention to you the poor exchnage rate they’ll give. Just like the banks, a credit card company will usually give an exchange rate 2% to 3% less than what you can find elsewhere. That means you’re actually paying 5% to 6% on top of the purchase price for your transaction. Quite a hefty amount. If you need to use a credit card on an overseas trip, look around for one that offers no foreign transaction fees like the Capital One Venture Rewards Card.
Following just a few of these simple tips can help you save big on international money transfers and overseas purchases while traveling.