Once you are settled in your new home and job, you may wish to send money back to your home country to help care for relatives or as a gift, but it can seem daunting trying to decide which method is best for your situation. In this article, we outline the ways in which you can transfer money overseas from the UK, what to be aware of, and which method will be most beneficial to you.
It is important to note that we are not financial advisors and this article is a guide. We would always recommend that you consult a professional for further information.
Things to Consider
Before you decide which method you wish to utilise to transfer money abroad, some important things to consider to help you make a decision are why you wish to send money abroad, how much you are intending to send, and how frequently you wish to do this. These are important questions to ask, as each method of transferring money will have its pros and cons, and these factors can help you narrow down which system will be best for you. We will outline which method is best for individual situations later in this article.
Another thing to be aware of is exchange rates and fees. Certain methods will offer you better exchange rates and value for the money you are sending, and some methods may charge you a fee to transfer the money abroad for you. As we explain each method, we will outline the fees and exchange rates associated with each.
Methods of Transferring Money Abroad
There are three main methods of transferring money from the UK to overseas accounts. These methods are:
Money Transferring Firms
Foreign Exchange Brokers
We will go into detail about the pros and cons of each of these.
Bank transfers are considered to be the best option for transferring regular mid-range payments overseas, such as transferring money to parents or other family members overseas on a weekly or monthly basis. This is because bank transfer is considered to be the safest and most reliable option for safeguarding your money, and also the easiest way to set up a recurring payment.
Unfortunately, whilst it is the most secure and often convenient method for long-term payments, the downsides are that the exchange rate will often not be particularly competitive, so you may not get the best value for your money. As well as that, it is likely that there will be fees involved with transferring money overseas, unless the bank you are transferring money to overseas is linked with the UK branch. Some branches have sister banks overseas, in this case, there are often no, or lower charges involved, though often for this to be approved, the bank account overseas must be in the same name as the bank account you are sending money from.
The Money Saving Expert website offers some helpful advice on which bank is most beneficial for different countries, you can read more here.
It is the safest method of transferring money overseas
It is the best method for small to mid-range regular payments
Easy to set up regular transactions
Most banks allow you to set up transactions online, over the phone or in your local bank, this may vary from bank to bank.
You have protections of the Financial Services Compensation Scheme if you transfer money via a UK bank or building society – this will protect your money if something happens to the bank.
Some banks allow free transfers between linked banks – both accounts may need to be in the same name, this will depend on the bank.
Most banks have 24/7 online banking to allow you to transfer money whenever you need to.
Some banks will allow you to transfer up to £50,000 in one transaction, but this will vary depending on the bank and method you are using, and some banks may have daily limits for safety reasons.
Some banks do not charge fees if you are transferring money within the European Economic Area (EEA).
It is not the cheapest
The exchange rate may not be the best, particularly large amounts over £5000
The exchange rate is often set in-house
It could take 4-6 days for the bank transfer to process
Rates won’t be competitive
There are often fees for transferring money abroad, Barclays bank reportedly currently charges £25 for an international transfer and £40 for a fast transfer, or £15 if you set this payment up online.
How to set up a payment
This will vary depending on your bank, but you will, of course, need a UK bank account to transfer money from, and your recipient will need an overseas account to receive the payment. As previously mentioned, ideally, they will have a linked account to save on fees, but as long as they have a bank account, they should be able to receive payment.
Each bank’s requirements may vary slightly, but HSBC states that in order to make an overseas transfer, you will need:
Your account details
The name and address of your beneficiary
The beneficiary’s bank code (this is also called a Business or Branch Identifier Code (BIC)) you can usually find this on bank statements.
The beneficiary’s International Bank Account Number (IBAN) or account number – An IBAN is a set of alphanumeric characters, but depending on the beneficiary’s account, they may not have an IBAN, and may only hold an account number. These can usually be found on bank statements.
The country of your beneficiary’s bank account
The amount you wish to pay them
Any reference you want included with the payment
Your reason for making the payment
These are HSBC’s current fees for transferring money overseas as well, please note that this will again vary from bank to bank, and this is only to give you an idea of how fees operate.
HSBC to HSBC
Euros outside EEA or any other currency outside of UK or any foreign currency (other than Euros) in the UK
Euros within EEA
Banks you Can Use
Here are some banks that offer international transfers, we advise you to do your own research to decide which one will be best for your situation.
Royal Bank of Scotland
Money Transferring Firms
Transferring firms are often considered to be the best option for fast, one-off payments, for example, if you wish to send money as a gift, and as these firms exist for the purpose of transferring money abroad, they have great systems in place for doing this quickly and efficiently. It is important to be aware that there are no compensation schemes in place to protect your money if the company went bust, so it is riskier than transferring money via your bank, but that said, some of the other benefits outweigh the negatives for many people. A final positive thing to mention about this method is that you aren’t restricted to simply transferring money to a bank account, whilst this is an option, it is also possible to send money to the recipient’s phone, or to a safe location for them to collect the money in person, depending on the country you are transferring to. Some recommended that you don’t send more than £5000 via a money transferring firm.
Great option for fast transfers
Exchange rates vary, but this can sometimes be beneficial.
Some firms do not currently charge for transactions within the EU.
Best option for small amounts of money.
You can send money directly to an account, to their mobile or for cash pick-up.
You can pay via your bank account, or via credit or debit cards including Visa, MasterCard, Maestro and Visa Electron.
You are able to transfer money 24/7, though if you opt for pick up, the recipient may not receive it as quickly depending on the time difference.
You may be able to send up to £50,000 in one transaction with some firms if you have satisfied their identity checks.
Transfers can generally be made online or over the phone.
Fees are sometimes higher than they are with banks.
There is protection with firms than you would have with a bank.
It can take 2-4 days at most.
It can take a few days to verify your account upon first signing up.
It is recommended that you do not send more than £5000 via this method.
How to set up a Payment
In order to make a payment with a firm, you will generally need to sign up with their website and create an account and also have your address verified, this can take a few days, so the initial set up can take some extra time. Once your account is verified, you can choose whether you wish to send money via your bank account or a debit or credit card, after which you may select the country you wish to transfer money to. Once you have selected a country, they will then be able to suggest different ways the beneficiary can receive the money, whether you wish to transfer it to their bank account, mobile phone or to a location for pick up. Please note that not all countries will offer all of these options. Once you have sent the money, you will be advised how long it will take for the recipient to receive the payment, though sometimes this will not include the length of the processing time. This is still a faster method than transferring money via your bank though.
With the money transferring firm, Western Union, if you opt to send money for pick up, your recipient will be able to pick up the cash from a Western Union location, though when they can collect the money will depend on the location’s hours of operation, so it is important to bear this in mind if you need to send money urgently.
Western Union also offers mobile transfer, again, other firms may not offer this, and it will be dependent on the country. If a country does accept this form of transfer, this can be an incredibly fast method of sending money, with Western Union claiming you can transfer money to the recipient’s mobile in minutes. You will need to ensure that the beneficiary has activated their mobile wallet with one of Western Union’s partner mobile operators in that country. At most, your recipient will receive the money within 2 days with this method.
Finally, if you’re sending the money to the beneficiary’s bank account, it will likely take two working days at most for them to receive it. That said, Western Union does offer a faster service which you can find out about here.
Western Union also stipulates that if you wish to send more than £799.99 within a five-day period, you will first need to confirm your identity with them, after that, they will allow you to send up to £4000 within a three-day period, and up to £50,000 per transfer with their faster payment option, though this may vary from firm to firm.
Money Transferring Firms you Can Use
Foreign Exchange Brokers
Foreign exchange brokers are said to be the best for large, one-off payments above £3000. It is suggested that they are great for payments for overseas mortgages or large purchases. They are also great because there are often no fees, or very low fees, particularly on large amounts of money, and their exchange rates tend to me more competitive than those of banks or money transferring firms, giving you the best value for money if you intend to send a lot of cash in one transaction.
Good for large payments.
No charge or low fees for transfers above £3000.
Exchange rates are highly competitive.
If you are making regular transfers, they may be able to lock you into a set exchange arrangement over a certain period of time, usually a year.
Can be faster than transferring money via bank.
Generally, offer a bank transfer or cash pick-up.
You can manage payments 24/7.
Payment generally arrives within 1-2 days.
You can opt for priority payment to speed up this process.
Transfers can usually be made online or over the phone.
They offer less protection than banks, so take care, particularly when transferring large amounts.
It’s not worth the cost if you are sending amounts under £1000.
Be aware of changes to the exchange rates – they can have a huge impact on the value of large amounts of money.
How to set up a Payment
Sending money via this route is straightforward. You will need to open an online account, which is usually free to do, and will generally need to verify your identity during this process. Depending on the brokers, you will then state how much money you wish to transfer, and they will try to secure you the best exchange rate. Once they have offered you a rate and you have confirmed that you are happy and send them the funds to transfer, provide them with the details of your recipient’s bank account and they will process the payment and send it to the beneficiary. You will then receive a confirmation once the payment has been transferred. They generally accept money via bank accounts or debit or credit cards including Visa, Master Card and Maestro. Some brokers state that money can be transferred within a few minutes to a few days, like with previous methods, this will vary depending on the country and broker.
Foreign Exchange Brokers
Things to Note
With all three of these options, it is important to note that your recipient may be charged to receive or collect the money you have sent. Sometimes, you can opt to pay these charges yourself, but it will be dependent on the company or bank.
Registered or Authorised?
As previously mentioned, transferring money via a bank is the safest method, as if anything happens to that bank, your money will be safe. This may not be the same with some firms and brokers. When researching firms and brokers you will see that all UK services will be registered or authorized by the Financial Conduct Authority. This is incredibly important to understand as it will give you some insight into how well protected your money will be if a firm or broker goes bust.
Being authorised means that a firm or broker MUST keep your money separate from the company’s own money and accounts, meaning that if something happens and the company goes under, your money should be recoverable.
If a broker or firm is registered, the directors of the company need only prove that their business is based in the UK and that they have no past financial criminal convictions, which means your money may not be kept separate from the company’s own accounts and funds, therefore, making it less easily identifiable, and less easily retrievable if the company goes bust.
It is also important to be aware that unless they state otherwise on their website, some brokers and firms will not be covered by the Financial Services Compensation Scheme. This means that if a company goes under and does not have the funds to pay you back, you will not be able to claim for compensation under the Financial Services Compensation Scheme. So where possible, we would strongly advise ensuring that a firm or broker is covered.
Finally, it is important to note that we are not financial advisors, and this article is merely a guide. Please consult a professional for further information.
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