A few things to consider before settling on a particular money transfer service company to employ when making an overseas transaction. Here are some definitions of words related to money transfers, as well as some general advice that will assist you in making a decision.
It’s almost important to choose the right card that allows you to make international money transfer service easy. Whether it’s sending money to your child for overseas education or relatives, a card that offers the best rates and takes the least commission is very important. Below are some key terms and information you must know when using a money transfer service.
Exchange Rates for Moving Money
Three different rates are used to calculate the total cost of your money transfer and the amount of money that will be sent to the receiver.
- The rate of exchange
The value of one currency expressed concerning another currency is referred to as an exchange rate. If you wish to convert U.S. dollars to euros, you would first determine how much one U.S. dollar is worth in euros.
- Midmarket rate
The midmarket rate, also known as the interbank rate or the interbank exchange rate, is the exchange rate used by major financial institutions when trading currencies with one another.
- Exchange rate markup
When determining the cost of your transfer, most providers include an exchange rate markup. To generate a profit from the transaction, they offer clients a rate of exchange composed of the midmarket rate plus an extra percentage, often known as a markup. This can be a lot. But, with the right card from companies like Niyo, you should be in good hands.
Learn how currency rates operate
Markups on the exchange rate are one of the ways that companies that facilitate money transfers generate revenue. The majority of suppliers of money transfer services will supply you with a different conversion rate than you would obtain on a currency exchange platform such as the one found on Bloomberg.com or Reuters.com.
These websites will only provide information on the price of one currency concerning another; nevertheless, they are a great starting point for determining which currency exchange rate is currently the best. When you check the conversion rate for an international transfer using services such as Western Union, you should concentrate on the exchange rate markup by looking at the quantity of the foreign currency sent. Your receiver will get a more significant amount of money, and the markup on the item will be reduced the higher it is.
Compare total transfer fees among several providers
There are two different expenses: the initial charge and the markup on the conversion rate. Find the service provider with the most significant exchange rate while charging the lowest possible cost. In most cases, online nonbank providers can provide transfers at lower fees than banks.
Try to avoid using a credit card wherever possible
It is a choice that may be made with some service providers; however, the initial price may be more significant, and your credit card issuer may throw on additional expenses such as interest and fees for cash advances.
A transfer paid for by a bank account is often significantly cheaper than other transfers, although slower. Use a debit card if you need money delivered immediately; the fees associated with using a debit card are cheaper than those associated with using a credit card.
