Foreign currency transactions

[Chris B]

I need to pay money to Swienty in Denmark sometime over the next few weeks.

The invoice is in euro.
I've always just gone down to the bank and arranged a transfer of funds in the past.
However, it was suggested to me recently the exchange rate used for such a transaction isn't the best value. Credit cards charge a foreign transaction fee but what exchange rate do they use? I'm looking for the cheapest option and it's proving to be quite difficult to work out what that is. Neither the bank nor credit card company make it easy to find their exchange rates.

Any advice anyone?

 

[Dusty Rhodes]

You say you've got a bit of time before paying.

I'd suggest getting a Halifax credit card, just for holidays and foreign transactions.

They give a straight rate and don't whack on the charges.

But don't take my word for it. I use Money Saving Expert as a reliable source of consumer-friendly financial info. [And, yes, I do know Martin Lewis sold the site last year. I still trust it.]

Take a look at:

http://www.moneysavingexpert.com/travel/cheap-travel-money

Dusty

 

[Chris B]

Thanks Dusty,
I wish I'd got onto it earlier. I might just have time to get one but it's tight.

 

[Black Comb]

Check out Nationwide, in the past my daughter has used them and said they were the cheapest. Need to ensure this still applies.

 

[itma]

Don't just look at the exchange rate.
Look at the total cost - which involves finding out ALL the charges.

Which one happens to be the best deal will almost certainly depend on the amount of money involved.
So "do the maths" on your specific amount.

You can't predict future rates.
But you can compare historical ones. What would it have cost (via different intermediaries) to do the deed yesterday?

 

[bees4u]

I need to pay money to Swienty in Denmark sometime over the next few weeks.

The invoice is in euro.
I've always just gone down to the bank and arranged a transfer of funds in the past.
However, it was suggested to me recently the exchange rate used for such a transaction isn't the best value. Credit cards charge a foreign transaction fee but what exchange rate do they use? I'm looking for the cheapest option and it's proving to be quite difficult to work out what that is. Neither the bank nor credit card company make it easy to find their exchange rates.

Any advice anyone?

HI chris when I buy from abroad, I use Globel web pay. and it's a good rate & they only ever charge about £3-4 best thing I ever did changing to them
http://www.globalwebpay.com/ you can check the price before send the money etc. regards J

 

[alanf]

But don't take my word for it. I use Money Saving Expert as a reliable source of consumer-friendly financial info. [And, yes, I do know Martin Lewis sold the site last year. I still trust it.]
Take a look at:
http://www.moneysavingexpert.com/travel/cheap-travel-money
Dusty

Quite, I use a Nationwide Select card. Their debit cards used to be the best value too, no loading but that deal was replaced with a 'free travel insurance' for European areas. Not had occasion to try out that service yet.

 

[Chris B]

Thanks All,

I've had a number of conversations about this now.
Every option has a cost!
If I pay by any sort of card Swienty are charged 2.85%. Depending on the card provider I am also charged up to 3% via exchange rate loadings.
Paying via bank transfer costs me 3.75% via exchange rate loadings plus upwards of £10 fee depending on size of transaction.
You can also use services like globalwebpay (thanks bees4u). They also charge you via exchange rate loadings but not usually quite as severely as banks and credit cards. However, they are not subject to the same guarantees as banks so you could be more exposed in the unlikely event of something going wrong.
I did also look at the cost of running a euro account at a UK bank and Barclays do offer that as part of a business package. It works if you buy and sell in euros, which I do to a degree but the account has an ongoing charge in addition to your sterling account so the volume needs to justify it, which it doesn't, and it adds an extra dimension to cashflow so overall a non-starter.

So after all that I'll just transfer the money and comfort myself with the thought we are all shareholders in Lloyds so it's for the good of the nation.

 

[VEG]

what about paypal?
I dont know the costs but could be worth a look if they accept it of course

 

[enrico]

Use PayPal it doesn't cost the payee but it does cost the receiver! Just pay a little extra to cover that cost

 

[blackcavebees]

Have you looked into setting up an account with currencies direct or GCEN or similar? Once you've setup the account (free) and jumped through the normal money laundering hoops (ID verification etc) you can send payments to euro countries using your UK debit card, debited funds in £s, no currency surcharge and euro ex rate usually better than high street bank. Only downside is can take 7-10 days for money to hit bank in eurozone, ok if you have time to schedule it.

 

[alanf]

If I pay by any sort of card Swienty are charged 2.85%. Depending on the card provider I am also charged up to 3% via exchange rate loadings.
Paying via bank transfer costs me 3.75% via exchange rate loadings plus upwards of £10 fee depending on size of transaction...

Banks make the most of their position as gatekeepers by adding as many charges as they can get away with. The two fundamentally different ways of moving money are that you make a transfer (and you pay the fee) or they charge your card (and they pay the fee). Within cards the fundamental division when accepting them is credit cards where the merchant pays a percentage and debit cards where the merchant pays a set fee. The complication is the currency exchange where your card issuing bank gets another chance to make a charge. The charge is because they can, they don't do anything for the fee. I guess, since Swienty have invoiced, that it's a negotiated amount and assumes they will not be paying any transaction fees.

The merchant percentage Swienty quote for a credit card is in the 2-3 % range most businesses are charged for Visa and Mastercard, it depends on how big they are and if they need card processing more than the processors need them. When you say 'any sort of card' that percentage is almost certainly for credit cards with a Visa or Mastercard logo. Amex would be more, a debit card should be a fixed amount under 50p. Those charges are negotiated by them with their payments processor, nothing you can influence. If a rate of exchange is involved it uses the rate set daily by Visa (or MC). Any charges your card issuer adds appear on your statement as a percentage on that rate, usually plus a transaction fee for cash if you're using an ATM, this is known as the loading and it varies.

Banks are notoriously cagey about the loading, most transactions just appear on a statement as 100 euros withdrawn charge 89 pounds. What minimises the charge for both of you, if you're negotiating a one off payment for goods in the 100s or 1000s range is to use a debit card where the loading is minimal. If you negotiate to use a debit card, their costs are fixed and it's up to you to find one with low charges on your side. The obvious card used to be a Nationwide flex account which had no loading. But they stopped that a few years ago. Moneysavingexpert is as up to date reference as any, and notes Metro bank have a no loading debit card, but limited branch network.

As Brecht said, "It is easier to rob by setting up a bank than by holding up a bank clerk".

 

[itma]

Bit late, but noticed this on The Guardian website today (in the review of money-saving Apps)
http://www.guardian.co.uk/money/2013/apr/12/10-best-money-saving-apps

Azimo

Works on: iPhone and Android

Cost: Free

Azimo lets people transfer money from the UK to more than 100 countries at a fraction of the rates charged by banks or money transfer services.

To send money, users need to register and enter the recipient's bank account details. Azimo charges about 1% of the value of the transaction, up to a maximum of £15 per transaction.

The app claims big savings versus other money transfer methods. For example, sending £500 from the UK to Poland would cost £42.50 at a typical high street bank, £32.64 with Western Union, or £19.70 through PayPal. Amizo would set you back just £6.25.

The interesting thing to have compared would be the sterling (£) cost of getting €500 (not £500) to Poland ...