Some people use the expression that time is money and when it comes to completing a deal or paying for something urgently, there is certainly an element of truth in that statement.

If you need to get money to someone abroad safely, securely and swiftly, you will need to find the right system and someone you can trust with your funds and is properly regulated as well.

Companies such as ACE FX bureau de change are used to handling transactions like these every day, but it is important that you get an understanding of how foreign exchange money transfers work, so that you can make an informed decision and choose the right one for your particular needs.

Banks Love Sending Money Abroad

Any overseas money transfer request is normally met with a broad smile by your bank as its big business for them and generates a fair amount of profit for them as well.

If you are planning on buying a property abroad or maybe even going somewhere else to live in the world, this will involve sending a large sum of money abroad.  Even if you want to transfer money into a foreign currency for a holiday, you should always try to get the best possible deal for your money, as what may appear as a small percentage difference in rates, can quickly add up to be expensive.

A good example of how a seemingly small commission rate difference can impact on your savings would be if you were planning on funding a house purchase abroad and needed to send £100,000.  Every 1% variance in the exchange rate means an extra £1,000 of your money on fees, so it definitely pays to shop around.

money transfer to nigeria by secretlondon123, on Flickr.  This work is licensed under a Creative Commons Attribution-ShareAlike 2.0 Generic License.

Foreign Exchange Brokers

Using an FX broker could be the way to go if you want to get your foreign money at a rate that is going to be more competitive than the one offered by your bank.

Your first port of call should be to ring your bank and get a quote from them, so that you know how much it is going to cost you in total for the transaction.  Armed with that price data, take a look at some FX brokers and see the difference in charges.  You will probably find that the commission charges are lower than your banks and therefore offer you a potential cost saving that is well worth having.

You do have to compare like for like and take into account any special discounts or offers that your bank might offer you as an existing customer, but there is no point paying more for an FX money transfer just because you already have a relationship with your bank.

How it Works

If you decide to use a foreign exchange broker, they will probably only start to offer fee-free transfers over a certain amount, probably in the region of £3,000 or more.

FX brokers make their money on the exchange rate, so you will find plenty of no-fee brokers around, which makes price comparisons even easier as a result.

To make the transfer, you will need to open an account with the broker and pay funds into it.  Allow a couple of days to get the account set up and then when you are ready to send the money, you have several choices open to you.

You can either send money abroad using the current exchange rate being offered or you could take out a forward-contract, which will lock in the exchange rate for a future trade.

These forward contracts can be very cost-effective if you know that you will need to send a large amount of cash abroad at some point in the near future.

Talk to the broker and tell them what you want to do and when, if you are unsure what the best option is for you.

Edward Gill has been a Forex trader for several years now.  When he’s not busy trading, he’s writing about it in order to help newbies to the market.  Look for his illuminating articles on a variety of websites and blogs.