International money transfers are exceedingly common transactions that are performed by more than six million households every year across the U.S. While it once cost a significant amount of money to send funds internationally, the sending and receiving fees are currently lower than they’ve ever been, which means that it’s the perfect time to wire money to your friends or family members who live in another country. If you’ve never before attempted to wire money internationally, this process can seem complicated because of the many different options and services available to you for these transfers. The following is a thorough guide to wiring money internationally, which should inform you about the costs of these transfers while also easing any of your concerns.
Rates and Fees Associated With an International Money Transfer
The rates and fees associated with an international money transfer depending on which service you’re using to send or receive the money. The three basic fees that you will need to consider when handling an international money transfer include sending fees, receiving fees, and currency conversions. The main options that you will have when making an international money transfer include banks, credit unions, online money transfer services, and walk-in transfer centers like Moneygram and Western Union.
When you’re looking to send money internationally, the method and service type that you use will dictate what your sending fees are going to be. For instance, Western Union will charge upwards of $12 to send $200. Keep in mind that the sending fees with most service providers increase at a smaller rate when you send more money. When you send $25 through Western Union, sending fees are usually around $5, which means that a $12 fee for $200 is a relatively small increase when compared to how much money you’re sending.
If you’re using a service like Xoom, the sending fees when you’re looking to spend $200 are just $4.99. If you opt for using an international telegraphic transfer, the sending fees will be much higher than the other services in this guide. Keep in mind that these costs depend on the bank that you make the transfer with. If you’re sending a payment from Australia, the standard sending fees will be anywhere from AUD $20-$30. If the payment is being sent from the United Kingdom, you will need to spend around 20 euros to make a transfer. A foreign telegraphic transfer from a major bank in the U.S. will cost you around $45-$55. Before you use an international telegraphic transfer, keep in mind that the individual receiving the money will need to pay a fee as well.
One of the top considerations that you should think about when getting ready to wire money internationally pertains to the receiving fees for each transfer service. There are some money transfer services that won’t charge any receiving fees, which means that all fees will be taken care of by the sender. For instance, Western Union doesn’t require receiving fees for international money transfers.
On the other hand, international telegraphic transfers will come with some receiving fees, the total amount of which depends on the individual bank and the country that the money is being sent to. The receiver will usually pay around $10-$25 for an international telegraphic transfer. However, it’s important to understand that the receiver may need to pay as much as $50.
Before you make one of these transfers, it’s highly recommended that you consider all of your options. If another bank will make this transfer for $10 less in receiving fees, there’s no reason not to use the other option. Many people go into these transactions without realizing that the receiver will get less money. To avoid this issue, try sending money less frequently. If you send more money on a less frequent basis, the sending and receiving fees will be lower.
Even if you use a money transfer method that doesn’t come with any receiving fees, the individual who you’re sending this money to may need to pay a small fee if the money is being converted into a different currency. Banks will charge a significant sum for converting funds into another currency, which you need to take into account before making this transfer. In most situations, you will begin this transfer by selecting your own currency. The system that you send this money will then convert the funds into the local currency that you’ve selected. The fees for currency conversion are usually between 2-4 percent of the total amount that you transfer. If you transferred $1,000 to a close family member, the currency conversion fees would be $20-$40.
Other companies that provide international money transfer services will charge different rates and fees for currency conversion. While these rates are similar to the ones provided by most banks, they may differ from time to time. General exchange rates for a currency can change multiple times per day. Each company will use a different method to account for the changes in exchange rates, which is why the fees can vary. As such, you should shop around to find the best option for your money transfer needs. Some companies will offer a guaranteed exchange rate, which will allow you to lock in the rate before the money is transferred.
Your Options for International Money Transfers
There are many fantastic methods for transferring money internationally, which extend all the way from a telegraphic transfer via a bank to walk-in and online transfer service like Western Union. Before you begin the process of sending money internationally, you should consider all of your transfer options.
What Is a Telegraphic Transfer?
A telegraphic transfer is a name used for an electronic transfer of money from one bank to another wherein the recipient bank account is located in a foreign country. This specific method of wiring money internationally is known as a wire transfer in the United States. This was once the most common method for transferring particularly large amounts of money to an overseas bank account. However, the internet has allowed for specialist money transfer services to provide individuals and businesses with another way to send their money overseas.
When you make a telegraphic transfer, the money will typically take around 4-7 days to arrive in the bank account that you send it to. The exact time that it takes for the money to be sent to the foreign location depends on the exact destination of the transfer that you’re making as well as the requirements for currency exchange in that country. In order to send money via a telegraphic transfer, you will need to have the complete bank details of the recipient, which include their full name, their bank account number, and their SWIFT code. Certain banks will also require the other bank’s phone number, address, and branch name.
Additional Options for International Money Transfers
If you don’t want to send money via a telegraphic transfer with the bank, there are several additional options available that can be cheaper and may be preferable to you. If you would like to avoid making these transfers online, you could think about using a credit union as opposed to a bank. While credit unions send money internationally in much the same way that banks do, they will typically be cheaper. For instance, the average cost for a telegraphic transfer through a bank is upwards of $48. These fees drop by almost 25 percent when sending money through a credit union.
You can also complete this transaction with a walk-in money transfer center. Non-bank providers like Moneygram and Western Union allow you to make these international money transfers by phone, online, or at a physical store. They are also considerably cheaper than other alternatives. While the total amount of fees that you pay depends on the amount you send, the fees can be lower than $10. There are several similar online money transfer providers that only allow customers to complete these transactions over the internet. Fees for most of these services are similar to Western Union and Moneygram.
Online Money Transfer Services Vs. Banks: Which Is Best?
While banks continue to be a popular option for sending money internationally, that doesn’t mean that they are the best option. Because of the large number of specialist money transfer services that can be accessed online or in-person, you can actually shop for the best rates before you send the money. Making an international wire transfer with a specialist service will always be more affordable than using a bank to make this transfer. No matter which of these services you use, you’ll be able to avoid the exorbitant fees that are charged by banks.
Now that you know everything about wiring money internationally and the costs associated with doing so, you should be able to avoid making any mistakes during the transfer process.
Matt is a veteran of the moving industry, a recognized moving expert and is the founder of Mover Focus. Matt holds a Bachelor of Commerce (BCom) majoring in Finance and Marketing and Bachelor of Arts (BA) majoring in Economics and History. He also has completed the EiM (Essentials in International Moving) course from the FIDI Academy. His advice has been featured in Reader’s Digest, Yahoo Finance, MSN Money, Business News Daily and The SpareFoot Blog Go. Read more.