4 Common Mistakes When Spending and Sending Money Overseas

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.

 

Making a Last Minute Transfer or Exchange

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.

 

Ignoring Exchange Rates

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.

 

Making Lots of Small Transfers or Exchanges

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.

 

Relying on Credit Cards

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.

 

 

How-to Save Money When Doing Business Internationally – Part One

Growing your business from a domestic company to an international brand is an exciting and scary endeavor. On one hand, your homegrown business that you started from scratch is poised to explode on the international market where there will be countless new ways to profit and grow, but on the flip side there will be a number of unforeseen hurdles and a steep learning curve.

After logistics, one of the trickiest aspects of expanding internationally is managing your finances. A number of things can lead to higher costs and sometimes, just a tiny mistake can mean the loss of thousands of dollars. International banking and money transfers are a large part of doing business overseas and the fees associated with them are often overlooked as the cost of doing business, but they don’t have to be. There are a variety of things you can do to save money while growing your business overseas.

 

Keep an Eye on the Exchange Rate

Doing business internationally leads to unexpected ups and downs in your cash flow based on exchange rate swings. If you have a slim profit margin, this is doubly important. Exchange rates can work with you or against you depending on your timing and it’s vital to remember they change daily. Timing your currency transfers whether hourly, daily, or weekly, to align with the best exchange rate can equal to big savings.

In addition to keeping an eye on the daily swings in the exchange rate, there are a number of things you can do to hedge against negative currency moves. You can use forward currency contracts to lock in a specific exchange rate or set up a currency option. Check out part two of this article to learn about the ins and outs of these options more fully.

You’ll find out that at times it will be better to accept payments in a foreign currency and other times it’s best to accept payment in USD. Just make sure you discuss and agree with your clients upfront about the type of currency you’ll be accepting.

 

Don’t Forget About Banking and International Transfer Fees

The basics of international banking are very similar to domestic banking, but the fees associated with the services vary greatly. Take the time to fully explore your options to find out which institutions offer the best services at the lowest cost.

Even if you have a foreign bank account and credit card, at some point you’ll either need to send money abroad or want to take some of your profits back home. This is where you can really get whacked with international transfer fees from the large banks. Despite having an overseas bank account, it’s often best to use foreign exchange transfer services like Xoom or World First for your international money transfer. They offer better exchange rates than banks, usually by 3% or 4%, and the fess will be lower too. Many offer large international money transfers at no cost too.

 

The Takeaway

Expanding your business overseas is going to take a lot of moxy, a touch of knowhow, and maybe even a bit of luck. If you are smart about it and plan correctly though, the positives will far outweigh the downsides.

 

 

 

 

 

 

H1B Visa Holders Can Save When Sending Money to Family Overseas

If you’re like most H1B visa holders, you’ve left your friends and family back home in the hopes of making a good western salary. Not being able to see your family on a daily basis is a sacrifice you’re willing to make knowing that in the end, it will be worth it.

Unfortunately, with the high cost of living in America and the exorbitant fees charged by banks for sending money overseas, many H1B visa holders find it difficult to give their family as much money as they had hoped. So what’s the life on an H1B visa holder in America like and how can you save when sending money internationally to ensure your family is really benefiting from the sacrifice you’re making?

 

The Life of an H1B Visa Holder                                                                                     

Living and working in America as an H1B visa holder has its fair share of limitations. Unlike American citizens, you aren’t allowed to work multiple jobs or for multiple companies. The rules of an H1B visa state that you must work full-time and only for the company that is sponsoring your visa. You also aren’t eligible for any federally-held education loans.

There is also a fair bit of uncertainty that comes along with the visa privilege. For example, if you get laid off, you cannot claim unemployment and are supposed to leave the country. The loophole here would be if you can quickly find another company to sponsor your visa.

So with all of the uncertainties and drawbacks of living on an H1B visa, why do so many people still come to America and work on them. The answer is simple. They are much easier to obtain than a green card and the opportunity to make a western salary is hard to pass up.

 

How-to Ensure Your Family is Getting as Much Money as Possible             

You have put so much work into educating yourself, learning a skill, and getting an H1B visa so you can make good money working in America that it doesn’t seem fair for the huge banking corporations to take a large chunk every time you send it back home, but that’s exactly what they do.

It is not uncommon to lose 8% or more on the value of your money during an international money transfer with most banking institutions. How would you feel sending $2,000 USD to your family back home, paying a $50 fee to the bank, and then they only get an amount in their local currency with a $1,900 USD value? Pretty annoyed I imagine.

The reason this happens is because of the poor exchange rates banks give for international money transfers in addition to their high fees. Unfortunately most H1B visa holders are surprised when this first happens because the banks do a good job of hiding it. Luckily there is a way you can ensure your family is getting every dollar they deserve.

Dedicated foreign exchange services offer lower fees and better exchange rates than banks for overseas money transfers. With a company like Xoom or World First, that same transaction would only cost you $5 or $10 and your family will receive the full $2,000 value because their exchange rates are pretty close to, if not matching, the current market rate.

Don’t just settle on losing a large chunk of your money every time you want to send it back home to family. Do the research, check with foreign exchange transfer services, and find out how you can get the cheapest international money transfer.

 

Guide to Sending Money Overseas with a Foreign Exchange Firm

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.

 

How to Send Money with a Foreign Exchange Firm

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.

 

Additional Options When Sending Money Abroad

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.

 

Use Currency Forward Contracts to Save on Large International Money Transfers

If you are looking to save money and get the most out of your international money transfer, consider using a currency forward contract. Most people who send money abroad place what is called a spot trade. This means the trade is executed immediately at whatever the current exchange rate happens to be, but people who regularly send money overseas know that getting a good exchange rate can equal to be savings and luckily, there’s way to ensure that you do.

The problem with spot trades comes from the fluid nature of currency exchange rates. Because the value of one currency against another is always fluctuating, you never know if you are going to get a good deal when the time comes to transfer your money overseas and into another currency. Currency forward contracts aren’t subject to that same problem.

 

What is a Currency Forward Contract

In simple terms, a currency forward contract is a way of locking in an exchange rate ahead of time; before the trade ever happens. This can be very beneficial if you are a person or business that regularly transfers money overseas or know of a large international money transfer need in advance.

A currency forward contract works by connecting two parties in need of exchanging money. This doesn’t mean you’ll actually be put in contact with the other party; the foreign exchange firm will handle all of that. Both parties involved agree to the exchange rate they are willing to accept at a future date, which could anywhere from a single day to a few years in advance. Once the set date is hit, the transaction is executed at the agreed upon exchange rate regardless of the current market rates

 

Benefits of a Currency Forward Contract

Currency forward contracts are a way to hedge against the value of a currency dropping at a later date. It can be incredibly useful if you are working with a currency that has a tendency towards massive rate fluctuations. You can protect yourself against an unfavorable spot trade rate at a future date. It’s a valuable way of insuring a good exchange rate if you are planning a large international money transfer such as a house, property, or business purchase in the future.

Most companies that regularly do business overseas use currency forward contracts as way of ensuring a predictable cash flow and hedging against sudden currency drops which could have negative consequences.

For example, imagine a US importer is doing business with a Chinese manufacturing firm. They have a contract to purchase a large amount of products from the manufacturing firm in six months time and the currency for that transaction will be the Chinese Yuan. If the American importer thinks the value of the dollar may fall against the Yuan over the next six months, he can execute a currency forward contract which locks in a rate to purchase the Yuan in six months time. This leaves the American importer fully protected if the USD depreciates in value.

It works the same way for you if you’re planning a large overseas money transfer in the future. Lock in your rates using a currency forward contract and be assured you’ll get a good value for your dollar when the time comes.

The Best Way to Send Money to Students Overseas

Figuring out the best way to send money to students abroad can be tough for a lot of families. Most just wind up going with the traditional method of using their personal bank to wire money overseas. Unfortunately this is rarely the cheapest way to send money internationally and could be costing you hundreds or even thousands of dollars annually.

Finding the right choice to send money to a student overseas depends on the amount you plan on transferring. Some foreign money transfer firms offer no fees when sending over a certain amount and others charge minimal fees on small amounts.

 

Sending Small Amounts of Money Regularly to Students Overseas

While it’s usually not a good idea to regularly send small amounts of money to a student overseas as you will be hit with numerous transfer fees, it’s just a reality of having a child living abroad. Whether your kid isn’t good at budgeting or they ran into a situation where they need a small amount of cash quickly, there are still a couple options to send money abroad cheaper than your personal bank and they’ll get your money there quicker to boot.

Paying $30 to $60 to your bank for transferring $500 to a student overseas seems pretty pricey; especially if you are doing it on a regular basis. If you did that twice a month, you would be losing 6% to 12% of your money, not even including the horrendous exchange rate you will most often get.

We recommend using a foreign exchange firm like Xoom instead. They only charge $4.99 for transfers under $1,000, offer competitive exchange rates, and the money is usually transferred within one day. We realize every situation is different depending on how often and where you will be sending money overseas. To find the best rate for your personal overseas currency transfer use our comparison tool for real time rates and fees.

If you have one of those rare college kids who is a good at budgeting and want to know the best way to save money when transferring larger amounts of money overseas, check out this article.

How to Transfer Money as an Expat

No matter which country you choose to move to, there is one problem that every expat faces at some point, how to transfer your money overseas without losing a large chunk of it to fees and poor exchange rates. This is a common issue for expats and you’ll see it appear in numerous expat-related forums from Thailand to Colombia. Before moving overseas, most people never consider sending money abroad and therefore aren’t too educated in their potential options.

The average expat will generally just visit their bank’s website and opt for a foreign wire transfer. After all, that’s how you send money isn’t it? I know that’s what I did when I first moved overseas. I opened up a foreign bank account in my new homeland, went online and transferred $2,000 from my home bank to my new foreign bank.

The end result was a charge of $45 from my bank in America, plus a $22 fee from my new foreign bank. It cost me $2,045 and I wound up with only $1,978. That’s over 3% in fees! Thankfully I was in a country which uses the USD as an official currency or I would have lost even more to the banks poor exchange rates.

How to Send Money Abroad Cheaper

After that first time using my bank to transfer money overseas, I started looking for a cheaper way to send money abroad. I didn’t want to lose $60 or $70 in fees every month just trying to access my own money.

So what’s the best option then? How do you send money overseas cheaply? Simple. By using a private foreign money transfer firm you can save money when sending funds abroad. If you are looking for the cheapest way to send money internationally, they can’t be beat. Not only do they charge limited fees, they give a much better exchange rate than the big banks; usually 3% – 4% more for your money.

I sent the same $2,000 to myself the following month from my home bank account, but instead of using their private wire transfer service, I used Ria’s foreign money transfer service. I was given two options, I could have the money there within 12 hours and I would be charged a $26 fee or it could be available in four days and there would be a $5 fee. My bank to bank transfer took three days and still cost me $67, so I opted for the 4 day transfer. The end result, I paid $2,005 and $2,000 was deposited into my Cambodian bank.

If you’re looking for the cheapest way to send money overseas, I highly recommend you look into private money transfer companies. The Send Money Cheaper comparison tool will help you figure out which service to use for your personal transfer needs.

Now that you’ve found out how to send your money abroad cheaper, go out and buy yourself a fancy dinner in your new homeland. You’ve earned it.

The Four Best Ways to Send Money Overseas

How did you send money overseas last time? Did you use a bank and pay more than $40 in transfer fees?

If you did, I’d bet that not only did you pay high fees, but you also got a poor exchange rate and the recipient probably had to wait two or three days before the money was available. How would you like to make that same transfer for just $5 or $10?

Compared with Europeans, Americans are quite a few steps behind regarding the best ways to transfer money abroad. While it has become commonplace for Europeans and Asians to use private foreign exchange firms for sending money overseas, most American’s are still going to their banks and paying higher transfer fees and exchange rates. Today we take a look at the four best ways to transfer money abroad that will save you time and money.

 

Sending Small Amounts of Money Overseas               

If you need to send a small amount of cash overseas, skip your local bank. Consider one of the private domestic and foreign exchange services for cheaper rates and better customer service. I’ve highlighted my top two picks for small money transfers below.

Western Union

Most of us have heard about Western Union or used them at some point in time. While they don’t usually offer the cheapest rates, some of their main benefits are the speed at which you can transfer money overseas and their vast number of locations. Most often the recipient will be able to withdraw the money within minutes of you completing the transaction.

In addition to the speed at which you can send money overseas with Western Union, they offer some of the most versatile payment and pick up options. You can use their online site to send money and pay with your credit or debit card. A multitude of pick up options are available from local Western Union branches, foreign banks, and even a transfer to a mobile wallet on the receiver’s phone.

Xoom

Xoom is a fantastic choice for sending small amounts of money overseas. They offer foreign money transfer options to 32 countries from Argentina to Vietnam and only charge $4.99 for international transfers under $1,000. You can initiate and track your money transfer from your mobile phone or tablet, plus it is usually available for withdrawal in one day or less.

You have the choice of doing a direct bank deposit or cash pick up from thousands of locations in each of the countries they serve. Xoom is one of your best options for cheap small money transfers to friends and family overseas.

 

Transferring Large Amounts of Money Overseas

When transferring large amounts of money overseas, it’s not just the fees you need to be concerned with, but the exchange rate too. Just a small difference in the exchange rate can equate to thousands of dollars saved on a foreign money transfer. Next time you are considering sending money overseas with your personal bank, take a look at the exchange rate they offer. You might be surprised to see a 3% to 4% difference on currently published rates.

World First

Offering some of the best exchange rates around, World First is one of the most affordable ways to send large amounts of money internationally. They charge zero fees on any transfers over $10,000 and only $10 on smaller amounts. It takes about one day and you can send money from bank account to bank account using their phone or online methods.

World First also offers a unique feature where you can lock an exchange rate for future money transfers up to 3 years in advance. This way you can ensure you get a good rate even if you aren’t ready to transfer the money today. Start watching the market rates long in advance and lock your rate when you get a favorable exchange.

USForex / UKForex

USForex is fully regulated in the U.S. and part of one of the largest foreign exchange firms in the world. Using their service to send money abroad, you’ll often save 2% – 3% on bank exchange rates and incur minimal fees. Any international money transfer of $5,000 is completely free too.

As a sign up bonus, USForex offers your first exchange for free regardless of the amount of money sent. They are great when you need to transfer money overseas for really large purchases like property or a vehicle. You can use their limit orders to designate an exchange rate you want and when the market hits that rate, your order will be triggered. This allows you to take advantage of exchange rate movements even if you are unavailable. It’s a good way to save thousands on large international transfers.

Use a Foreign Exchange Firm and Save on Your Overseas Property Purchase

When you bought your home in America did you shop around for the best mortgage rate possible or did you just take the first loan offered to you?

If you are like most home buyers, you shopped around for the best deal. We all know that saving even half a percentage point on your mortgage can translate into huge savings over time, so why wouldn’t you do the same when transferring money abroad to purchase a home or property in a foreign country?

Banks turn a tidy profit sending money from one country to another. Unfortunately this is at your expense. Not only do they charge a large fee, they often give poor currency exchange rates as well. If you were to buy a $200,000 home abroad, saving just one percent sending your money overseas would mean another $2,000 in your pocket. Add another percent or two for getting a better currency exchange rate and you could easily save over $5,000 on a single transaction!

A quick search on Wells Fargo’s Foreign Exchange Services page just highlights this issue. Converting $200,000 with Wells Fargo will net you €166,430.89 Euro while transferring that same amount using Send Money Cheaper’s recommended foreign exchange firm will result in €175,000.60 Euro. That’s a savings of nearly $10,000!

 

Where to Start Your Search for the Cheapest Way to Send Money Abroad?

The best place to start searching for a cheap international money transfer is your personal bank. Rarely will they offer the best rate, but it is great for establishing a benchmark cost. Once you have received a quote from your bank, compare that with the rates you get from private money transfer firms. You can compare multiple firms at one time using this comparison tool from SendMoneyCheaper.com.

Once you have found the best rate for sending your money overseas, take a little time to research your chosen source. You’ll want to ensure that you’re using an exchange firm that is regulated to protect your money in the case of a bankruptcy or insolvency. Not all exchange firms are regulated so this is important to keep in mind.

 

How Can Foreign Exchange Firms Offer a Better Rate than Banks?

There is a long-winded answer and a short one to this question. The short answer is greed. Big banks are greedy. They like to charge you a large percentage over the rate they buy and sell currency to each other; typically around 4% to 5% plus a hefty fee to send money overseas. Foreign exchange firms are willing to take a smaller percentage; usually around 1% over the rate they buy a currency.

In addition to the savings you get when using a private money transfer firm, they often have better customer support than large banks. Most exchange firms have currency specialists that can advise you on the best time to transfer large sums of money abroad based on the currency exchange rate fluctuations. If you are considering using a bank to send money overseas, it might be time to compare private money transfer firms and save yourself some money.

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