New research shows that high-street bank customers are paying a high price when it comes to sending foreign payments overseas.
The numbers highlight that to get the best deal for your money it is important to shop around, as even a small percentage difference in the exchange rate can result in considerable savings.
If we want to send some money abroad most of us will automatically arrange the transaction via our own bank, but in most cases this can prove a costly mistake.
Unfortunately many people are unaware of the cheaper alternatives available and are confused by the combination of uncompetitive exchange rates and transaction fees levied by the banks.
Even though some providers claim to offer a fee-free service the wide variation in the exchange rates used in foreign currency transactions often represent the major hidden cost to retail customers
As well as looking at the exchange rate, for the man on the street, the situation is further complicated as many of the banks charge an additional fixed fee on top.
The research carried out on 19 February highlights how much worse off a customer could be if they instructed their own bank to send a payment overseas.
The difference between the cheapest and most expensive option to send $1,500 to the United States is far more than most people realise.
The lowest cost was £910.14, courtesy of FairFX, closely followed by Caxton FX at £913.80. At the other end of the scale, the same transaction with Santander came to £950.37, and the most expensive, Barclays, charged £954.83, almost £45 more than the FairFX deal.
As a one-off transaction these sums may not sound that much; however, when you consider that some people with property overseas or children studying and travelling abroad are transferring funds every month to cover costs, the annual savings could be about £500 in some cases.
It has been reported that up to 90 per cent of transactions are still conducted through the banks, so there is a huge amount of money to be saved if only consumers took advantage of deals from some of the online brokers such as FairFX, Caxton FX and HiFX.
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Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.ukReuse content