There are various options for transferring money overseas, and many people find it confusing as to whether they should use a Bank or choose remittance service providers. The wide variety can complicate your decision. It is crucial to make the right choice and to take into consideration all of the factors which can affect your money such as reliability, transfer fees, transfer time, and most importantly--the exchange rates.
When it comes to your personal finances and sending money internationally, the first option that generally comes to mind is a bank. But the truth is--banks may not be the best choice. Here are some facts to consider:
1 Banks are usually more costly
Banks generally offer comparatively lower exchange rates. Additionally, banks ordinarily have higher wire transfer fees ranging from $20-$40 per transaction. For example - the average cost for an outgoing international wire transfer at a top 10 American bank is about $40.
Some banks may offer overseas wire transfers with no wire fees, but beware of hidden costs and service charges that may be difficult to identify. Also, don’t forget to calculate the final cost which will include the fees charged by the receiving bank at the other end of the transaction.
2 Banks often require a lot more information
Some banks do not offer online wire transfer services, and you may have to visit a local branch. The bank will most likely require you to fill out a lengthy wire transfer form and may ask you for additional information each time you send money. They may also require you to present your ID card in order to validate your identity.
3 Banks may require you to have an account with them
With many banks, you have to be a existing customer to utilize their wire transfer services. If you do not have an account with them, you may have to open a new account for the wire transfer to be initiated.
4 Bank transfers may take longer
Bank wire transfers may take longer to reach its recipient. Online service providers, such as Xoom, can execute money transfers to countries like India within 4 hours. Another online service provider, Western Union, can arrange cash pick-ups in just minutes.
5 Most banks may only transfer to other banks
Transferring money via the bank will usually restrict you to the sole option of transferring it to another bank on the receiving end. Online service providers, such as Western Union or MoneyGram, can administer money transfers so that the receiver may pick up cash at an agent location in recipient country.
6 Service providers are more beneficial for smaller transactions
Companies like Western Union, MoneyGram, Xoom, or Remit2India are better equipped to handle smaller amounts being sent overseas. Some banks may have special remittance programs with no transfer fees for smaller amounts, but the exchange rate will not be as favorable.
7 Consider Forex companies for larger money transfers
To transfer high currency amounts, such as a home purchase or mortgage, consider sending money via online Foreign Exchange (Forex) companies. Forex companies specialize in money transfers and offer much better exchange rates with low or no transfer fees. Companies like USForex offer $0 transfer fees to send $5000 or more. With companies like these, the higher the amount, the better exchange rate they will offer you.
Whether your personal choice is to use a bank or an online remittance service provider, it is always a good idea to shop around and compare the exchange rates, transfer fees, transfer time, and other aspects of remittance before selecting the service. You should use our Compare Money Transfer tool to analyze all the various channels, and then determine the most cost-effective and beneficial option to send your money.