Category: exchange rates

7 TOP TRADE SECRETS to help you save time and money when sending money abroad

If you are sending money overseas, getting more for your money when buying or selling currency is important. Currency expert Sarah Davie from Moneycorp has listed below some useful tips that will help you when making international money transfers – whether you are making a one-off payment for a property, making ongoing mortgage payments or even repatriating funds back to the UK.

Tip 1: Don’t use the Bank to make your transfer

Many people leave foreign exchange in the hands of their bank. This is a big mistake.

It’s not a widely known fact but it’s certainly a costly one; currency exchange is one of the easiest ways for the bank to pick your pocket; and for larger transactions the losses can amount to hundreds, even thousands of pounds.

A specialist broker is much better placed to help you achieve a better rate of exchange when making a currency transfer. Although they trade currency in exactly the same way as a bank, as they solely deal with foreign currency and operate with reduced overheads they will be able to help you achieve much more for your money.

Another benefit is that the banks can charge up to £30 per transfer, foreign exchange brokers tend to offer a much lower transfer fee or in some cases no transfer fee at all.

Tip 2: Bigger Savings with Bigger Transfers

Typically, the larger the transfer, the bigger the saving; so if you are buying or selling a property abroad or you need to make a large overseas payment for any reason you are more than likely to benefit from a better exchange rate.

That said, you are still likely to see a considerable saving when making transfers with a specialist broker if you are exchanging a few thousand pounds or more.

Tip 3: Lower Fees with Regular Transfers

By setting up a regular payment plan for your regular payments, a foreign exchange specialist can work with you to ensure you make a saving every step of the way.  They will collect your GBP/Sterling via Direct Debit and then automatically send the foreign currency abroad.  The transfer fees can be as low as £0-£4 (in comparison to the typical £25 charged by the banks) per transfer – which makes a noticeable difference when considering monthly mortgage payments or pension transfers. Here is a recent bank comparison:

BANK

BROKER

Exchange rate*

1.1809

1.225

Amount sent in € per month

€ 1,000

€ 1,000

Amount you pay in £ per month

£846

£816

Saving in £ per month

£30

EXCHANGE RATE SAVING PER YEAR IN £

£360

Transfer fee per month (subject to bank and broker)

£25

£0

Possible receiving charges per month

£5

£0

Total Charges per year

£360

£0

CHARGES SAVING PER YEAR IN £

£360

TOTAL SAVING PER YEAR IN £

£720

*Exchange rate based on a bank comparison on 28/09/2012

Not only will a specialist be able to give you more flexibility than your bank, they have options that allow you to secure the price to protect you against adverse rate fluctuations and save you money. A specialist will be able to offer you 3 easy options for transferring your regular payments:

Option 1
Fix the Sterling amount and the amount of foreign currency you will receive will vary according to the exchange rate at the time of transfer. This is great for pension transfers.

Option 2
Fix the foreign currency amount and you will know how much foreign currency will arrive in your overseas account every time. This is great for mortgage payments.

Option 3
Fix both and you know exactly how much sterling will leave your account and how much foreign currency will arrive in your overseas account. This option fixes the rate; securing the cost of your payments over a set period.

Tip 4: Overseas Banks May Charge Extra

You will need to be aware that some overseas banks may charge you a handling fee of up to 1% of the value of the transfer.  This can add up depending on the regularity that you send money overseas.

You can however negotiate this issue with the receiving bank prior to transferring your money to try and minimise costs. You can also speak to a foreign exchange currency specialist to discuss possible options/solutions they can offer you.

Tip 5: Click here for greater SAVINGS

It is often cheaper to send money overseas via online systems provided by brokers as the costs are generally reduced.

The process is straight forward – you literally select the desired currency rate and then enter the amount you wish to transfer.  Payment can be made with a UK Debit card or a bank transfer; you then complete the deal by entering the beneficiary bank details for complete independence.

Tip 6: Don’t leave your transfers to the last minute

The longer you have to arrange your currency transfer, the more flexibility you will have to en­sure you get the best deal.

Although your broker will be able to offer you a same day transfer, the longer you have to manage your exposure the more options are available to you for example:

Forward contract
This allows you to fix an exchange rate today for a future date. Forward contracts can help protect against adverse currency movements and can be used to lock into favourable exchange rate with a 10% deposit up to 2 years in advance.

Limit Orders
You can specify a higher price at which you would like to trade at, if the market moves to this level your order will be fulfilled automatically.

Stop Loss Orders
Set a minimum level at which you would be happy to buy/sell your currency. Your order will be fulfilled automatically if this rate is reached in the markets. Ultimately, your worst-case-rate is being protected should the market move against you.

Tip 7: Get “FREE” Expert Advice

As exchange rates are continuously changing. It is important to discuss your requirements with a currency specialist; they will offer free expert guidance and be able to help you through the money transfer process step by step.

There are various options available to you, so it’s important to plan ahead. One of the main benefits of using a currency specialist over a high street bank is that the expert guidance and personal service you receive comes at no additional cost, so you are able to discuss your situation over a long period of time before you transfer your money.

This will give you much more control over your money and give you confidence that you have made your transfer at the right time and, therefore, at the right exchange rate.

[This article was provided by Sarah Davie of Moneycorp.]

Opening a bank account

Moneycorp
Foreign exchange

When we first started our relocation services, opening a bank account in advance of your arrival was a standard part of the package. As the years went by, and banks became warier of money laundering and the terrorist threat, this service became impossible.

Now at last there is a way. Our partners at Moneycorp have negotiated a service in conjunction with Royal Bank of Canada (RBC). If you are a client of Moneycorp then contact your account exec and ask them about this service. If not then it is simple to sign up with Moneycorp – it costs nothing and there’s no obligation to trade.

In our experience there are many other advantages to using a professional service, like Moneycorp, to handle your foreign exchange.

In case you don’t know RBC:

    •  They’re Canada’s largest  bank (by market capitalization and assets), and have been helping newcomers get settled for over seven generations
    • They have the largest branch and ATM (Automated Teller Machine) network in Canada
    • They provide service by phone in up to 180 languages
    • Rated as one of the top 10 “World’s Safest Banks”, by Global Finance magazine in August 2010.

How to adjust to prices in Canada

Vancouver farmers' market
Checking the prices at the farmers' market

When you first move to a new country there is a period of adjustment that you go through. One part of that is getting to understand prices and what is good value.

There’s a psychological element to this as you’d guess.

Much like the early honeymoon period that most migrants go through at first, the early days may well be a time when you spot all the good things about prices. Gas prices might be one for instance.

This honeymoon period is our way of confirming we made the right decision in coming to Canada. We are on the look out for all that’s good, and price comparisons are included.

If the exchange rate works for you, and this is admittedly unlikely, then you might be tempted to mentally translate all the dollar prices back into your old currency. That is a mistake. You really need to adjust to looking at prices from the local perspective.

There’s a psychological effect which I will call “price anchoring”. This is where our expectations of  a good price are set by our first experience of buying or considering buying something. That sets the target price. When you’ve moved to Canada, your price anchors may still be referring back to prices in the Old Country.

So how do you reset them?

Time will eventually reset these price expectations, but since the first weeks after arrival are usually the time when you’re doing a lot of shopping, it is a good idea to reset them as soon as you can.

The best way is to be aware of your own thinking. Avoid comparing back to the Old Country prices, but do look around locally. Ask advice from people who’ve been in Canada a long time. Canadians love a bargain, so you’ll likely get a lot of advice. You are then consciously setting your anchor price for a lot of things.

Before long you’ll be like most of us in Canada: grumbling about the gas prices!

Getting money from UK banks once you are in Canada

TTT Moneycorp foreign exchange services
Foreign exchange services

I am passing on some advice provided by Moneycorp. Their experience of dealing with foreign exchange has been valued by many of our clients, and ourselves too. This advice relates to organizing money transfers once you are in Canada. It refers to transferring money from the UK, but I am sure similar issues exist when moving money from other countries.

We [Moneycorp] have found that once clients move to Canada, they often come across problems transferring their money there too. Their UK banks often request their physical presence to authorise the transfer or a letter of authorisation.

Our service is a very simple and straightforward alternative.

When transferring your money from your UK accounts (Moneycorp banks with Barclays, HSBC and RBS) please check with your UK bank before you leave the country – as you may find them unhelpful here too. The below tips might be of help for organising your transfer once in Canada;

1)    Letter – Many of our clients courier a letter from overseas to their UK bank. For example via DHL.

2)    Online banking – Check your daily limit. We can accept payment over a number of days. If your limit is low, ask if it can be increased. However we are flexible and can also book later value dates with this delay in mind.

3)    Bank Form – Complete and sign a transfer instruction form before you leave. Your bank will likely ask you to specify in advance the date of transfer and the amount which may not be known at this stage. Enquire as to whether the amount and date can be completed over the phone at a future date.

4)    Cheque – We can accept a sterling cheque up to £100,000 in the post. I would recommend finding a secure method of posting. We cannot book a deal until we have received your cheque. Cheques will take 8 working days to clear.

5)    Types of transfer – Your banks will offer various methods of transfer for example CHAPS, BACS and Faster Payment. Please check cost and time frames with your bank. Our payments department are on hand to assist with any queries.

I (Frank) recommend Moneycorp’s services. We recently had a client buying a home here and without Moneycorp’s advice they would have struggled to get their deposit into Canada in time. Thankfully all was well and the deposit arrived in time. They are now comfortably settled in their new home.

See our page on foreign exchange for other tips on moving your money to Canada.

Loonie suffers as US economy improves

IMROVING US ECONOMY HURTS CANADIAN DOLLAR

Nationwide reports a third successive monthly rise for house prices. Loonie gets caught in the crossfire through no fault of its own.

It was not the most exciting week ever for GBP/CAD. Having set off from $1.7850 it took four days to move more than a cent and a half away from that level. On Friday the Loonie was dragged down by the US dollar, allowing sterling to jump to $1.80 where it opened in London this morning.

After the sell-off at the end of the previous week the market’s first instinct was to buy the pound, although nobody was quite sure why. Hometrack’s housing survey was vaguely helpful, inasmuch as it showed prices not falling, but investors found it difficult to get excited because prices were not going up either. It was a similar story with the CBI’s retail sales report for July: At -15 the figure was better than the previous month’s -17 but did nothing to motivate buyers. Money supply data on Wednesday were another net “don’t care” for the market. The number of mortgage approvals went up, true enough, but as Reuters put it; “British financial institutions lent less money to households last month than at any time in the past 15 years.” Gfk’s index of UK consumer confidence survey produced another utterly useless figure when it remained unchanged at -25.

Investors at last woke up on Thursday morning when Nationwide’s house price index came out. For a third successive month the building society saw a rise in the average price, this time by an entirely respectable +1.3%. The annual decline eased from -9.3% to -6.2%. The firm’s chief economist offered an impressive hostage to fortune, saying “there is now a reasonable chance that prices could end the year slightly higher than where they started.”

Sterling’s performance over the week obviously had something to do with the UK economic data – few thought they were – but mainly it was the by-product of another quiet week during which the mood of investors became more upbeat. As one of the allegedly riskier currencies it is more likely to find buyers when the market is less nervous.

The Canadian dollar fell through the cracks between investors’ guarded enthusiasm for commodity currencies and their underlying mistrust of the greenback. Although initially it managed to sidestep any collateral damage, and to keep pace with sterling, it came to grief on Friday. Figures showed a much smaller than expected slowdown in the US economy between March and June. As is now usually the case, the US dollar suffered as a result of the news. An improving US economy is symptomatic of an improving global economy: as that happens, investors become less nervous and less inclined to seek the sanctuary of the US dollar and the yen. This time the Canadian dollar became caught in the crossfire, through no fault of its own.

Still in its recent range of $1.75-$1.85 the pound is going nowhere fast. Having failed to push past $1.92, the pound clearly has no secret reserves of power. The $1.75 support level could well be the next port of call. With sterling bang in the middle of that range buyers of the Canadian dollar should protect themselves with a 50% hedge.

Courtesy of TTT Moneycorp

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