Money Insider: Bank customers pay a high price for sending their money abroad

 

New figures released this week show that high street banks' customers are getting a raw deal when it comes to sending foreign payments overseas.

The numbers show that in order 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 you want to send some money abroad most people will automatically arrange the transaction via their current bank, but this can prove a costly mistake.

Unfortunately a lot of people are unaware that there are 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 in the street the situation is further complicated as many banks charge an additional fixed fee on top.

The research highlights how much extra a consumer could pay if using their own bank to send the money overseas. The difference between the cheapest and most expensive option to send just $1,000 to the USA is more than most people realise.

The lowest cost was £631.71 courtesy of FairFX, closely followed by Caxton FX at £638.53. At the other end of the scale, the same transaction with Santander came to £670.64 and the most expensive, Western Union, charged £671.05, almost £40 more than the FairFX deal.

As a one-off transaction these sums may not sound that much. But when you consider thatpeople with property overseas or children studying and travelling abroad are transferring funds every month to cover costs, the annual savings could be in the region of £500 in some cases. It has been reported previously 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 new breed of online brokers such as FairFX and Caxton FX.

Next time you need to send some funds overseas remember there are other options to transfer money all over the globe that are cheaper, offer better exchange rates and give you the same level of security as banks.

Clydesdale and Yorkshire offer a Helping hand

With all the focus on the Government's latest Help to Buy initiative, it was interesting to see Clydesdale Bank and Yorkshire Bank throwing down the gauntlet with an excellent new 95 per cent LTV mortgage offer.

The interest rate for first-time buyers with a 5 per cent deposit has been chopped from 5.49 per cent to just 4.99per cent for a three-year fixed rate deal even though the bank hasn't signed up to Help to Buy. There is also no arrangement fee, plus a free valuation and £250 cashback.

With only NatWest, RBS and Halifax currently offering products via Help to Buy 2 it's good to see Clydesdale and Yorkshire grasping the nettle and going it alone without waiting for Government guarantees.

According to the latest HomeLet rental index the average rent in the UK (excluding Greater London) is £844 a month. By comparison a £100,000 mortgage at 4.99 per cent (25-year term) would cost £584 per month or £876 for a £150,000 home loan, so if tenants can get their hands on the 5 per cent stake the affordability of home ownership is now starting to make it a more realistic option.

Andrew Hagger is an independent personal finance analyst at moneycomms.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Mortgage Advisor - OTE £95,000

    £40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

    SThree: Trainee Recruitment Consultant

    competitive: SThree: Are you passionate about sales?Do you have a keen interes...

    Recruitment Genius: Loan Adviser - OTE £30,000

    £17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Day In a Page

    Isis in Syria: Influential tribal leaders hold secret talks with Western powers and Gulf states over possibility of mobilising against militants

    Tribal gathering

    Influential clans in Syria have held secret talks with Western powers and Gulf states over the possibility of mobilising against Isis. But they are determined not to be pitted against each other
    Gaza, a year on from Operation Protective Edge: A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians

    Gaza, a year on from Operation Protective Edge

    A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians
    Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously

    Illnesses, car crashes and suicides

    Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously
    Srebrenica 20 years after the genocide: Why the survivors need closure

    Bosnia's genocide, 20 years on

    No-one is admitting where the bodies are buried - literally and metaphorically
    How Comic-Con can make or break a movie: From Batman vs Superman to Star Wars: Episode VII

    Power of the geek Gods

    Each year at Comic-Con in San Diego, Hollywood bosses nervously present blockbusters to the hallowed crowd. It can make or break a movie
    What do strawberries and cream have to do with tennis?

    Perfect match

    What do strawberries and cream have to do with tennis?
    10 best trays

    Get carried away with 10 best trays

    Serve with ceremony on a tray chic carrier
    Wimbledon 2015: Team Murray firing on all cylinders for SW19 title assault

    Team Murray firing on all cylinders for title assault

    Coaches Amélie Mauresmo and Jonas Bjorkman aiming to make Scot Wimbledon champion again
    Wimbledon 2015: Nick Bollettieri - Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!

    Nick Bollettieri's Wimbledon Files

    Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!
    Ashes 2015: Angus Fraser's top 10 moments from previous series'

    Angus Fraser's top 10 Ashes moments

    He played in five series against Australia and covered more as a newspaper correspondent. From Waugh to Warne and Hick to Headley, here are his highlights
    Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

    EU 'family' needs to forgive rather than punish an impoverished state

    An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
    Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

    Gaza, a year on from Operation Protective Edge

    The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
    How to survive electrical storms: What are the chances of being hit by lightning?

    Heavy weather

    What are the chances of being hit by lightning?
    World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

    World Bodypainting Festival 2015

    Bizarre and brilliant photos celebrate 'the body as art'
    alt-j: A private jet, a Mercury Prize and Latitude headliners

    Don't call us nerds

    Craig Mclean meets alt-j - the math-folk act who are flying high