If you’re making or receiving a large payment in a foreign currency, then it’s important to consider how you go about completing the transaction.

While you can simply make a bank transfer, your best bet is normally to use an online currency transfer firm that offers competitive exchange rates.

In this article, we explain more about how to transfer money to or from the UK and the best ways to make the transaction.

What’s the best way to transfer money to or from another currency?

For many people, the only time that they have to think about exchange rates is when they are going on holiday.  You might use a bureau de change for holiday cash, or perhaps a travel credit card or prepaid card. You can read more about these in our articles Travel money: where can I find the best exchange rates? and What are the best cards to use abroad?

However, when it comes to converting and transferring large amounts, you will find that there are much more cost-effective ways of sending or receiving your funds. The best way to pay will generally depend on the circumstances.

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When to use your bank

There are certain situations when using your bank may be your best bet. While banks tend to charge a fee for international transfers, if both accounts involved in the transaction belong to banks in the same banking group, you can sometimes make a fee-free payment. This could be a good option if you are making a regular transfer to a family member living abroad, for example.

For example, with HSBC, you won’t be charged for sending  money to any other HSBC account. It also doesn’t charge fees for payments in euros to countries in the EU, Iceland, Liechtenstein and Norway. Or, if you open a State Bank of India UK account and keep at least £500 in it, then you can send money fee-free to any Indian bank account also in your name.

The downside of this option is that banks tend to offer weaker exchange rates than specialist foreign exchange firms, so you may not be getting the best value for your money. If your bank does charge fees for international transfers, you should check how this is calculated as well to avoid being caught out.

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When to use a specialist firm

If you’re making a large transaction overseas, such as buying or selling a property or preparing  to live abroad, then you might want to consider using a company that specialises in large-scale international payments. These firms tend to offer better rates for the amounts you’re dealing with, and minimise the risk of being caught out by fluctuating currencies.

Some specialist firms will charge you a fee for transferring with them, calculated either as a percentage of your transfer or as a flat rate, but this tends to be considerably lower than the fee charged by a bank. Many companies will not charge a fee, though beware that this is sometimes because the rates that they offer are less competitive.

Some of these services allow you to set a “target” exchange rate, and will contact you automatically when it becomes available. They also tend to let you “lock into” favourable rates for a year (or more) so that you won’t be affected if the rate worsens before your transfer completes.

Your transfer might take a few days to process, though this depends on the amount and which country you’re sending to or from. Some services offer an instant transfer option at a higher cost.

Here are a few highly-rated specialists in international money transfers that offer competitive conversion rates:

  • Currencies Direct: Currencies Direct boasts an almost-perfect TrustPilot rating of 4.9, and tops many website’s rankings for the best international money transfer services. They do not charge transfer fees for transactions over £100, and offer 24/7 customer support. They support over 40 different currencies.
  • TorFX: Also boasting a Trustpilot rating of 4.9, TorFX has received the Moneyfacts Consumer award for Exceptional Money Transfer Provider every year since 2016. They will assign you a Personal Account Manager to work with you on your transfers when you create an account with them. TorFX also does not charge transfer fees.
  • Wise (formerly TransferWise): With a TrustPilot rating of 4.5, Wise offers some of the best conversion rates at the time of writing. They do charge transfer fees, though these tend to be relatively low, and often worth it for their competitive rates.
  • Moneycorp: The oldest broker on this list, Moneycorp has a TrustPilot rating of 4.4. Like Currencies Direct, they do not charge transfer fees, and support over 120 different currencies.

Shop around to compare the rates these companies and others can offer you. Some websites will have a free calculator or publicly display their current exchange rates, whereas with others, you may need to create an account before you can see their rates. It’s worth putting in the effort, though, as you will likely make considerable savings from finding the cheapest option you can. Remember that even a 1% difference in rates can represent a hefty chunk of money when it comes to large  payments.

Transferring money to the UK

If you are moving foreign currency to the UK – for example, if you have sold a property abroad – then make sure you have opened an account with your chosen transfer company early on in the process. This way, you can ensure that the money is transferred to this account rather than your usual bank account. If you have a lawyer helping with an overseas sale who will be in charge of transferring the funds, make sure they know which account to transfer to.

Is my money safe with these firms?

Be aware that your money does not have the same protections with exchange rate specialists  as it does with a UK savings provider. If you were allowing an unregulated firm to hold your money and they went bust in the process, there would be no guarantee of getting it back.

However, if a firm has been authorised by the Financial Conduct Authority (FCA), it is required to separate customer money from its own funds at the end of each day and store it in a dedicated bank account in order to safeguard it. If the firm has done this correctly, your money should be adequately protected and you should be able to get it back if they run into difficulties (although it could take a while, as there is no set timeframe for this process).

All of the firms listed in this article are FCA-authorised. You can check if a particular firm is authorised by the FCA using the search tool on their website. Bear in mind that simply being registered is not the same as being authorised by them – there will be a label on any firms in the search results that are no longer authorised, or never were to begin with.

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Understanding conversion rates

Conversion rates can be extremely unpredictable and difficult to keep up with. Companies that specialise in international transfers will tend to provide some protection against this (such as letting you lock in at favourable rates) but this may not be much help at certain times when the pound is particularly weak. To learn more about the pound’s recent drop in value, read our article How does the falling pound affect me?

In these circumstances it may benefit you to speak with a currency specialist or financial advisor. The company you are using might offer this service, or you could look for advice yourself. Doing so could bolster your understanding about the current economic climate and the likelihood of an improvement in rates in the future. Read our article Should I get a financial advisor? to learn more about getting advice.