International remittances have reached an all-time high, with the World Bank reporting a jump of 10% from the preceding year to $529 billion of international money transfers in 2018. A wide range of financial services is being provided by global companies like Western Union, MoneyGram, World Remit, and TransferWise to facilitate this process. But, as more companies are viewing this as a lucrative investment opportunity, the marketplace is facing stiff competition, with some companies charging excessive and sometimes hidden transfer fees while some are going out of their way to facilitate customers. Among them, TransferWise is currently the cheapest and most reliable option available in the market. The Motley Fool has reviewed them to be the best option for sending money internationally because of their transparent fee structure with no hidden fees, their fast transfers, and the excellent customer service provided by them 24/7. Keeping this in mind, one should take care of the following aspects when sending money through these institutions:
Watch the Fine Print for Hidden Fees
The fees on an international money transfer can be broadly categorized into four parts:
§ Sending Fees
§ Transfer Fees
§ Exchange rate Margins
§ Receiving Fees
These are the areas where some companies keep huge hidden margins for themselves. You only find out about these charges once the money has been sent and received. Usually, one sees the transfer fee marked out by the company, but the rest are hidden. Exchange rate margins are especially notorious when sending large amounts of money. When sending small amounts, one hardly sees the difference, but as the amount increases, these fees can multiply and cause a significant dent in your budget.
Keep an eye on the exchange rate
When sending money internationally, one must be vigilant of the relevant exchange rate. Keep one eye on the currency markets and time your transfers when the exchange rate is in your favor. Geopolitical events or natural disasters can have positive or negative impacts on currency markets, and the right timing will save you loads of money.
Use bulk transfers
The most common fee that every money transfer company charges, is the transfer fee. There is usually a cap for a certain amount of transfer fee. The brackets range is under $500, $500 – $7000, and $7000 and above. Although different companies have different brackets, the concept is the same. Try to keep your amount near the upper limit of the bracket, as sending $600 or $7000 would be charged at the same rate.
Branch Networks on both ends
A well-established money transfer institution will have abundant branch networks at both ends. This saves time as well as money. TransferWise, e.g., has branches in 70+ countries, this eliminates bank sending and receiving fees on both ends, and the money transfer is virtually processed within minutes. Extensive branch networks also ensure reliability. The worst thing is when your transfers get stuck in-between banks and tracking that money is a complete nightmare. The banks themselves have no idea what is happening when there is a mix-up like this. So, it is imperative to ensure that the transfer service you are using has sufficient branches at the receiving end.