Maybe you need to send money abroad now, or are looking to make an international payment in the next few months. Either way, odds are you’re thinking of using your bank…
But if you’re making a big transaction, the exchange rates could have a huge effect on how much of your money actually makes it to the other side.
Exchange rates in a nutshell…
Exchange rates are the value of one country’s currency against another. So a USDEUR rate (dollar versus euro) of 0.80 means that $1 is worth €0.80. When the exchange rate falls, that means you’ll get fewer euros for your dollars. So if you’re buying euros, you would want the dollar to be stronger so you get more euros for your dollar.
Why do exchange rates fluctuate?
Exchange rates are decided on the foreign exchange market and many things can make the rates go up and down. With the market open 24 hours a day from Monday to Friday, the rates change throughout the day and any political events, natural disasters or economic turmoil can send the exchange rates shooting up or down.
How much difference does it really make?
Obviously, the more you send, the bigger the difference it makes. For example, if you sold 5000 US dollars to buy euros at the beginning of 2015, you’d have gotten about €4,200 at the interbank rate. But if you did the same at the end of September 2015, you’d get about €4,475 at the interbank rate. That’s over €250 more! So timing is crucial when sending large sums abroad.
So how do I get the most out of my international wire transfers?
A lot of people go to their banks, because that seems like the most obvious choice. What people don’t realize is that there are lots of safe and easy alternatives – and they could actually save you money!
When you buy currency, you usually pay some kind of fee. These fees may come in the form of a percentage added to the exchange rate banks trade at between themselves (this rate is known as the mid-market rate or the interbank rate) or a fixed amount commission, or even both.
Banks tend to offer better exchange rates for their big clients and most individuals won’t be able to get these better rates. Worse, you’ll probably find that your bank charges you a hefty commission on top of that.
There are many alternatives to using a bank. For example, if you use World First, you could wire money faster and with much better exchange rates than you’d typically get through your bank. What’s more, the team at World First is there to help if you need to speak to them.
So if you’re sending money abroad, it pays to shop around and compare. You should also look out for the range of products that currency providers can offer to protect you from future exchange rate fluctuations.
Get in touch with the World First team now to see how much you could save against the banks and what products we’ve got to help you protect yourself from the fluctuating exchange rates!