Is my bank ripping me off on international money transfers??

alokanvekar

Hi All,

Hoping you guys may be able to help! I transfer money abroad using my banker, Natwest. I have seen that the exchange rate I get from the is far lower than the actual rate. I check the actual rate either on websites like X-rates, or the BBC.

I do pay a seperate Natwest commission for the transfer plus additional Agent's commission

Would anyone know how I can find out if my bank is not ripping me off by charging me a lower rate? Also, can I rely on the above websites to give me an accurate rate check?

Any advice here will be much appreciated

Thanks

Al

lorweld

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Extant

alokanvekar wrote: »

Hi All,

Hoping you guys may be able to help! I transfer money abroad using my banker, Natwest. I have seen that the exchange rate I get from the is far lower than the actual rate. I check the actual rate either on websites like X-rates, or the BBC.

X-rates, by their own admission, gathered the majority of their rates from places such as the International Monetary Fund, and some central banks as well. The rates quoted are there for going to be whole sale rates - rates that you'd get if you were trading on the Forex markets, and trading for significant amounts of money (at least £1m).

I do pay a seperate Natwest commission for the transfer plus additional Agent's commission

Would anyone know how I can find out if my bank is not ripping me off by charging me a lower rate? Also, can I rely on the above websites to give me an accurate rate check?

No, they're not ripping you off - the rate they use will include some profit, but it will also reflect the smaller amounts of money being trade. Typically, most banks will offer a better rate if you exchange a larger amount of money - £20k, for example.

You're not forced to use Natwest, you're choosing to use their rate. There are alternatives out there for these transfers where you may get a better rate. You're not being ripped off, you just need to shop around - services cost different amounts in different places, as with any market place.

chookie1

BarclaysManager wrote: »

No, they're not ripping you off - the rate they use will include some profit, but it will also reflect the smaller amounts of money being trade. Typically, most banks will offer a better rate if you exchange a larger amount of money - £20k, for example.

You're not forced to use Natwest, you're choosing to use their rate. There are alternatives out there for these transfers where you may get a better rate. You're not being ripped off, you just need to shop around - services cost different amounts in different places, as with any market place.

I think you're being a bit disingenuous here. The rate that high street banks charge includes a huge wodge of profit - not uncommon to be 2+% away from the spot rate even on USD. And yes I know that's the benchmark for wholesale FX but speaking as someone who's traded in those markets I know that you can transact much smaller amounts than $1mm within 50bp of spot.

I don't begrudge banks the amount they charge (much) for holiday cash - after all they've got to deal with the notes and such, but it's pretty ridiculous how much is ripped out on electronic transfers.

I take your point that you can shop around, but unless it's a big amount it's a huge hassle and is it so unreasonable to ask the bank that you have a "relationship" with to act in a reasonably fair way?

Waldir

Moneybookers was the cheapest way to transfer money abroad until recently, but they increased a bit their margin lately. They are still a lot better than banks.
You can check XEtrade as well.

You can use these 2 websites to check what rate they offer, and compare with your bank...

Extant

chookie1 wrote: »

I don't begrudge banks the amount they charge (much) for holiday cash - after all they've got to deal with the notes and such, but it's pretty ridiculous how much is ripped out on electronic transfers.

There's massive costs in running anything international, be it cash handling or transfers - there's invariably a staff to pay for, the reams of regulation, etc.

"Ripping out" or not, it is fairly obviously not all going to be profit.

97trophy

As above try Xetrade.com for future fx payments

chookie1

BarclaysManager wrote: »

There's massive costs in running anything international, be it cash handling or transfers - there's invariably a staff to pay for, the reams of regulation, etc.

"Ripping out" or not, it is fairly obviously not all going to be profit.

Granted, and I know that even banks have to make their crust, but whereas holiday cash has many costs in handling cash, paying for the cashier to man the desk and so on, electronic transfers have miniscule costs. All done by computer without human involvement - don't tell me that costs 2% per transaction :-) The computer's long paid for, and the regulation is the same cost for 1 million transactions as 1transaction.

jonesMUFCforever

Who enters the transactions on the computer?
From your own experience with home computers you must know that that from nearly the first instance you open the box it soon becomes out of date.#

The charge is clearly marked for you - you don't have to use it if you don't want to.

Finally who pays for the lease of the building, rates, electricity,gas, water,office equipment,staff costs,etc ???

superstar_2

HBOS charges £19.50 if done at the branch or £9.50 if done online.

chookie1

jonesMUFCforever wrote: »

Who enters the transactions on the computer?
From your own experience with home computers you must know that that from nearly the first instance you open the box it soon becomes out of date.#

The charge is clearly marked for you - you don't have to use it if you don't want to.

Finally who pays for the lease of the building, rates, electricity,gas, water,office equipment,staff costs,etc ???

Mmm quite surprised how many people are on the bank's side on this one!

Don't get me wrong, I'm not suggesting that it should be free. What gets me is two things

- the fixed transactional cost for a bank is much the same whatever the size of transaction - it takes just as much time to type in $200 as $2,000 or $20,000 - yet because the cost is a % (and I'm talking here about cost in the exchange rate you get not a fixed 10 pounds or whatever) bigger transactions cost you more. Anyway in most cases the person who enters the transaction on the computer is me through online banking or a credit card. And the charge actually isn't clearly marked because they certainly don't advertise what the difference will be between their rate and the FX "spot" market rate.

- and this difference between their rate and the market rate is *huge*. Fair enough to a degree on a tiny $50 transaction - you wouldn't expect to get the wholesale rate and the cost isn't that much in real money (although in reality what they do is bundle lots of these transactions up and do them in the wholesale market or just offset between people going different directions and make money both ways). But if I want to eg buy a house in Florida and need to buy $100,000 which you could do in the wholesale market you still get a terrible rate from any high street bank. Yes I could go to a specialist broker but why should I have to other than my bank takes me for a mug.

Anyhow - rant over!