Go via cyberspace if you're sending cash across the planet

Want to help far-flung family members? Flora Willis charts the best deals on fees and exchange rates
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The Independent Online

The world is a global village. More people are sending money abroad to family and friends than ever before, for everything from birthday gifts to everyday expenses like food and heating.

But the charges involved, such as commission and transfer costs, are punitive and can dramatically reduce the value of that cash if you don't explore your options.

Sending money overseas may be simplest via your high-street bank or a money-transfer agent such as Moneygram or Western Union, but you could make a big saving by taking advantage of one of the range of online facilities now springing up.

Banks usually charge one high, flat rate, making it very expensive to send that gas money across a continent or two.

Alliance & Leicester offers the lowest rate at £16 per transfer, while Nationwide charges £20. NatWest also levies £20 for its standard payments, although it costs £10 to send any sum in euros within the EU and the same price to pay a value up to £2,000, via relay, to Australia, Canada, New Zealand, South Africa and the US.

At HSBC you can send money most cheaply to its 21 "Worldpay" countries, including Australia, New Zealand, Hong Kong, South Africa, Spain and the US. All payments to accounts in these countries under £2,000 will set an HSBC customer back by £9. For payments over £2,000 made online, the bank charges £15.

And then you get hit by the exchange rates. Bank deals here are consistently lower than those of alternative payment methods. At the time of going to press, Nationwide has the lowest conversion rate at €1.196 to the pound, while HSBC's is €1.199. Alliance & Leicester's conversion is the best at €1.206.

Kevin Mountford, head of banking at comparison site Moneysupermarket. com, warns: "Consumers often feel their bank presents the most convenient option. But be aware this may not always be the most cost-effective method. The fee is usually visible but watch out for hidden costs such as exchange rate fluctuations, fees applied by the receiving bank and other add-on charges."

Moneygram and Western Union offer the fastest transfers, although the speed and cost varies according to where you are sending the money from and to – and charges can easily make up another 50 per cent of the total, particularly if you are sending relatively small sums.

The best deals are typically found online. The money-management service PayPal does not impose a transfer charge. It is free to send any amount in a choice of 18 currencies and can be done via an online PayPal balance, a linked bank account or a credit card. And its currency conversion rate was €1.221 at the time of going to press. Travelex offers around €1.223 and Tranzfers.com has the best deal at €1.233.

Many UK residents are unaware that there is often a charge levied for receiving that money at the other end. But customers won't incur these fees in the countries covered by Tranzfers, while the firm maintains a low flat rate of £7 for each transaction.

The customer must pay their cash electronically into a Tranzfers account on the website, and the funds are then switched. The major drawback here is that the website will not take cash, cheques or credit card payments. Additionally, its range of receiving countries is limited to Europe, Australia, New Zealand, South Africa, Singapore, Canada and the US.

Travelex may offer the best way to send large sums, though not smaller ones. The company charges £10 for transfers from £2,500 to £5,000, and £25 for transactions under £2,500. Transfers over £5,000 are free.

Travelex is big and flexible enough to send any amount in any currency. And if you are more comfortable managing your money face-to-face, it can carry out payments in-store.

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