How to save money when transferring funds abroad

There are different reasons for transferring money abroad. It could be for business purposes, sending money to friends or family members across borders, or a range of other reasons.

Understanding international money transfer methods and fees

There are several ways to send money abroad and they differ in terms of speed, fees, and currency exchange rates.

Common ways to send money internationally include:

• Bank transfers. Banks can provide services for sending money internationally. These could be in the form of a traditional bank transfer, wire transfer, or check. Banks may charge higher fees and offer less favorable exchange rates. The transaction may also take longer.
• Money transfer services.  International money transfer services, such as Xoom, a PayPal service, provide different options for sending money — from cash-for-pickup to direct bank account transfers. These methods can offer flexibility for the sender and receiver.
• Peer-to-peer services. Peer-to-peer (P2P) services allow users to send money directly to another account. This method of using apps to transfer money abroad is often quick, secure, and convenient.

Understanding the types of fees associated with international money transfers is crucial. Consider the below:

• Transaction fees. Most services charge a transaction fee. This fee is usually a flat rate or a percentage of the international transfer amount.
• Foreign exchange fees. Foreign exchange (FX) fees add to the cost of sending money abroad. Different providers may have different currency exchange fees that directly impact the final amount received by the recipient.

Minimizing the cost of sending money abroad

It’s possible to reduce the cost of sending money abroad. Here are some helpful tips:

• Shop around and compare fees. Online calculators and comparison tools may help to identify providers with the lowest cost rates and fees. This may lead to significant savings on international money transfer fees.
• Consider the transfer amount. Some providers offer lower rates for larger transfers. Flexibility concerning the transfer amount may help in selecting the most cost-effective option.
• Look for promotions and discounts. Providers may have introductory offers or fee waivers for new customers. Keeping a close eye on these promotions and discounts could help reduce the cost of sending money abroad.
• Choosing between transfer speed and cost. There can be a trade-off between the speed of the transfer and associated fees. Faster transfers may incur higher costs but are useful for urgent money transfers. For non-urgent transfers, choosing a slower service may keep costs down.
• Explore transfer methods. Different transfer methods offer different benefits, so researching each type for one’s unique situation is beneficial. Peer-to-peer transfers may provide cost-effective solutions, for example. P2P services, like those offered by PayPal, often have competitive rates and may offer instant transfers to a variety of countries.