Guide to finding the cheapest and best option for your international money transfers.
Simply using your bank to transfer money is easy. The problem is it is expensive. Fortunately there are now many great alternatives that can save you money. For amounts less than $500/£250 – there are many options. Over $500/£250 and choosing a provider depends on the countries but money transfer companies are a great choice.
The key is to choose the right option for your needs!
This starts with the amount you wish to send because different services tend to do better based on the amount you send.
- Less than $500/£400/€450
- More than $500 but less than $7000
- More than $7000/£4000/€6000
- Hidden Costs to Watch For
- Costs of using Bitcoin and Other Crypto
- How make MORE money arrive
$500 USD = Approx £400, €450, $700 AUD, $700 CAD, $700 SGD, 50,000 JPY, 25,000 INR
$7000 USD = Approx £4000, €6000, $10000 AUD, $10000 CAD, $10000 SGD 800,000 JPY, 500,000 INR
USD is used but these are services who transfer worldwide with offices and bank accounts in many countries.
Two of the biggest providers for smaller amounts are compared in CurrencyFair V TransferWise.
1.1 Have PayPal
If both you and the recipient have a PayPal account apart from being extremely convenient and practically instantaneous PayPal is also very cheap. This is because even through PayPal charges quite hefty currency conversion fees on the interbank exchange rate and fixed fees on top of that – the fixed fees tend to be quite small making it a winner for many people in this category. Beware though, as the amounts increase PayPal rapidly becomes relatively expensive.
1.2 No PayPal
If you or the person at the other end does not have a PayPal account, Digital Wallets and Apps designed for mobile can also be pretty convenient and potentially cheap. Not to be confused with their big brother services – Apps like PayPal.me and Skrill (review) are geared towards paying small amounts for services and to family and friends but they can also be used effectively for international payments too. A worthy mention, because for smaller amounts even though the percentages are high, lowish fixed fees make them extremely competitive compared to banks especially for micro-payments less than $100.
1.3 Money Needs to be Cash
These are certainly not the cheapest but for whatever reason, sometimes money needs to be sent or received in cash. This is where remittance companies come into their own although generally they will never be cheaper than online services some are certainly cheaper than others. Remittance companies are often you best choice in this situation where companies like Western Union, Moneygram and Xoom charge between 6% to 9% in total costs in exchange for speed, security and being able to use cash.
Low Cost Option?
The best we can find that allows cash to be received is WorldRemit (review) who are significantly cheaper than other remitters and also have an excellent App for both the sender and receiver of cash.
Caution: This is where the scammers and fraudsters hang out. Make sure you know the person on the other side and are sure it is them.
$7000 USD = Approx £4000, €6000, $10000 AUD, $10000 CAD, $10,000, SGD 800,000 JPY, 500,000 INR
2.1 Leading P2P Services
TransferWise and CurrencyFair tend to be the cheapest ways to send money internationally for amounts less than $7000 USD. We like both a lot but for different reasons. See CurrencyFair V TransferWise for and in-depth expose’, but simply put if you simply want the cheapest rate both are going to be hard to beat especially if you are transferring money in common currencies like AUD, CAD, USD, GBP, EUR, and JPY.
However they are quite different in the way they operate, and what they deliver.
2.2 Most Important Differences
- CurrencyFair operates a P2P market where as TransferWise operates off the interbank rate
- TransferWise is extremely transparent on the rate you get – before you sign up.
- CurrencyFair enables you to set the rate you want to swap at with your anonymous peers.
- TransferWise guarantees rates while you send them money.
- CurrencyFair needs you to have you funds cleared in your CurrencyFair account before you can lock in (extremely good) rates.
In addition to this, regulatory requirements mean that both services tend to need to ask for more ID above certain thresholds and can sometimes lock your account if you try to send larger amounts while these requirements are met.
Both services are extremely effective at doing as much as they can online, leaving customer service mostly to troubleshooting or dealing with issues usually related to meeting regulatory requirements or the time and costs it takes for banks at either end to do their part.
A transparent, low cost option supporting 70+ countries
TransferWise wins our best money transfer service for 2020 for amounts below $7000 USD for good reason.
Apart from keeping costs low and transparent, TransferWise is a winner in this category because of their network of local banks which means fees can be eliminated at both ends (from the banks) and transfers can often be faster as well. Oh and for the record, we use them personally.
Leading services like OFX and TorFX are often the cheapest and best ways to send money internationally for amounts more than $7000 USD. All three are going to run rings around your bank in terms of costs but they also become cheaper as the amounts increase making them a clear choice.
Note: This page is all about the cheapest options, but if you take into consideration things like smooth account set up, speed, regulatory guidance, guaranteed rates and off-line telephone support you might want to use them for transactions less than $7000 USD.
Most Important Differences
- TorFX is very service and proactively telephone oriented
- OFX is very transparent on the rate you get after you sign up and is a mix of online and telephone support
- OFX sometimes charges a $15 fee but you can get the fees waived here
- OFX is regulated in more countries and has more local bank accounts in different countries.
The Pros and Cons of each are discussed in more details in the reviews.
The reviews above often also contain specially negotiated links to make them even cheaper. You’re welcome and thank you for choosing my affiliate links which can save you more money.
Banks are notorious for having fees that you usually only find out about after painstakingly researching the fine print – if you are lucky.
That is where this new bred of money transfer companies shine and certainly the ones we recommend.
However beyond purely getting the best deal on exchange rates and transfer fees, a lot of people forget to consider the fees that banks at either end of the transaction charge. These can be significant (sometimes the greatest part) and you might think the the money transfer services have no control over these fees but they do!
First, let’s be clear what we are talking about.
4.1 There are Four Fees
- Sending Fee
- Transfer Fee
- Exchange Rate Margin
- Receiving Fee
The cheapest money transfer companies keep the (2) Transfer Fees low and the (3) Exchange Rate Margin low as well, but significant costs can accrue through the banks that Send (1) money to be transacted and Receive (4) money at the other end.
Some companies even remove the (2) Transfer Fees and have “Fee Free” Transfers.
Each bank in each country often charges different fees to send and receive your money but the money transfer companies themselves have great potential to reduces these fees and in some cases make them zero!
4.2 How Money Transfer Companies Reduce 3rd Party Bank Fees
Reducing 3rd party bank fees depends a lot on the network the transfer companies have developed.
For example, if the money transfer company has a bank account in that country (in the local currency) this means that sending money (to fund the transaction) is usually inexpensive or free.
Some Ways to Fund the Transfer
- ACH, Domestic Wire (USA), SWIFT
- SEPA Bank Transfer, SOFORT (EUR)
- Direct Debit, Local Bank Transfer, Bill Payment (Canada)
- POLi, BPay, Domestic Bank Transfers (Australia)
- Domestic Bank Transfers (UK)
Likewise, the recipient (which may be yourself) will not get charged a fee if the money transfer company once again has a bank account in the same country (and currency).
As you can imagine, having business bank accounts all around the globe and managing all those pools of funds can get expensive and complex – not your problem, but potentially very much to your benefit.
If you hold Bitcoin (or another crypto) already and can stomach the volatility transferring your money internationally could be a good way to go.
5.1 Not Cheap, Yet…
Assuming you wish to use more common currencies (fiat) at each end, the transaction fees which exchanges who deal in crypto charge to convert your money to fiat currency often makes it costly. Coinbase – the largest crypto currency exchange in the world typically charges 1.49% to buy and sell = 3% total.
While there are cheaper exchanges, 3% is only just cheaper than the banks and a good 1.5% to 2.5% more expensive than money transfer companies which can go as low as 0.5%.
In the future these costs are expected to become more competitive, but anything above 2% transaction costs make it expensive although better than a bank.
5.2 Volatility Problem
If you are still considering Bitcoin or another crypto to transfer you money, it is worth considering the time you are holding it. While you are holding it (even just for a day) you could be subject to pretty wild swings not just in the crypto currency itself but the actual currency pairs you want to convert.
For now, there are much better options for most people.
Just not using a bank and using a reputable money transfer company will but you far ahead.
There are some great ways to have even more arrive!
- Time the exchange rate
- Set up alerts
6.1 Time the Exchange Rate
If you find reading about pips, basis points, resistance and bar charts not at all fun – I have got good news. Simple charts can help save or make 1% or more quite easily.
6.2 Set up Alerts
Many money transfer companies allow you to set up alerts and some even allow you to execute transfers if you reach certain currency pairings.
Some money transfer companies are simply not willing to negotiate when it comes to giving you are better deal, but others are. A simple call can save you hundreds or maybe even thousands. In general companies that are great at smaller transfers are already rock bottom and are mostly online, so negotiating is not an option. Some do however have “Fee Free” transfers.
TorFX on the other hand is all about speaking on the phone and keeping you happy. With larger amounts and if you do multiple transactions over a period of time, it is well worth speaking to your appointed “Personal Account Manager” about the options available.
OFX are probably going to be already the cheapest and get cheaper by default as amounts rise and not in a position to negotiate. That said, you can get the $15 fee waived for ever.
You might also like the Latest “Fee Free” Transfer Offers which we keep updated on a monthly basis with the latest fee free transfers.