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International Money Transfers

by ViTo • July 1, 2010 Comments off

Having lived abroad for the last 6 years, one of the situations I had to deal with was transferring money between countries and typically also between currencies. When I was a student, I never paid much attention to it, but lately I realized what a scheme the whole process is… so let me share my experience with you.

Usually, any bank will do that transfer (via wire) for you and charge you a fee that goes from 0 to 50$. It is not that expensive and the money will get there in a couple of days, right? riight!? The only problem is any of those banks will charge you an outrageous conversion rate between currencies. To give a specific example related to my case, I called Citibank a couple of weeks ago inquiring about the euro-dollar rate. At that time, you could check it online and it was around 1.30$ per euro. However, this is the info they gave me (it changes daily):

Maybe that seems normal to you but it is a huge spread. I searched online and basically all banks will have similar spreads. I was even willing to try unorthodox solutions like PayPal, but even they charge conversion rates not close to the “right” value. Continuing with the quote from Citibank, if you wanted to transfer 10,000 USD to Euros, the conversion rate quickly becomes significant:

10,000$ * 1.37 – 10,000$ * 1.30 = 10,000$ * 0.07 = 700$ lost

After some more search, I found OANDA, an online currency trading broker ( http://www.oanda.com ), which will charge you the same rate as banks charge to each other (interbank rate). From the previous example the spread would be much smaller, something like 1.2995 to 1.3005 and they give you a rate down to the minute.

Online FX broker

Assuming you don’t trade currencies, all you will need from OANDA is the Global Transfer service, which lets you transfer money to a bunch of countries for a 25$ fee and the right currency rate.

OANDA Global Transfer Example

If you want to check it out for yourselves, here are their currency rates: OANDA Currency Converter. You can get the same updated information from Citibank in the US by calling here:
For exchange rates, call the 24-hour Exchange Rate Hotline at 1-800-756-7050 and press option #1.

I hope this helps you. I know I already saved over 2,000$ in the last months…