It’s no secret that you should use a currency broker instead of your bank. But Why? Here we highlight why you should use a currency broker instead of your bank.
Watch our video in which we talk to Mark Phipps from Linear International Payments and answer these questions:
Here are the top ten reasons why you should use a currency broker instead of your bank for large international money transfers.
- Better exchange rates: You’ll get a better exchange rate with a currency broker
- Risk management: Banks generally don’t offer forward contracts to lock in an exchange rate
- Personal Service: A currency broker will offer you an account manager to hold your hand through the process
- Advice: You can call up a currency broker almost any time to ask for advice and progress reports
- Timing: With a currency broker you have more control over the timing of a transaction
- Price: You can use limit and stop-loss orders to get a better price with a currency broker
- Hedging: Currency brokers offer a variety of ways to protect your foreign exchange exposure
- Options: Some currency brokers offer OTC FX options for buying and selling currency
- Receiving foreign currency: if you receive a foreign currency into a UK bank they will generally convert it automatically giving you no control over costs and pricing
- Transparency: currency brokers can give you a fixed percentage mark up on your conversions.
Of course, there are sometimes occasions when a currency broker is not better than your bank.
Here are a few reasons why a bank may be more appropriate than a currency broker.
- Small transactions: sometimes currency brokers will only convert £1,000 upwards
- Convenience: you’ll need to open an account with a currency broker, but you will already have one with your bank.
- Pricing: It will be more expensive to send money through your bank, but if it is just a one-off small amount the price may not matter versus the time it takes to open a currency broker account.
- FSCS protection: currency brokers are not covered by the FSCS (Financial Services Compensation Scheme) so your money is potentially more at risk if the currency broker goes bust
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Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.