currency


When I travelled afield thirteen years ago all I was concentrated on was the adventure!  I had no idea quite how expensive my relocation was going to be!  Sure, I’d factored in removal costs and even the cost of an aeroplane ticket for me…I knew I’d have to pay leased and even possibly fork unwrap to get wholly my permissions in place.  But what I hadn’t factored in however, was the fact that just managing my money on a month-to-month basis was going to erode serious amounts from my regular engaging packet!

The hidden costs associated with just managing and travelled money abroad are shocking…and I am the sort of person who has a real problem with paying for a bank account!  I equitable don’t glimpsing why I should have to pay to put my money in a bank when the bank profit from my custom.  So, as you can imagine, when I realised just how much it was costing me to move money internationally I nearly had a meltdown.

Perhaps you’re not quite as obsessed with looking after the pennies as I am – which may in fact be a more healthy way to lead your life – however, are you aware of the fact that you can be charged up to 5 times for just sending money home?  The good news is there are some easy peasy way around this, and if you read on you will discover how you can save yourself a pretty penny with international money management – and even better, it’s simple to begin saving!

Most expats I know have an account hind in the UK and a bank account in their new nation of residence.  (Some also have an international (offshore account) if they’re more interested in the ongoing management of their cash…more about that in a moment.)

So, if you’re a typical expat you will gained money in your new country which will be paid into your local bank account, this money will be used by you to live day-to-day and to pay local bills.  Chances are however, you will also transfer money from this account back to the UK to serve debts such as a mortgage, or to just save cash so that it’s not wholly spent every month.

So – hither’s the ugly truth about the way you manage your money…

Your bank may charge you 1) a commission fee and 2) a transfer fee for making an international transfer to the UK.  A commission fee may be a percentage of the amount you’re transferring, and the transfer fee is likely to be a fixed making.

You will also have to 3) convert your currency, and chances are you’ll receive tourist rates from your bank which could be as much as a few percent away from the best rate.

You may also be 4) charged by any handling bank in between…and finally, you may be 5) charged by your bank in the UK for receiving international funds.

In total, you could lose a significant chunk of the transfer every single time just to make this very simple yet essential money movement…and it doesn’t stop there!

If you move money from the UK abroad to top up your wages or because you’re in receipt of your pension or investment income in the UK but you’ve relocated overseas, you will be charged to move that money out of Britain too.  You’ll have the same transfer and commission fees, the same conversion and international receipt fees too…

So, every single time you necessitated to travel your money you could be hit with charges.  You can think of it like a tax on your new life abroad – and it’s not very nice is it?

Some expats I know try to manage all their money through their old UK bank account in a bid to avoid this issue – but the truth is, they are hit even harder because they withdraw money from international ATMs and get stung every time they do with fees and poor conversion rates!

Personally I want to stop this injustice!

The good news is that there are better ways to manage your money when you’re living abroad, and cheaper ways to shifted your funds around the world.

The 1st option you could consider is an international bank account.  Instead of having an onshore account in your new nation and one back in the UK you can consolidate and have a single offshore/international account.  The likes of HSBC, Barclays, Lloyds etc., all offer such account types to expats.

These accounts may however, come with a fee affiliated!  So, do your homework carefully.  Premier offerings from the banks come with lots of bells and whistles you may not need – so look carefully at the account type and ensure you find one that will allow you to receive money from your employer or pension, fulfil financial obligations in your new nation and your old home country – all without ridiculous fees being applicable.

If you tin’t find an account that’s flexible enough – or you really have need or desire to keep your accounts in the UK and in your new nation open, don’t worry, there are still ways you can save money when you transfer money abroad or back home…

You need to do some research, but the foreign currency brokers that are now all over the Internet and the high street all offer a range of options to you.  Firstly they generally apply low or no charges for the movement of money, secondly they give you far better rates of exchange than the banks.  Thirdly – and perhaps most importantly for anyone making veritable transfers of money internationally – you can forward set the rate of exchange your money will benefit from by using what are called ‘forward contracts.’

These let you to work with a currency broker to determine when the currencies you’re interested in reach a good point at which to convert.  You then ‘buy’ in at this point and fix so that for the next X number of months, you will be able to benefit from this specific exchange rate.  (X being the totalling of months you decide to fix for, with most brokers allowing you to fix for up to 2 years).

You usually have to lodged some money with the brokerage (often up to 10% of the total transfer amount for the duration you have fixed for) and you don’t receive interest on this money however.  So, it will be up to you to weigh up the financial savings you may make, and base your decision accordingly.

For any infrequent or one off international movements/payments, always go to a FX broker and ask them what rate of exchange you can get and whether there will be any fees incurred – as stated, many brokers charge no fees for the international movement of your money.

Last but not least – another word about offshore accounts – it may be possible for you to combine an offshore bank and savings account, and to have interest paid on the money you don’t spend apiece month.  Whilst no one advertises such options, speak to your preferred bank about it.

I bank with HSBC, and I have a savings account directly linked to my current account, whilst the interest earned on the savings account isn’t massive because it’s instant access, at least I get something for them having the benefit of my money gracing their coffers!  I am sure all the leading institutions offer a similar options….just approach them directly and ask.

Some banks also offer premier account customers fee complimentary international transfer, and better ratted of exchange on currency conversion.  But as previously stated, you usually incur a monthly fee for such an account.

Finally, as regular readers will already know, at Lee Byers we’re not qualified to offer financial advice, so this article does not constitute advice.  Be sure to talking to a regulated, qualified and experienced fiscal adviser before you take any action that could affect your wealth status.

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