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Spend & Save

Consumer Rights: Sending your money abroad needn’t cost you the Earth

There are big differences in charges when you transfer funds, so look beyond the banks

If you send money to family or friends overseas get your calculator out! You could be paying over the odds to transfer money. The latest research shows that you could get a raw deal if you simply pop into your high street bank to send foreign payments overseas. The exchange rates and transaction fees charged by the banks all add up to confusion for customers and you could find cheaper options by doing some research.

According to Moneycomms.co.uk even though some providers claim to offer a fee-free service, the wide variation in charges on foreign currency transactions can add up to a major hidden cost. As well as the variation in exchange rates to consider, the situation is further complicated as many of the banks charge an additional fee.

Around nine out of 10 transactions are still done through the banks and the research shows there's a huge amount of money to be saved if consumers check out the deals on offer from some of the online brokers such as FairFX and Caxton FX. To give you a couple of examples from the study – if you're sending 1000 US dollars the cheapest option is FairFX and the most expensive is Western Union, with the high street names not far behind.

The difference between the cheapest and most expensive is £39.34. If you're sending 1000 euros FairFx again works out cheapest with Santander the most expensive and the difference in that case is £30.75. Again the high street financial institutions tend to appear at the more expensive end of the list. Even if you're sending a lump sum as a one-off those are fairly significant differences but imagine the savings you could make if you have a home abroad or children studying or travelling overseas and you have to send money regularly. It's worth shopping around for a better deal.

Independent Partners: Bank-beating exchange rates and no hidden fees on all your international payments. Find out why our readers choose HiFX

Protect your savings

It's all very well saving hard to have a nest egg in the bank, building society or credit union but you need to know that it's safe there. The Financial Services Compensation Scheme protects you if your savings are in an authorised financial services firm that goes bust.

The FSCS is the UK's statutory compensation scheme and can pay you compensation if a firm is unable, or likely to be unable, to pay up. So that you can check that your savings are in an authorised protected institution the FSCS has produced a simple deposit protection checker, which can be found at www.fscs.org.uk/protected/

It allows you to enter the names of any banks, building societies and credit unions you use and then tells you whether your savings are protected. If you have money in an institution that isn't authorised by the Prudential Regulation Authority, or you have more than £85,000 in a savings or deposit account, you'll be told how much of your money is at risk. You can then move it to safety.

The checker is aimed at helping consumers to be better informed, reassured that their money is safe and able to make considered, confident decisions about their savings.


Should I buy more equity in my home?

Q. We are paying a mortgage on 50 per cent of a house. The other half is owned by a housing association to which we pay rent. The lease on the property has 81 years to run and we are thinking about extending it. We're not sure if we have the finances to pay for an extension but if we do extend should the housing association and us pay half of the costs each? would we be better off buying more shares in the property than extending the lease? 

SO, York

A. Leasehold ownership of a flat or house is simply a long tenancy – the right to occupy and use the flat or house for the “term” of the lease. The flat or house can be sold during the lease. When the lease expires the property returns to the landlord. It becomes more difficult to sell a lease and move the shorter the lease gets.

Your shared ownership arrangement is a form of leasehold. However, there are several differences between a shared ownership lease and other residential leases and the most important one in your case is that you aren't entitled to extend the lease.

A shared ownership lease is specifically excluded under the Leasehold Reform Housing and Urban Development Act 1993, unless the leaseholder owns 100 per cent of the lease. Your only option is to buy more shares in your property.

Some shared ownership leases only allow the leaseholder to buy 80 per cent of the shares. There's a lot more helpful information at lease-advice.org