How to avoid high transfer fees when sending money abroad

There’s always scope to shop around for a fairer price when sending money abroad. TransferWise can put you in a better place to negotiate a deal

Finding different and innovative ways to transfer money abroad can be difficult. Individuals and companies moving funds internationally can struggle to predict currency movements or know if they are getting the best deal on exchange rates. Often they will simply take the rate offered by their bank or broker, but this can prove costly.

Some banks advertise “free” or “no commission” deals but you may have to satisfy certain requirements to claim them or, alternatively, the exchange rate may be dampened down to compensate.

There are more creative ways to transfer money and save on charges, but before choosing any transfer method you must consider:

  1. The amount you are sending
  2. Who you are sending it to and how they want to receive it
  3. Whether it is a single or regular payment
  4. When it needs to get there

You should then study the exchange rate and compare it with the real mid-market rate, without charges and the profit the bank is including on each deal.

When transferring to poorer countries, there’s a humanitarian service that allows people to transfer money for free, or gives the option of making a voluntary donation. Xendpay allows people to pay what they want, including nothing. It is one of the global social cause initiatives listed by the Clinton Foundation, founded by former US President Bill Clinton to improve the lives of poorer people around the world.

But other companies have sprung up, offering everybody a fairer rate, no matter where you are in the world. One intermediary helping individuals and businesses negotiate better foreign exchange transactions is former investment banker Matt Richardson.

You can end up paying a lot less if you use a service like TransferWise

He has set up a company called betterFX, having previously led the FX departments at JP Morgan and Deutsche Bank. Today he helps Britons with overseas property and companies trading abroad.

“I know the tricks of the trade and people need to know all the options,” says Mr Richardson. He says anyone transferring money overseas should ask providers what margin they are applying to a transfer as well as the exchange rate.

“They won’t be used to being asked this question. Try and get a simple percentage figure so you can compare,” says Mr Richardson. “The margin can differ wildly and if you are transferring money regularly the savings can soon add up.”

He says anyone transferring small amounts of money abroad should consider mainstream online services such as PayPal as a cheaper alternative to their high street bank.

Taavet Hinrikus, CEO and co-founder of peer-to-peer currency transfer matching service TransferWise, agrees that people should think more innovatively about how they send funds abroad.

TransferWise charges a small fee to take money paid into its account in a specific country to pay the recipient using the real exchange rate. A £5,000 transfer to Euros, for instance, would cost just £5. Most banks charge around 5pc of the transaction amount.

“Our advice is to shop around and look at alternative providers to your bank,” says Mr Hinrikus. “Make sure you understand what you are really being charged, compare the exchange rate to the real one on websites such as and check the stated transaction fee from your bank against those offered by other players. You can end up paying a lot less if you use a service like TransferWise.”

He cites the example of a female British retiree client living in Portugal who was losing £50 of her pension each month because she was transferring money via her bank. By switching to TransferWise two years ago she has saved about £1,600.

TransferWise operates within 60 countries and will launch new routes throughout 2016.

Visit for more information 

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