Last updated in November 2020
Many Britons choose to move to warmer climes after their retirement, so learning how to make an online money transfer becomes a necessity for them. The reason is simple, international bank wire transfers can be very expensive. Using the services of money transfer websites can save you over 5% of the transfer volume.
However, in order to stay safe, you need to understand how to choose a cheap money transfer provider. Unfortunately, there are some scammers operating in this industry that you should learn how to avoid. Moreover, you will have to do some research to understand what really makes the best money transfer offer. It’s not always a matter of the total transaction cost.
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Why Retired Brits Need to Know Money Transfer Websites
Thousands of British pensioners need to make international money transfers rather frequently. According to recent data, about 467,000 of them live in various EU countries, and even more live in other parts of the world. The majority of British retirees in the EU choose to live in the sunny Spain, but France and Portugal are also very popular.
Regardless of where exactly you choose to live or even just travel to after retirement, you will need to use money transfer services. They are essential when paying buying a property, transferring your pension, sending money to family, or paying for anything. Even using your debit card abroad will be considered an international transaction. Therefore, your bank will charge you a fee and some other costs for it.
The transfer fee itself could be as low as £8, so it doesn’t seem like a big deal. However, what banks don’t tell you is that they use very unfavourable foreign exchange rate margins. This means that currency exchange, which is an essential step of a cross-border money transfer, will cost quite a bit. All things considered, one such transfer made through your bank might end up costing you 3-10% of the transfer volume.
An online money transfer, on the other hand, might cost less than 1% and not more than 3%. The exact cost will depend mostly on the provider and the currency pair. In this industry, margins and fees vary greatly between providers. Therefore, it’s important to study a list of the best money transfer websites. Then, you’ll be able to get quotes from each and compare them.
Remember that online money transfer companies offer additional services that might be very useful. Thus, you should check out their full offering instead of simply picking the cheapest option at the moment.
How Does a Cheap Online Money Transfer Work?
All you need to do in order to make a cheap online transfer is to create an account on the website of your choosing. The registration process only requires your UK ID and address. It can be completed very fast and there are clear instructions for every step. Thus, it’s easy to navigate even if it’s your first time using this type of service.
Once you create and confirm your account, you can make a transaction following the prompts. Leading online money transfer providers offer very user-friendly smartphone apps. Therefore, you will be able to make a transfer directly from your phone.
If you use a debit card, the transfer could be completed within seconds. This speed could be very important in real estate payments. It will help you make a down payment fast before someone else snatches up the property.
If you transfer money from your bank account through this kind of website, the transaction might take up to a day. In some very rare cases, the duration could increase. But that’s mostly restricted to some exotic currency pairs.
You can get cheap transfers through these websites because the companies operating them have low overhead costs. The money you send doesn’t actually leave the country. Instead, you make a transfer to the company’s account in the UK. In the meantime, the company transfers an equivalent of your transfer to the recipient from its own account in the other country.
This means that instead of one cross-border transfer, your money goes through two local transfers. These are much cheaper, that’s why online currency transfer providers can keep their fees and margins low.
Are Money Transfer Websites Safe?
Before you get all excited about making a fast and cheap money transfer, you should double-check everything. Last year, the number of money transfer scams in the UK has grown by 40%. This year the numbers might be even more staggering because the use of fintech services has increased greatly due to the COVID-19 pandemic. Thus, you should be even more careful.
To protect yourself you should first check if the money transfer company is certified by the Financial Conduct Authority (FCA). All trusted UK online currency transfer providers are audited by it.
Next, check FCA’s own recommendations on how to watch out for foreign currency transfer scams. You need to be aware of what kind of scams are common so you know what the red signs are.
The online foreign currency transfer industry is rather new. However, there are some businesses that have already proven to be trustworthy. They are the leaders of the industry and UK residents can easily use their services. Today these companies include TransferWise, WorldFirst, OFX, Currencies Direct, Moneycorp, and TorFX.
All these online transfer websites use bank-grade encryption to protect their customers’ personal information. There is no need to tie your bank account directly to your account on the website. This gives you another layer of protection against cybercriminals.
Finally, always beware of the offers that seem too good to be true. You should stay vigilant and check the license and certifications of any money transfer service you consider using.
In case the worst has happened, you need to report the scam right away. Then, follow the provided instructions so you can try and get your money back.
Final Tips for How to Make a Cheap Money Transfer Online
To make a cheap money transfer today you need to step away from your bank. Innovative fintech services that allow you to make transfers through websites or smartphone apps offer great savings. However, you shouldn’t forget to be careful when using these services.
Register with trusted websites of industry leaders and always make sure they are certified.
If you are one of the UK citizens living abroad and need to make transfers regularly, you should also look into additional services these companies offer. In particular, you might need to use currency guidance and hedging. These services will help you make the most of the constant changes in foreign currency exchange rates.
Citizens living abroad are highly vulnerable to shifts in the Pound’s standing on the global currency exchange market. Brexit, the pandemic, and the global economic recession made this market extremely volatile. Therefore, you should use every possible solution to protect yourself.
Online money transfer companies offer such solutions to everyone, whereas banks usually restrict them to corporate and VIP clients. This is another reason why using currency transfer websites is a good idea. They will help you save money in many ways that go beyond offering cheaper services.
Consider the offering of additional services when choosing a money transfer company. But remember that checking its registration and license should always go first.