Expat Finance - How to Undertake International Transactions

Contributed Article, 08 January, 2014

When spending a prolonged time abroad, many people worry about language difficulties, culture shock, fitting in, being accepted, coping with an unfamiliar climate, being separated from friends and family, and so on. However, it is worth also considering matters financial, as transferring money between nations and currencies can be more complex than it may at first appear. Different transactions may even require different methods of money-movement, and understanding exchange rates and transfer charges can be a quagmire for the uninitiated. This short guide should help to get you started, and give you an idea of how to go about moving your money across national borders.

Keep an Eye on the Exchange Rates

The first thing to do when arranging any money transfer is to check the exchange rate. Exchange rates can change in minute spaces of time, so it is worth keeping a close eye on them in order to maximise your financial efficiency. Take note of the policy which any company you may use has regarding exchange rates as well - some use exchange rates as a sort of hidden charge, applying rates so extortionate to cross-currency transactions that you may even have been better off going with a company who charge upfront transfer fees. In any transaction, make sure that you know to as close a value as possible how much money will be received by the beneficiary of the transaction, proportional to the amount of money you yourself have sent.

Use Specialist Credit Cards

Using a credit card can help to keep charge and exchange-rate related costs down when shopping abroad or paying overseas bills. Specialist credit cards can be obtained from most banks, which will work in your favour and can actually prove cheaper than debit cards for regular transactions when abroad. Specialist credit cards won't add a fee onto the exchange rate, and most won't charge you for withdrawing cash at ATMs. Rather than being charged as you go like you would with a debit card, you spend on credit and pay the balance off as normal when you return home. This is a useful tool for regular transactions, like shopping, cash withdrawals, and paying for personal services as you go. However, interest rates will mount up if used for more complex or hefty transactions.

Make Small, Irregular Payments Online

For small, irregular payments, companies which arrange money transfers through the internet are probably your best bet. Many companies will do this at little to no cost for yourself, and using these companies is often the cheapest and most efficient way to make one-off payments - gifts to friends and relatives, for example, or paying for items bought online. Bear in mind, however, that the nebulous world of international online financial transactions is one with a good deal of potential for fraud and unscrupulous conduct, so make sure that you choose a company which has been approved by a relevant authority. Companies which are described as 'authorised' or have certifications from reputable financial authorities will keep your money separate from the firm's accounts, ensuring that your funds will be returned to you should the firm go bust. Companies which merely describe themselves as 'registered' but not actually 'authorised', however, have no such safeguards in place, putting you in an awkward financial position should the firm encounter difficulties. If you do end up in the unlikely position of losing money through company collapse, a complaint to a financial ombudsman may be able to sort the matter.

Transferring Through Banks

There is no need at all to be nervous about sending money through an online company, so long as they are authorised by the correct authorities. However, should you be wary, most banks will allow you to transfer money abroad through their own internal systems. These, however, usually add a far larger charge for the service than that which would be applied by specialised companies. HSBC provide one of the most comprehensive expat services, giving more value for money than many other banks, but it may be wise to shop around to find a service tailored for you.

Send Large Amounts Through A Qualified Broker

If you want to send a large amount of money, you are doing it through a specialised foreign exchange broker. Remember that, with large amounts, even small variations in the exchange rate can make a huge difference to the amount of money actually received at the other end, so be sure to choose a competent broker, authorised by the correct authorities and with plenty of experience behind them. Get quotes from a variety of companies to see what is best for you - but obtain these quotes as quickly and as close to each other as possible. Exchange rates are constantly changing and even a slight variation may make a huge difference in the quote when large sums are at stake. The rates tend to be better the more money you are sending, so such companies are only really worth contacting when you're spending significant sums - buying a house overseas, paying off a mortgage, converting large amounts of currency and so on.

Direct Bank Transfers

Direct bank transfers can be an excellent way to get money from one person to another quickly and efficiently, with few currency-crossing complications. However, this is only really a viable option if both payer and recipient have accounts with the same bank or banking group. Often, transfers within the same company will be fee-free and easy, but there can be complications with regards to account holder name. Transferring into overseas accounts which are not your own are viewed with inherent suspicion by some banking groups, so it may be worthwhile to choose a bank with a comprehensive and specialised expat service.

Sending Money For Immediate Receipt

If you need money to get to the beneficiary immediately, and don't have a payment system set up on your credit card or bank, some companies can offer an instant funds-transfer service. However, this usually comes at a fairly hefty price. Be sure to get as close a quote as you can regarding how much money the beneficiary will get compared to how much money you put into the company - there may be hidden costs on top of the transfer fees. It is also very important to ensure that the recipient will be able to collect the money from a branch by the time they need it. Some firms provide specialised transfer services between two specific nations, while others have a more global operation. Shop around to be sure that you find the best financial provider.

Do Your Research

It is most important of all to fully understand the way any financial transaction works before undertaking it. When dealing with middleman companies, make sure that you know exactly (or, if exchange rates are changeable, as close as possible to exactly) how much money will be leaving your account and how much money will be received at the other end, as some companies may apply hidden charges, or wangle the exchange rates to ensure a better deal for themselves. However, there are plenty of ways to transfer money cheaply, easily and efficiently, and most companies are open and upfront about any charges they may or may not apply - it simply takes a little research into the matter.

Tags: interest | currency | services | banking | internet | fees |



Articles Archive