If you have a large amount of money you need to send abroad this step-by-step guide will explain the process, the costs, and the risks so you can make an informed decision on the best way to send and receive your money.
I’ve been involved in large currency transfers for about twenty years. As both a prime broker to currency providers and have run a currency broker specialising in large currency transfers. It may seem complicated, but getting the best exchange rate and preparing for a large foreign currency transaction is simpler than you think if you know the steps involved.
What is the best way to exchange large amounts of currency abroad?
Definitely, use a currency broker. International payments can be made cheaper and faster than your bank. A bank could charge up to 4% in exchange rates costs, whereas a currency broker will normally be under 0.5% from the mid-market. To put this into perspective, if you are sending 500,000 Euros from Pounds, a bank’s exchange rate could cost you up to a staggering $20,000, but a currency broker would charge as little as $2,500. I know this still sounds a lot, but I’ll go into the best way to exchange currency so you can reduce those fees even further.
Using a currency broker can get you the best rates for large foreign exchange conversions.
This is because a currency broker provides much better exchange rates than most high street banks, advice on market timing and also offers currency forwards. Currency forwards let you lock in the currency exchange rate for conversions and transfers for up to one year in advance.
- Related Guide: What currency forwards are and how they work.
Three most important things when exchanging large amounts of currency:
- The price
- The speed
- The safety
We’ll now take a quick look at each key point of a large currency transfer, and further down this article, you can also watch our video interview and discussion on the top three mistakes people make when making large currency transfers.
Price: Getting the best price for large foreign exchange transfers
First, don’t use your bank, it may seem the easy option because you don’t have to open an account with a currency broker but it will be worth it. Opening an account with a currency broker takes a few minutes and once you are up and running, you can convert funds online or over the phone. You’ll also be assigned an account manager to assist with any issues and get you the best exchange rate.
So, not only will you get a better price, you’ll also get more helpful advice.
- Comparison: See our picks of the best currency brokers here
Speed: Currency brokers provide the fastest large money transfer options.
As currency brokers only focus on getting clients money where it needs to go cheaply and quickly, they are able to send money the same day.
So if you need to send a large amount of foreign exchange abroad a currency broker can send the foreign currency out as soon as your funds arrive.
You will also have access to their dedicated online currency exchange portals and your advisors so you can track where your funds are until they arrive.
Safety: Protecting your funds when sending large currency transfers
Firstly avoid scams by doing some basic research. We only feature FCA-regulated currency brokers on Good Money Guide and will have interviewed the CEOs for our reviews,
- Top tip: You can search the FCA register to make sure a currency broker is regulated here.
Never trust any financial services business that is not regulated by the FCA if they are based in the UK.
It’s important to note that, unlike banks, currency brokers are not covered by the FSCS so you don’t get protection if the firm goes bust when your money is in transit. However, regulated currency brokers will segregate client money from their own funds in trusted UK banks.
Five reasons to use a currency broker rather than your bank for large currency exchanges:
- Get the best exchange rate every time – Currency brokers can offer exchange rates that are fixed so you know exactly what your costs are. With transparent rates, it is possible when you transfer large amounts of currency online or over the phone to see both the mid-market and your exchange rate so you can calculate exactly what your fees are. This means that by using a transparent currency broker you can be confident that you are getting the cheapest transfer rate every time without comparing brokers.
- Hedge your currency risk – Hedging currency risk is very simple. If you know that you need to buy say 500,000 in Euros but split up over the year you can use a currency forward to lock in the currency exchange rate for the whole year. Banks generally do not offer this facility. You can date currency forward contracts so you only pay for what you need and when you need it. This means that you don’t have to worry about the exchange rate moving against you and reducing your profit margins.
- Convert and send funds online – As most banking is done online now, it makes sense to convert and transfer large amounts of money online too. Most currency brokers utilise industry-leading foreign exchange platform that gives you 24-hour access to live exchange rates and statements.
- Personal service and expert advice – As well as investing heavily in technology, foreign exchange is at heart a relationship business. That is the relationship with clients, their relationship with the banks, compliance and technology providers who all come together to produce the discounted exchange rates and systems that make money flow cheaply and quickly between foreign countries. Never forget the benefits of picking up the phone and talking to someone who actually knows who you are!
- Know your margin. One of the major issues for holiday home purchases or large foreign business currency transfers is that the costs of foreign exchange are included in the exchange rate. This means you may not be able to see exactly what you have been charged for a transaction. We have put together this guide, which explains how to understand currency exchange rate fees.
A few of the best currency brokers for large currency transfers
You can read more about each of these providers in our currency broker comparison. We have also interviewed the company CEOs and reviewed their services and products. Click on the links below to find out more about each currency broker.
Three risks of transferring large sums of money abroad
Here are the main price risks of transferring large sums of money abroad:
Bad exchange rate risk
One of the major risks when it comes to transferring a large amount of foreign exchange is that you will get a bad price and end up paying more than you should. When you convert funds with a currency broker you can choose the exchange rates and see live-streaming quotes.
However, with a bank, you have no control over the exchange rate, which could cost you thousands if the transfer is large enough.
Currency brokers provide bank-beating exchange rates. A bank can charge up to 4% for a large foreign exchange transfer, whereas decent online money transfer platforms like Wise or currency brokers generally charge less than 0.35%.
You can, in fact, get even better rates with smaller, more personal currency brokers like Key Currency. You just have to ask!
Charges and fees should always be included in the exchange rate, which is calculated as a percentage from the mid-market.
Here’s a snippet from an article in the FT, where Good Money Guide was featured that explains how hard it is to get the best price.
Volatile currency fluctuations risk in currency transfers
Currency exchange rates can move alot, in a short space of time. For example, the price of GBPEUR has moved nearly 4% in the last year. Which is a difference of 20,000 Euros if you are exchanging 500,000 pounds.
- Related Guide: How to avoid currency fluctuations with a currency forward
A currency forward allows customers to lock in the currency exchange rate for a conversion for any time up to a year in the future.
So, if you know that you have to buy say 500,000 Euros in six months’ time you can buy them at the current rate and pay for them in six months.
By locking in the exchange rate you no longer have to worry about the price of Euros moving against you and costing more.
Timing the currency transfer transaction incorrectly risk
As well as providing an online platform where clients can convert and transfer large amounts of currency online currency brokers also have a bank of experienced dealers who can trade for you over the phone.
There are certain times of day when market prices are tighter and it is advisable not to convert currency around certain economic figures, like non-farm payrolls or interest rate updates that are released to the market.
If you have a particularly large currency trade a currency broker can finesse the order into the market so the price does not get pushed by increased volumes.
- Related Guide: How to compare exchange rates.
The process of sending large currency transfers safely
Here are the steps of the best way to exchange large amounts of currency online:
- Open an account with a currency broker – This usually takes a few minutes to register via an online application. You will have to submit your ID so a currency broker can do some required AML checks for the FCA and let you know when your account is approved.
- Check quotes online – Once your account is approved you will get access to their online currency conversion platform. When you are logged in you can view live streaming prices and get quotes for all the currencies offered. When you request a quote you should be shown exactly how much a transaction will cost or how much you will receive. If you do not want to do this online, you can request quotes over the phone or via email from your account manager.
- Doing the conversion – You can choose either a same-day (spot) or currency forward contract which allows you to buy or sell large amounts of currency for any date up to one year in the future. Usually, you do not need to send full funds before you trade as this may slow down the process and mean you miss the cheapest currency conversion price.
- Making the onward payment – After you’ve done the conversion you can add the details of the beneficiary of the funds. This can be either a single person or entity or split into multiple payments. As soon as your funds arrive the currency broker should make the onward payment.
Avoid these mistakes when transferring large amounts of money abroad.
In this video we discuss some of the major mistakes people make which can stop them getting the best exchange rate when they send large amounts of currency abroad.
Getting the best exchange rate FAQ:
Here are answers to some of the most commonly asked questions regarding foreign exchange methods for large amounts of money:
To get the best exchange rate when sending large amounts of money overseas use a currency broker.
For individual large money transfers, you can generally open an account with a currency broker in a few minutes.
There are some fairly stringent checks that currency brokers have to do when sending a large amount of money abroad so don’t be shocked if they ask for some proof of what the transaction is for.
Fortunately, most of these checks can be done online now.
Currency brokers are required by the FCA to make some AML (anti-money laundering) ID checks that can take a couple of hours. Once this is done your account Should be approved and you can convert funds and transfer them abroad either online or over the phone.
If you need to send a friend, family member or a large amount of foreign currency to anyone a currency broker will be your cheapest and fasted option.
You can get the best business fx rates by comparing commercial currency services in our business foreign exchange comparison table.
Traditional business bank accounts are one of the most expensive ways of business international money transfers so make sure you use a currency broker to protect your profit margin and reduce your currency exposure.
Using a currency broker can save you a significant amount of money on large international business payments.
Currency brokers give you the best rates and control over bring large amounts of money back into the country.
Bringing money back to the UK is called repatriation of funds and still involves a foreign exchange conversion.
If you send funds straight to your bank you’ll have no control over the exchange rate or timing so make sure you use a currency broker. The exchange rates will be better and you can choose when to execute the conversion.
Expert dealers, who handle the repatriation of funds every day can also talk you through the process if you would rather deal over the phone than via an online conversion and transfer platform.