5 Tips to Get Better Exchange Rates

In my experience as a foreign exchange specialist, one challenge I see facing expats again and again is getting a good deal when changing currencies. 

For instance, I recently spoke to someone moving to France, that purchased about €200,000 to take with them. Had they used their bank, it could have cost £6,000 more than using a foreign exchange broker!

Moreover this is just one piece of the puzzle. There are countless potential pitfalls facing expats that need to send funds abroad. These include avoiding fluctuations in the rate (like we’re seeing at the moment owing to the debt crisis in Europe) and planning in advance.

To help then, please find 5 tips to get better exchange rates below. Each one should make the process of getting a good deal – and avoiding the pitfalls along the path – that much easier!

1. Beware the high street banks

As I mentioned before, one of the biggest pitfalls awaiting expats that need to send money abroad is using a bank. This is because banks depend on the fact that people use them for other financial services, and so provide inferior rates than dedicated foreign exchange brokers.

In fact, using a bank can leave you up to 5.0% worse off than changing with a specialist. In addition, you’re liable to be charged a fee.

2. Plan the transfer in advance

Perhaps the most important tip – aside from that regarding the banks – involves planning. Plan the transfer months before you intend to leave, and you’re in a position to get a much more advantageous rate.

Leave it to the last minute on the other hand, and you have little choice but to receive whatever rate is available at the time.

3. Consider setting up a forward contract

Forward contracts are when you lock in the exchange rate, protecting you against declines in the rate closer to the transfer date. This is ideal for people planning to emigrate, since it means you can receive a superior rate, if you’re concerned it could drop nearer to the time.

For instance, in the present tumultuous financial climate, a forward contract could be ideal to protect against sudden drops on the market.

4. Look out for companies that charge commission

You should not have to pay commission when you send funds abroad. If the business you’re using charges commission, then look elsewhere.

5. Look at sites like the BBC to find out what’s influencing the market

Sites such as the BBC and Google News are ideal for finding what is influencing the markets. For instance, at the moment rumours regarding a two trillion Eurozone rescue fund are boosting confidence, helping the euro.

Knowing this information will help you make a much more informed decision regarding our transfer. 

Keep these tips in mind the next time you plan to transfer money abroad, and you should receive a superior rate.

Written by Peter Lavelle, Pure FX