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May 24th 2020

How to send money abroad without spending a fortune

Tips what to do and what to avoid when sending money abroad.

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Loic Champlong

Whether you move to the United States for school, work, or another reason, you’re likely leaving behind friends and family. Sending money home — often known as remittances — can be a wonderful way to support your loved ones. 

Fortunately, there’s been a lot of innovation in the money-transfer space and competition between money transfer companies has pushed down the cost. However, the growth also means there’s more to consider and compare before you send money.  

4 options for sending money internationally

There’s no overall best option or company if you want to transfer money. Whether you’re looking for the cheapest way or fast service over saving a few dollars in fees, you’ll want to compare at least a few of the popular options:

  • Mail cash, a check, or a money order. This may be the worst option as you’ll have to pay for shipping, wait for the mail, and the recipient could still have to pay to exchange the money into their local currency. It also may be the least secure. 

  • Make a transfer or send a wire from your bank. If you’ve opened a bank account in the US, you may be able to make a bank-to-bank transfer or wire transfer from your account to a recipient's bank account. 

  • In-person money transfer services. With traditional money transfer services, such as Western Union and MoneyGram, you can pay with cash and the recipient can pick up the money in-person. These two behemoths in the industry aren’t stuck in the stone age, though, and offer many online and mobile services as well. 

  • Online money transfer services. There are also a variety of online-only transfer services, including OFX, PayPal, RIA, Remitely, TransferWise, and Xoom that offer international transfers. These online services may be more secure, quicker, and potentially less expensive than traditional options.  

Setting mailing aside (as it’s the least secure option and won’t necessarily save you a lot on fees), here’s what you should consider when comparing the other three. 

What to consider when comparing money transfer services

Money transfer services may have different limitations and benefits. Keep these in mind when you’re trying to figure out which service to use:

  • Does the company offer transfers to your home? This should be one of the first things you check. Many companies offers transfers to dozens or hundreds of countries, but you’ll want to make sure your destination country is on the list. 

  • How long does a transfer take? With some services, the recipient can pick up cash or receive the money in their account within minutes. With others, it could take several business days. The timing can vary depending on how you pay for the transfer, the delivery option, and where you’re sending money. For example, using a debit card could be quicker than a bank account transfer, although you may have to pay an additional fee to use a debit card. 

  • Are there maximum and minimum transfer amounts? Think about how much money you’ll usually send and make sure it’s within the acceptable range. You may run into limitations if you’re sending a particulary large or small amount of money. 

  • How can you fund the transfer? You may be able to use cash, a bank account, debit card, or credit card. However, the fees and transfer time can depend on which payment method you use. If you think you’ll favor a specific method, look for a company that offers low fees for that type of funding. 

  • How can the recipient receive the money? Companies may offer cash pickup and delivery services or electronically deposit money into the recipient’s local bank account or a mobile wallet. Consider what will be most convenient for you and the other person. 

Some factors are harder to quantify, such as whether the company offers high-quality customer service or has an easy-to-use website and mobile app. 

If you’ve narrowed down your list of potential options, you can look for reviews of the services online and read about others’ experiences. You can also ask friends and colleagues what service they use and whether they recommend it.  

Common international money transfer fees

Unfortunately, sending money isn’t free. The fees can vary depending on where you’re sending money, how you’re sending money, and the financial institution or money transfer service. Here are the common fees to look for and compare:

  • Upfront fee. You may have to pay a fee to add money to your account and initiate a transfer. Generally, there’s either a flat fee, which could be best for larger amounts, or a percentage of the amount you’re sending, which is best for smaller amounts. Or, you may have to pay a combination of a flat fee and percentage fee.

  • Wire transfer fees. If you’re sending money using a wire transfer from your bank account, you may have to pay a wire transfer fee.

  • Currency exchange fee. Some services will charge you a fee for converting money from one currency to another. 

  • Exchange rate markups. Additionally, services may offer you a less-favorable foreign exchange rate and pocket the difference. 

  • Cash advance fee. If you use a credit card to fund your transfer, your credit card company may charge you a cash advance fee.

  • Receiving fees. The recipient may need to pay a fee to pick up the money, or their financial institution may charge them a fee when the money gets deposited into the account. For example, some banks charge an incoming wire transfer fee. 

Many factors can affect the cost of your transfer, but you can generally check how much the transfer will cost (or see how much the recipient will get) on the transfer service’s website. Additionally, there are comparison services like as Monito and FXcompared that let you quickly compare the fees, exchange rate, and transfer speeds of different services.

Getting started

Once you’ve settled on a service provider, you may need to create a new account before you can send money. Sometimes, you can also save money by looking for promotion codes that waive or lower fees on your first few transfers. 

Before you can send money, you’ll also may need information about the recipient, such as their name, mobile phone number, bank account number, International Bank Account Number, or their bank account’s BIC/SWIFT code. 

You can then send money directly to the person’s account, or initiate a transfer and give the person a code that they can use to pick up the cash. Some services also let you and the recipient create mobile wallets, which you can use to send to quickly send money back and forth. 

And that’s it. While the initial comparison and setup can take time, once you’re ready, sending the money is often a quick and easy process.

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