International money transfer has become common in today's globalised environment. However, because of the hefty costs and hidden charges, the procedure can be intimidating and frustrating. Many consumers overpay because they are unaware of the other payment choices accessible to them.
Are you also concerned about being overcharged while sending money abroad? If so, you are in luck! This blog reveals the hidden fees associated with international money transfers. Get ready to learn vital information to avoid being caught off guard when sending money overseas.
4 Ways to Prevent Hidden International Money Transfer Charges
Did you know that many banks and money transfer companies don't give you the mid-market exchange rate, which you can easily find on Google? Instead, they add a hidden markup to the pricing without telling you. Sneaky, right? But don't worry. All you need to do is keep these 4 tips in mind to prevent them from sneaking up on you.
- Conduct Exchange Rates Research
According to most bank and transfer service websites, their exchange rate is the sum of the benchmark rate plus a margin. This is a hazy method of alerting you that you are not using the valid, actual currency exchange rate.
Financial companies might charge exorbitant fees for currency conversions without openly alerting customers. This is frequently substantially in excess of 5% of the value of the transfer. To prevent this outlay, you must check for the official mid-market exchange rate.
Before proceeding with the transaction, compare it to the quoted rate provided by the transfer service. The difference between the two amounts tends to be the extra fee you have to pay, which can sometimes be hefty.
- Examine Marked-Up Exchange Rates
Most banks and international money transfer services do not utilise the mid-market exchange rate and instead charge a markup that is not revealed to you. Their profit is derived from the variance in mid-market and marked-up currency rates.
The markup is often a percentage of the amount transmitted, so if you transfer a significant sum, the fee might quickly add up. Furthermore, you may find yourself paying high prices for money transfers. Before proceeding with the transaction, you can compare the exchange rate the banks provide or money transfer service providers.
Aside from the changeable foreign conversion rates, there are other expenses that you may be unaware of, known as hidden charges. These are the foreign remittance bank fees. Using services that state the prices upfront is the easiest way to avoid these expenses.
- Look Out for Correspondent Fee
The SWIFT network (Society for Worldwide Interbank Financial Telecommunications) is a global network of interconnected banks that handles the majority of international money transactions.
However, not all banks in the world are members of the SWIFT network, and this is where correspondent banks come in to aid with transactions between institutions that do not have a relationship with one another. This third-party bank deducts a charge straight from the transmitted funds.
This amount, known as the correspondent fee, varies depending on the bank and is typically not disclosed beforehand. And, the fee amount is not possible to anticipate.
Knowing whether or not your service provider is a member of SWIFT might help you predict any extra charges for sending money abroad.
- Study Foreign Remittance Fee
Some banks across the world may charge users for receiving foreign remittances. These fees might vary by bank and be challenging to reverse. Moreover, you or your bank do not influence this recipient's fees.
In this scenario, the best way is to carefully assess your alternatives and attempt to determine if the person to whom you are sending money will be charged this cost. Of course, one way to avoid all of this is to look to technology and discover which money transfer software or gateway best meets your needs.
This saves you time and eliminates all middleman fees, leaving you with the market-determined, fairly-priced commission. Explore alternatives if you don't want the receiver to be charged for this expense. The international push for pricing transparency is underway, but the first step towards attaining that aim at large is to remain watchful individually.
The need for simple international transfers has resulted in the formation of various authorised and active money transfer organisations, such as Wise or EXANTE. There are bank and non-bank choices, each with its own pricing structure.
If time is not an issue, cheaper solutions include, to mention a few, Bank Draughts, Cashier's Checks, and ACH transfers. Although these techniques take longer to reach your receiver, they are dependable and secure.
Furthermore, because of cheaper costs, better exchange rates, and increased convenience, online money transfer is one of the most popular ways of sending money abroad. Browsing around might help you save money by locating the most terrific bargain.