A big headache for expats is how to switch their money between different countries without paying sky-high fees and losing our on exchange rates.
Millions of expats remit their money from where they are living and working to another and see middlemen shave off fees and charges for what should be a simple transaction.
The same applies to expats picking up income from pensions or investments from their former home for transferring into a currency they can spend where they are now living.
Here are some tips about reducing those charges –
Planning to spend – If you make regular payments, like remittances back to a UK bank to pay a mortgage back home, look at forward pricing contracts.
Specialist brokers and banks offer these deals that fix exchange rates, so if you plan to send money on the first of each month, you will have security of knowing the rate is locked for the life of the contract regardless of how the transmitting and receiving currencies have risen or dropped against each other.
Keep an eye on rates – If you need to make a short-notice transfer or cannot access a forward pricing contract, then watching the rates is always an option. Money markets tend to be volatile and even a small shift in the rate can mean a large gain or fall in the value of your cash if you are switching a large amount of money.
A penny change in the Sterling rate doesn’t sound much until you are sending £250,000 across to Spain to buy a home, when it adds up to a £2,500 difference.
Paying for sending money – Forget fees when you are looking at the cheapest way to change money. Instead, look at the amount left at the end of the transfer. Banks, brokers and building societies dress up their rates in complicated headline rates, 0% transfer and other marketing ruses.
The figure that is important is the amount of cash that comes out of the end of the foreign currency exchange wringer.
You also need to consider how safe your money will be – is the organisation handling your cash reputable and trustworthy, for instance. Sometimes it is better to pay a little more for peace of mind.
Speculating on forex – Binary options, spread betting and other popular forex speculation is simply gambling on how the market will rise or fall. IT’s not a good idea to bet more than you can afford to lose after paying all the bills as predicting the markets is luck and although you may have good fortune once, you may risk losing everything next time round.