Nowadays, when people can study or work overseas, money remittance is becoming a necessity.
If you’re a person who has to transfer money abroad often, you might want to read this article. That’s because we will share ten practical tips you need to know when sending money abroad.
Research your options
There are now various ways you can transfer money internationally. The bank used to be the best way to transfer money outside of the country. However, there are plenty of money transfer service providers nowadays, so you should make sure to research your options first.
Bank transfer is one of them. But you can also transfer money online and through third-party service providers.
They each have their pros and cons that you should consider before finally choosing what money transfer service you should opt to use. If you prioritize security, using the bank might be the safest. The only caveat with bank transfers is that they often have expensive transfer fees.
Compare money transfer services
When looking for money remittance service providers, you shouldn’t stick to the first provider that you find. Just like when you’re shopping around for other services, make sure that you compare money transfer options.
Since you’re transferring money internationally, it often means that you’re going to deal with exchange rates as well as transfer fees. You also want to ensure that they provide secure transfers and are reputable.
The best exchange rate is the goal, but the transfer fee might offset what savings you get from the exchange rate. Thus, it’s best to check the big picture first before making rash decisions.
Check transfer fees
When making a money transfer abroad, make sure that you check the transfer fees first.
The transfer fee is what service providers charge for transferring the money for you. The total amount will vary depending on your preferred service provider. It could either be a fixed fee, or they would compute the transfer fee based on a percentage of the amount of money you’ll transfer.
They might charge the receiving end of a money transfer as well, so make sure to clarify if you have all the fees accounted for so that you’re not blindsided.
Be mindful of transfer limits
Aside from the transfer fees, there are also transfer limits that you have to consider before sending money. When you do international money transfers, the money transfer company or the bank might set a minimum amount of funds for transfer.
In some cases, they will also have a maximum amount transfer limit to comply with international banking rules.
It’s not necessary to be too conscious of the maximum transfer limits, however. That’s because the maximum transfer limits are usually relatively high, so it’s unlikely that you’ll reach those.
But if you plan on sending a large sum of money abroad, make sure to check the rules so you know if your transfer is subject to tax.
Check the exchange rates
We’ve mentioned the transfer fees before, but there’s another thing that you should think of before doing an international money transfer. We’re talking about the exchange rates.
This is common if the recipient uses a different currency than yours. For example, you are sending money in USD to your family who is in Delhi, India. They are likely to receive the money in Indian Rupee unless they are using a dollar account.
That said, you want to ensure that the service provider’s exchange rate is as close to the current rate as possible. And in case you’re wondering, you can find the current exchange rate on Google or by watching the news.
Send a single, large amount
If there’s a need to transfer money abroad, it’s best to do it with a single, large amount of money rather than to split it up. As mentioned before, there are transfer fees or transaction fees that you should consider.
That said, splitting up your transactions into multiple small amounts can have your transfer fees add up quite a bit.
Instead of sending money every week, why not consolidate that amount and send it once every month? It’ll save you a lot in transfer or transaction fees.
Take your time
It’s a good idea to take your time before transferring money abroad because you might be able to get a better exchange rate that way. The exchange rate often changes every hour in some places. Thus, even waiting for a few days or hours can make a huge difference in how much your money transfer will be worth.
You’ll also have a better understanding of which money transfer service providers offer the best rates. Thus, preparing you for any future transfers abroad.
Use forward contracts
Another method you can do to reduce the effects of the uncertain exchange rate on your money transfers is the use of forward contracts.
Forward contracts are the arrangement you set up between you and a money transfer service provider. Doing so allows you to lock in the exchange rate now before exchanging money sometime within the next 12 months.
The downside is that if the exchange rate is more favorable for you in the future when you do the transfer, you can’t use that exchange rate. Thus, you might want to use this for only a portion of your money transfer if you’re going to do so.
Set order limits
Another way to have your money transfers less affected by market fluctuations is by setting a limit order. A limit order is when you select a rate that you want your money to be exchanged for. Once that rate is there, there’s an automatic exchange at that rate.
How long a limit order lasts will depend on the bank or what you use for your money transfer, so make sure to check.
Pay attention to the refund policy
Make sure that you know what the refund policy is before transferring money abroad. There might be emergencies when your recipient might not be able to get the funds in time. In this case, knowing the refund policy can help so that you don’t lose that money.
Over to You
The international money transfer tips listed above should help you achieve convenience. And by “convenience,” we mean you can transfer money without hassle and that they are not ripping you or your recipient off.
Next time you have to transfer money abroad, make sure to refer to these tips to make the most of your international money remittance.
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