Consumers today looking to send money overseas have more options than ever when it comes to which money transfer method should be used. The best method depends on where the money is being sent, the amount being sent, the amount of time that can elapse before the money needs to be received, and the level of convenience to the sender of the funds.
Whether you're sending money through your local bank or post office, through a money transfer service, or through a website that facilitates money transfers, there are a few key questions that you should ask to help make the best decision for your situation.
What are the fees?
No matter how you choose to send money to foreign countries, there is usually a fee involved. The fee can depend on many things, including the amount being sent and the speed at which the funds need to arrive at their destination. It is common for a fee to be charged for sending the money as well as for receiving the money on the other end. The fee can be flat, and is occasionally based on a percentage of the amount of money being sent. Fees can also be hidden in the way exchange rates are calculated, so be careful!
How is the exchange rate determined?
Exchange rates are constantly changing, so it's important to know when the rate will be calculated to convert your US dollars to the foreign currency. If your recipient is expecting a set amount, it's important to understand whether the currency is being converted at the time it is sent or at the time it is received. This can make a substantial difference in the amount that actually makes it to your recipient.
How does your Recipient access the Cash?
Some methods today are so convenient that the recipient can swipe a card at any ATM machine to access the cash that was sent. Other methods require the recipient to be present in a bank or in front of a money transfer agent in order to receive the money. Think about your recipient and finding a method that is most convenient on both ends. The banking systems of foreign countries also need to be considered when sending cash, as some are more developed than others.
What additional charges should I watch for?
The biggest hidden fee that many money senders are not aware of is charged by their own credit card company. Several money transfer methods allow for a credit card to be used to send money worldwide. What is not always clear is that this is considered a cash advance on your credit card, which can carry hefty charges.
These fees can be as high as 4% of the amount of cash that is accessed, making a simple transaction much more expensive than you might have planned for it to be. This can be avoided by using a debit card, which taps into money in your checking account directly.