Cost effective way to make an overseas Dollar purchase advice please

biesty

Hi

I need to make a purchase from a company overseas that only takes payment in US dollars and wondered if anyone could help with some tips to make it as cost effective as possible?

I have been told that opening a dollar account might be the best way forward as if things go well then this might become a regular thing. However this is all very new to me and I wondered if there was another way to minimise the bank and currency conversion fees I incurred last time I did this.

Any help / advice would be great.

Thanks in advance.

beansOnToast_3

What is the size of the purchase? And, how are they expecting payment?

If it is something you can put on a credit card, I'd recommend something like Revolut, they give you a virtual or real plastic mastercard that allows you to buy stuff in Dollars and you are charged in Pounds. The conversion is done at the interbank rate which is much much better than letting your own standard credit card or bank do the conversion.

If it is a larger amount and they're expecting a bank transfer (wire transfer for our American cousins), then I'd look into TransferWise. You set up the details of the person you're paying and the dollar amount they are expecting and then Transferwise gives you a local UK bank account to transfer the money into with a special reference code. When they receive the money from you they make the transfer to the person you are paying. Again, the exchange rate Transferwise offers is much better than a standard high street bank.

A Dollar denominated account may be less hassle in the long run, but you have to be very careful about the rates that the bank charges to convert your Pounds into Dollars. I'm not convinced they will match the rates offered by these newer companies like Revolut and Transferwise.

biesty

Thank you,

The purchase will be about 15,000 USD and they will be wanting a bank transfer I think. I've not used transfer company before, how safe is it? Would the money be protected in any way should they go bump or the funds be misplaced?

Thanks in advance.

jonesMUFCforever

biesty wrote: »

Thank you,

The purchase will be about 15,000 USD and they will be wanting a bank transfer I think. I've not used transfer company before, how safe is it? Would the money be protected in any way should they go bump or the funds be misplaced?

Thanks in advance.

Your bank can do an international payment for you (there are other forex companies too).
However once the payment is made its gone....out of your control, no comeback if the goods never materialise.
Even with a credit card payment there is no S75 cover for business transaction.

IMO ask to speak to your international desk at your bank to discuss Letters of credit whereby your monies are secure until such time as your goods have been delivered (to a UK port or depot anyway).

beansOnToast_3

I've not used transfer company before, how safe is it?

Transferwise is safe. They themselves don't hold on to your money for very long at all, usually only a few minutes before they arrange for the payment in Dollars at the other end.

Would the money be protected in any way should they go bump or the funds be misplaced?

Nope. Don't think so. But then no one will guarantee the funds once they've sent them (not even your bank). As long as the person you are buying from gives you the correct bank details and you input them correctly you will be fine. This is probably more of a trust issue with the person you're buying from rather than a company like Transferwise.

If there is lack of trust I've used an Escrow service before (a third party that holds the money until you confirm you've got the product before releasing the funds to the seller). But this service comes at a price and outweighs any savings you might make in trying to get the best FX rate.

paddyrg

$15k is a lot to lose, I'd echo the suggestion to use an escrow service mutually agreed - agree to split the fees $95-odd each from escrow.com ($188.80)

uncletomcobbly

If you sign up for Transferwise through this referral link, you'll get your first transfer up to £500 free of fees.

https://transferwise.com/u/samuelp40

If 3 people sign up, I'll get £50 which I'll donate to BBC Children in Need.