Banks offer terrible deals for international transfers with high rates but businesses like TransferWise could help you.
Fortunately, nowadays there are a lot of options to send money abroad. Banks, building societies, post offices, online currency brokers and others offer this kind of service but they can cost a lot of money.
The Western Union and Moneygram are easy alternatives for those who don’t have a bank account. But if you have a bank account the best option so far is to use the service from TransferWise. Clinking on the link, the first Transfer is without an additional fee. The exchange rates are so compatible.
If you look up an online currency conversion calculator and compare, you will see that Transferwise is way more advantageous. Why?
The reason is that probably the exchange rate you found on the calculator was the middle market rate, in other words, it was the midpoint between demand and supply for that particular currency on the day in question. This mid-market rate is also known as the “real” exchange rate and it is used by professional currency traders.
And what happens with this mid-market rate with you transfer money for a different currency than yours? Your bank and any bank is NOT passing this mid-market rate on from you. Instead, the bank takes the mid-market rate and apply a margin on top of it. At the end, it claims an amount of your money as commission, either in for of an unfavorable exchange rate or a fixed fee, but quite possibly both. The result is that the bank makes a considerable profit and you get a bad deal.
In comparison, a payment of £2000 to US dollars costs £9.95 with TransferWise but £65.91 on average with the banks. And a payment of £10,000 to EUR costs £49.75 with TransferWise, but proximally £256.09 with banks.