Most people will have had some experience of changing money when they have been abroad on holiday and will be only too familiar with the hunt for the best exchange rates.
However, anyone with a foreign investment, a business which exports goods or a property overseas may well need to bring funds back into the UK on either a one-off or regular basis.
Tracking down the most competitive rates are even more crucial when larger sums are involved as the difference could result in quite literally hundreds of pounds.
But where are you likely to get the best deals and how should you approach bringing money back into the UK? This article brings you some of the facts you need to know.
Convenience versus money
In many cases it would be possible to simply arrange the transfer of funds to come back into the UK via your bank.
This would undoubtedly be a very convenient way of receiving money and would mean the money arrives straight into your account.
But there is likely to be a hefty financial cost for the convenience. A transfer between a foreign bank and your own branch back in the UK is likely to involve not just a painful fee from the overseas bank, but also the standard exchange rate. In most cases this is far from the most competitive rate available on the market and could mean you effectively lose some of your own money, simply because you are moving it from one country to another.
If you are looking to move money and are not concerned about losing a chunk which could be easily saved elsewhere, the convenience of using your own bank could be for you.
How to get the best rates for your money
An alternative to using the automated exchange service from your local bank is signing up with an online currency broker.
Currency brokers operate in a very different way to banks and have specialist skill or knowledge which can help you to squeeze every last penny out of your foreign currency. In addition, because they do not have the high street overheads, the transaction can work out far cheaper than banks.
Because currency brokers are used to dealing with transfers in and out of the UK, the process is rapid and simple, and the volume of business conducted means that they have access to preferential exchange rates. This can be as much as 4% better than the rates available from banks.
The practicalities of obtaining money from different countries varies significantly but a currency broker will be well aware of the regional variations and can help you to avoid overseas costs as much as possible.
If you are not in a rush to bring your money back to the UK, many currency brokers also offer a service which allows you to specify at what point you would like a transaction to be carried out. Currency markets have a habit of swinging up and down, markedly changing the value of the exchange. By specifying the rate you want to receive, a currency broker can wait to execute the transaction until the market hits the right level.
Security
Although you will want to enjoy the best rate available on the market, you will not want to jeopardise the security of your money by directing it through a company which is unsafe.
In the UK, currency brokers are regulated by both HM Revenue & Customs and the Financial Services Authority, which means they are subject to vigorous checks and must pass certain standards in order to be allowed to trade.
There are two levels of certification with the FSA, Authorised Payments Institutions (API) and Smaller Payments Institutions (SPI). An API has to comply with four key areas including offering safeguards for customers’ money. An SPI does not automatically have the same checks so doesn’t offer the same protection.
To be certain that the organisation you are using will not just offer you fair and transparent rates, but is financially stable and will hold your money separately, look for API status.
Conclusion
When it comes to exchanging money, it’s easy to make the mistake of simply going to the bank as that is something most people are familiar with. However, currency brokers can provide a far more tailored service to help make sure you don’t lose any of your own money to unnecessary charges and unfair exchange rates. A good website to visit for further information is international-payments.co.uk/, they can help in various ways, but especially with receiving money back into the UK at low cost.
Image Credits: Gino and Images_of_Money.
