Three Top Tips When Receiving Large Amounts of Money from Overseas
If you are receiving large amounts of money from overseas you could save money by using a currency broker to handle your transaction.
Using your bank when you receive money from abroad can be very costly as you have no control over the exchange rate, timing of the conversion and whilst small relative to the foreign exchange rate costs there are usually various administrative costs to pay when receiving large amounts of money from overseas.
Here are our top tips to reduce costs when receiving large amounts of money from overseas.
1. Look for the Best Exchange Rate
A currency broker can offer exchange rates that are far better than any bank will offer. For example conversions around £100,00 equivalent, this could mean receiving at least £4,500 when funds arrive.
To get a quote and see how much money a currency broker can save you when receiving large amounts of money from overseas you can compare currency transfer services here.
2. Try and Have Some Control of the Timing of the Transaction
One of the biggest issues with receiving money from abroad is that currency prices move all the time and misjudging the transaction time can have a serious impact on how much money from abroad you will receive.
For example, if you are receiving EUR 500,000 a difference of just 3% in price amounts to EUR EUR 15,000.
It’s not difficult to get some market timing advice when dealing with a currency broker. Banks don’t usually allow their clients to set limits, work stops or stop entries, but with a currency broker you can set your ideal rate or take a little risk if you think the currency will move more in your favour.
3. Hedge Your Risk With a Currency Forward
If you know you have a set amount of foreign currency coming in at some date in the future and that currency is for a GBP purchase then the sensible thing to do is to lock in the current exchange rate for that future date. This can be done with a currency forward contract, which means you put down a small deposit of the total value of the trade as a deposit, then only pay the balance when it settles.
So for example, if you have $500,000 coming in from America at today’s rate (1.26) that is £396.825. However, if the currency moves against you to 1.40 then that $500,000 will only be worth £357,142 – which means by not hedging your currency risk you have to come up with another £40k to make the same purchase.
To find out more you can read our guide on preparing for a large foreign exchange transaction here.> Compare Currency Brokers >