Saving Money on International Money Transfers with Currency Brokers

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Currency brokers provide essential services in the modern globalized world. Not only do they make international money transfers more accessible, but they also cut the cost of these transactions quite significantly in comparison to banks.

This means if you need to send money to or receive money from abroad for any reason, you should ideally be looking for the best currency brokers available in your area.

By doing this, you should be able to confidently save well over 5% of the transfer volume. While this might sound like an insignificant number, that small amount can certainly add up, especially when multiple transfers are involved.  

How much money can you save with currency brokers?

Despite their many advantages, currency brokers aren’t the first choice of the majority of people who need to send money abroad. Instead, the most common way to make this transaction is through using bank wire transfers. These typically cost you 3-7% of the transfer volume, on average.

Of course, most banks are not overly keen on showing you that you are going to lose so much money in a single transaction. On the surface of it, bank wire transfer fees usually seem very reasonable. But aside from the direct transfer fee, this transaction will also include additional costs, such as:

  • Intermediary bank transfer fees
    These can vary greatly or you might avoid them. They are fees charged by additional banks which your money ends up passing through on the way to its final destination. These transitional banks may add a wide range of different fees which are often not clearly indicated.
  • Recipient bank fees
    The majority of banks charge a fee for incoming international transfers. Thus the recipient will lose more money, and you might be required to cover this cost as well.
  • Foreign currency exchange rate (FX or forex)
    It’s not a well-known fact but most of the money you lose on an international money transfer is due to banks using a bad exchange rate. Unfortunately, the bank will never show you how different this rate is from the mid-market level. The biggest advantage of using currency brokerages is that they offer a much better rate. This alone can save you up to 5% of the total transfer cost.

How do currency brokerages save your money?

Simply put, currency brokers are businesses that sell and buy currency on your behalf. These service providers are not subject to the same stringent regulations as large financial institutions such as banks. As such they are able to make money without having to set high fees and FX rates. Instead, brokers operate on the so-called over-the-counter market, which is less regulated. This enables this type of currency transfer service to use “wholesale” rates.

The more money currency brokerages trade, the lower they can keep their fees and FX spread margins.

There are many companies of this kind in the world today, but when speaking of these services people usually mean currency brokers in the UK. This country is the leader in the industry by the number of top FX brokerages in the world. Most industry leaders are based in the UK, even if their main area of operation is located elsewhere.

This is why almost all companies servicing Americans are actually UK-based currency brokerages. The leaders amongst them are TransferWise, Currencies Direct, OFX, and Moneycorp.

Considering how this type of currency transfer service operates, and the fact that brokers are mostly online-based, the average transfer cost with them is 1-3%. The size of the transfer will usually determine the precise amount. The bigger the transfer volume, the cheaper the transaction will be for you.

Please remember though that because of the differences in regulation, using currency brokers can be risky. It is imperative that you double-check the provider’s certification and licensing before using its services.

This is where you can once again benefit from using a UK-based broker.,as this county has rather stringent regulations for all financial businesses.  Top brokerages here are audited by the Financial Conduct Authority (FCA) as well as by other reputed regulatory bodies. Having an FCA certificate is proof of an FX broker’s trustworthiness. Therefore, always look for verification first, before you go on to check the transfer cost and FX rates. You should always be sure that the money transfer provider you consider using can be trusted.

Why it’s essential to find a good currency transfer service today

Using every opportunity to save money is always wise. However, today using the services of currency brokerages is even more important because of the present global crisis. You’ll need to work very hard to make it through a recession as it is, and you really cannot afford to miss any chance to cut your costs.

The global economy today is brimming with uncertainty at every level. This affects every one of us and compels people to look for more reliable sources of income. These circumstances have prompted many to consider international investments. Today it is easier than ever to become an investor, and that is largely in part because you can use currency brokers in order to cut your costs. With these services, you can transfer money to invest in foreign ETFs or real estate and actually keep your ROI at a decent level.

Moreover, investors, entrepreneurs, and business owners who choose to use currency brokerages also get access to hedging tools. This particular benefit is essential today when the global economic crisis has made global FX markets extremely volatile. Hedging can protect you from extreme and unpredictable changes in FX rates.

Banks offer hedging options as well, but these are often restricted to big corporate clients. In this area currency brokerages win again as they allow all their customers access to hedging tools. Those usually include forward contracts and currency options.

Please note that not all currency brokers offer this type of service, and keep this in mind when choosing a brokerage. It’s often these extra services that you need to focus on instead of the exact transfer costs. Even if the FX broker you pick doesn’t offer the cheapest transfer, it may enable you to save money in different ways.

In conclusion: currency transfer services of the future

Banks have reigned over the global market of financial services for far too long. Today, if you want to make international money transfers, using currency brokers is definitely the better option. With them, you get convenience and a chance to save a lot of money. Choose your brokerage carefully and you will certainly notice the benefits.

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Picture of Kate Bregovic

Kate Bregovic

Kate Bregovic has been working in the financial planning and investment services industry for over 10 years. Now being a freelance writer, she is well equipped to provide advice on a wide array of areas. Follow and connect with her on Facebook!
Article Author:
Picture of Kate Bregovic

Kate Bregovic

Kate Bregovic has been working in the financial planning and investment services industry for over 10 years. Now being a freelance writer, she is well equipped to provide advice on a wide array of areas. Follow and connect with her on Facebook!