Many UK expatriates living here in Spain have a regular need to transfer money to Spain from their UK bank account. To the uninitiated, they simply transfer money from bank to bank as they believe that this is less hassle. But is that necessarily the case?
Why Pay for Convenience when it can be Simpler and Cheaper?
Whilst there is a certain amount of convenience in just going down the bank to bank route, it will almost certainly cost more money on a transaction by transaction basis than it would do if you were to use an alternative method - for example using a foreign exchange company (FEC). But are there any other benefits?
The Benefits of using a Foreign Exchange Dealer
When you are sending money to a foreign country such as Spain from the UK, it's not just the foreign exchange currency rate that you should be taking into consideration. There are several other factors as well, for example:
- All banks will charge you a transfer fee. Not only does this differ from bank to bank, but it also differs depending on the transfer duration period, often the faster - the more expensive. The transfer fees that FECs levy is usually less than that charged by UK banks.
- Up until recently, most banks would take up to 3 working days to affect a foreign currency transfer. Many now offer a faster service, but at a premium. FECs can usually transfer money faster than banks.
- Many financial institutions charge a commission for each transfer. FECs do not.
- The foreign exchange rate is notoriously volatile, and with a bank you will have to pay whatever the prevailing rate is on the day of the transfer. With a good foreign exchange company you will be able to fix a more favourable exchange rate for all future transfers.
- As we all know, banks do not have the most friendly opening hours, whereas most FECs are open for extended hours and have friendly staff on hand to help if you need them.
How a Foreign Exchange Transfer to Spain Works
Most FECs will have an online facility on their website for instigating a foreign money transfer. Once you have registered your details with your chosen FEC, filling in the online form is simple and above all secure.
During the registration process, you can create a library of recipients in order to speed up future transactions. All you have to do is to select the amount of currency that you wish to transfer, nominate the currency that you wish the money to be converted into, and request a quote. The quote will be shown on screen immediately. If you decide to accept the quote you can proceed immediately by simply completing the online form.
FECs are able to provide such competitive exchange rates because they bulk buy foreign currency in advance, which enables them to pass on the favourable rates that they gain to their clients.
How to find a Good Foreign Exchange Dealer
To ensure that you locate one of the better FECs, here are a couple of things to look out for:
- Are they authorised by the Financial Conduct Authority under the Payment Services Regulations 2009, registration 462444, for the provision of payment services?
- Are they a registered MSB with HM Revenue & Customs? Check their registration number
Finding the Best Foreign Exchange Deals
The marketplace for foreign exchange is a very competitive one. A good way of finding the best deals is to go to a comparisons website such as http://www.fxcompared.com
Once you find what looks like a good deal, you can check out the authenticity of the FEC itself by going to the FCA's website http://www.fca.org.uk and checking out that the company is listed.
Although the savings you can make by going through an FEC rather than a high Street bank will vary from company to company, you can expect to make savings anywhere between 1% and 5%, and if you're talking about substantial amounts of cash, if for example, you are purchasing a property, the money you can save can be significant!
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