Earlier this year, we officially left the EU. However, this still doesn’t change the fact that HUNDREDS of BILLIONS of quid worth of trade flows to Europe annually.
BoJo and company have only to 31 December to draft a trade deal with the European Union. Doing this, along with coping with the Coronavirus outbreak, will be a challenging feat.
What does any of this have to do with financial freedom? It’s simple – the fate of the GBP is tied to investor confidence in our nation. Should we fail to get a deal done, the Pound’s value against the Euro and other currencies will plummet.
In other words, if you haven’t planned to shelter some assets offshore, it’s time you did. However, it isn’t as straightforward as sending cash to a financial institution in Ireland or Spain. If you do it through your bank, they’ll take you to the cleaners.
These days, it’s best to move money online. In today’s blog, we’ll show you how to save heaps of cash by using an online money transfer provider.
Banks Like NatWest Exploit Unaware Customers Every Day
Many of our fellow Britons trust institutions like NatWest. Others are less pleased, but put up with sub-par service out of convenience and inertia. Because of this, they and other financial institutions make considerable profits at the expense of their customers.
A quick back-of-an-envelope calculation shows how bad this can get. Let’s assume you want to move 50,000 GBP to a bank in Dublin. To do it through NatWest, you’d first have to pay a 15 GBP wire fee. Not only that, but you’d have to transfer cash over five consecutive days. This is because NatWest only allows customers to move a max of 10,000 GBP per day – in total, you’ll pay 75 GBP in fees.
According to their site, you’d pay a GBP/EUR rate of 1.0982. Assuming this price stays the same (and in the volatile markets of 2020, that’s a stretch), you’d get 10,965 EUR on the other end after each transaction. All totalled up, you’d get 54,825 EUR.
That sounds alright – but, what if you could move money at the interbank rate? “Wait – what’s the interbank rate?”, you say. In short, it’s the wholesale rate of exchange that brokers use to trade currencies with each other.
As such, there’s no way you could do this in reality, but, bear with us. As of the writing of this article, the interbank GBP/EUR rate was 1.10494. At this price (and without fees,) you would end up with 55,247 EUR.
What should you take away from this example? On a transfer of 50,000 GBP to EUR, NatWest effectively charges you about 450 GBP to move your money. That is nothing short of ghastly.
Online Competitors Offer Rates Within Millimetres of Interbank
Fortunately, you don’t have to give up nearly that much cash. Online, there are dozens of money transfer firms that offer far better rates. Of them, Transferwise is by far the most popular option.
Even when this firm doesn’t have the best rate available, it is usually a close second. Let’s do a quick example using the numbers previously discussed. When you move 50,000 GBP through Transferwise, you get the GBP/EUR interbank rate – 1.10494.
To make money, Transferwise charges a nominal transfer fee. In this case, they charge 0.37% on 50,000 GBP. This charge leaves 49,815 GBP for the conversion. On the other end, you’d get 55,042 EUR – that’s more than 200 EUR more than if you used NatWest.
Other transfer providers offer similar results. Some get a bit closer to a pure interbank trade. Others give a bit less than Transferwise. But, as you’ll see below, there’s often more to a money transfer provider than competitive rates and low/no fees.
Which Online Money Transfer Providers Are Best?
With dozens of players in the online money transfer industry, picking a firm can be tough. Fortunately, there are web resources that can make this task much more manageable. In our opinion, referring to review sites like MoneyTransferComparison.com can help sort them out.
Once its landing page has loaded, you’ll see the firms that are rated “Best” by Money Transfer Comparison. These money transfer providers have attributes that make them suitable to different customers.
World First is great for online sellers, as they offer receiving accounts. They also screen out smaller customers with a minimum send amount of 1,000 GBP. This site lauds Transferwise not just for its competitive rates, but for its industry-leading transparency. And, OFX offers fantastic customer service with its team of dedicated dealers.
Protect Yourself In These Uncertain Times
It’s time to get off the fence. It’s far from certain that the British government will sort out the EU trade deal by year-end. Waiting could end in disaster, as a massive GBP drop could wipe out the value of your savings.
Instead, use a money transfer provider to establish an offshore hedge. You’ll save money versus what your bank charges, and there’s no downside. Get it done – your financial future may depend on it.