Whether you are sending money home to family, making a payment overseas or needing to send emergency funds to a child, there is now a bewildering multitude of methods available to you.
You can do it by; bank wires, moneygrams, checks, preloaded debit cards or credit cards, specialist money transfer companies with offices around the world, PayPal, foreign exchange brokers or now by the use of a virtual account backed by the big custodial banks.
How do you choose?
Well let's take a deeper look at the benefits and sometimes well hidden pitfalls of the various methods of transferring money.
1. The traditional method of sending a bank wire, which as long as you are using a major bank is obviously fairly safe and generally a reliable although slow method of sending money. However, the currency exchange fees, exchange rates used and other costs can make this a fairly expensive exercise. Quite often $30 to $40 dollars on either end is added, plus the retail exchange rate used by banks is higher than is necessary. There is also a fair bit of paperwork required and this can all take time, even if everything goes smoothly.
2. Sending large amounts of money through foreign exchange brokers is usually cheaper in that because they trade in bulk amounts, they offer somewhat better exchange rates and cheaper fees, but since you are dealing with private companies, recent history tells us that there is always a small risk of losing your money through the company collapsing. Again, there is a fair bit of paperwork required and this can be time consuming even if you know what you are doing.
3. Sending money using the mainline specialist money transfer companies seems pretty simple but each comes with a number of disadvantages. Fees are generally much higher, the exchange rates are not great and some charge a conversion fee of as much as 4.5% of the money sent. They do tend to have plenty of conveniently situated offices around the world but long lines and a fair bit of paperwork can mean 30 to 40 minutes to collect the money even if the recipient has all the ID required. With PayPal you need to make sure that the recipient's bank has an agreement with PayPal or it will be impossible for them to collect the money.
4. The use of prepaid or preloaded debit or credit cards is becoming more common. Here for a fee of around $5 to $30 depending on the company, plus usually around 3 % of the money sent and a postage fee of up to $25, you can arrange to pay a predetermined amount of money in the currency of choice onto a card which will be shipped to the recipient. Sounds fine, however you must have ID and a mailing address on both sides which can be a problem if the people you are sending the card to are moving around and security in some areas can be problematic. The cards can be reloaded and fees will be charged when they are used.
5. Virtual accounts are the very latest and to my mind, the best method to safely, cheaply and quickly send money overseas. Here you have access to the best exchange rate, the security of major holding banks and instantaneous transfer of money at very cheap rates between account holders. There are some small charges involved when the accounts are used but overall, this is by far the quickest and cheapest way to transfer money internationally.
Benefits of a virtual account are:
Accounts are free to open, needing only ID in the form of one photo ID plus one ID with an address to conform with international banking and anti-terrorist requirements. To open an account is simple and can be done quickly online
Extremely competitive exchange rates where because you can change your local currency within your own account to the currency you want to send, you can see how much it will cost you before you send it
No currency exchange fees, although If the currency you need to send is not on the list of currencies available, then there will probably be a small fee charged by the recipient's local bank to change the currency.
Instant transfer to other virtual account holders, so great for emergencies.
Very cheap money transfer fees with an average fee of about $3 - $4 regardless of how much you need to transfer. Available to anyone over the age of 16 without a credit check.
Money can be distributed from one virtual account to another as well as to debit cards, credit cards or conventional bank accounts.
Dick Aronson is a long time business consultant with considerable experience in international business, online transactions and currency trading. Dick has published well over 40 articles and also runs a number of informative websites. viz: http://www.ezybondscards.com/
No comments:
Post a Comment