Contrary to popular belief, high-street banks are not the cheapest way to transfer money to another country. Here are four reasons why you should avoid using a traditional bank for your international forex transfer.
1. Banks are more expensive
Banks tend to penalise you with high fees on what they consider to be small transfers. It’s not uncommon for UK banks to charge up to £30, while in South Africa you can be charged up to R500 for funds to clear (the good news is, we only charge you £10 when you transfer £1000, plus there are no receiving fees you need to worry about). So if for instance you were transferring £1,000 to South Africa, the recipient would receive around R16,329.50 if you transferred through a bank, compared to R17,325.00 through a reputable forex agent (once you take the exchange rate and fees into account). The difference is even greater for larger amounts, which means you get more bang for your buck.
2. Banks take longer
With a high-street bank, you can expect your money to arrive at its destination anywhere from three to eight working days later. Not ideal if you need to meet your month-end mortgage obligations. A good forex agent will make sure your money reaches its destination within one to three working days, offering an additional speed service if time is of the essence.
3. With banks, the rate you see is not necessarily the rate you’ll get
The rate you see scrolling across the screen on the financial news (the “interbank” rate) is not the rate you will receive. “Interbank rates” are the rates that the banks trade at, in excess of billions. These are certainly not the rates the banks offer to their average clients, and while it is fair to display these rates, it is misleading as these rates cannot be obtained by anyone, not even forex providers. Make sure your rates are locked in at the time of your transfer so that there are no nasty surprises on the other end.
4. Using a bank means you have to go into an actual bank
And finally, wouldn’t you rather send money home from the comfort of your home or local coffee shop than having to go into a bank, wait in a queue, fill out numerous forms and pay more to do so?