Guide to sending money overseas

Sending money abroad with minimal hassle |  ID 3198511 © Sigrid Zabel | Dreamstime.com

Is it safe to transfer money abroad?

As long as you use a firm which has been authorised by the Financial Services Compensation Scheme (FSCS), your money should be protected. UK banks and building societies are protected by the FSCS, as your money is with a regulated company.

However, if you choose to use a foreign exchange broker, you may receive less protection if the company lets you down.

Money in a UK-based savings account is protected by the FSCS in case something happens to it – for example, it goes into administration. However, foreign exchange money transfer firms aren’t – and you won’t receive any compensation if the company goes under.

All UK-based services must be either ‘registered’ or ‘authorised’ by the Financial Conduct Authority – however, there’s a big difference between the two. Authorised firms keep your money separate from their own accounts, so your savings should be returned to you, even if the company goes under. Registered firms just have to prove they’re based in the UK, and that their directors have no financially-based convictions. There’s no guarantee that your money is kept separate from the company’s own funds.

You should check to see if the company which you’re using is authorised by using the FCA website.

The best way to send money abroad

How you send money abroad will depend on:

  • How much you’re sending
  • What it will cost you to transfer the money
  • If you send money abroad regularly
  • How the other person wants to receive it
  • How quickly the money needs to arrive

You then need to look at your options – there are three main ways to send money abroad.

  • Your bank or building society
  • Foreign exchange firms (FX brokers) - normally the best option if you’re sending larger amounts over £3,000
  • High street transfer firms – these are fast, but can charge you more

Using your bank to send money abroad

It’s easy and convenient to use your bank to send money abroad – it’s also safe and secure, and your bank will guide you through the process if you need help. However, if you’re sending large amounts, you may get a better exchange rate from a foreign exchange broker. It can also take longer for the money to reach its destination.

Using foreign exchange firms to send money abroad

FX brokers usually won’t charge you fees if you’re transferring over £3,000, and they can offer you a great exchange rate – as well as being speedy. However, you may need to open an account with them, which can take a while, and the FSCS doesn’t cover you if these firms get into difficulties.

Using high street firms to send money abroad

If you use a high street firm, your cash will get to its destination quickly and it’s easy to send money – you normally don’t need to set up an account. You can also usually take advantage of a range of services, from getting instant cash to your recipient to transferring directly into a foreign bank account. However, these firms can charge large fees and exchange rates can vary. Plus, you are also not covered by the FSCS.

How much does it cost to send money abroad?

The cost of the transfer will depend on a range of factors, so the best thing to do is figure out the total amount you’ll be spending – including transfer costs. There are three costs to consider:

Foreign exchange rates: These change frequently, so when you’re sizing up different offers, try to do them all on the same day.
Sending fees: What the company will charge you for sending the money
Receiving fees: The person you’re sending money to might have to pay a small fee to access their money, but you can offer to pay these fees so they don’t have to.

An easy way to start the comparison process is see what your bank will charge you and then expand your search to include online FX firms and high street companies.

Once you’ve found a company you want to use, confirm with them that they can do the transfer at the time and day you have chosen. If possible, get them to send you a receipt.

What if something goes wrong when you send money abroad?

The first thing you should do is complain to the company you used, and give them a chance to sort out the situation. Make sure that you keep hold of all your paperwork through the transaction process, even if you’re sure it’ll go through – you’ll need it if something goes wrong.

If the company can’t sort out your issue, the next thing to do is contact the Financial Ombudsman Service. It can investigate and in some cases it can order the firm to pay you any money which has been lost.

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