Using Currency Exchange Services For Your Money Transfers
Currency Exchange brokers are specialists in providing foreign currency to you, whether you are an individual who needs to make payments or transactions to an overseas account or a large corporation which needs to make regular payments abroad.
Because they are specialists who deal directly with the foreign exchange market, currency exchange brokers can offer excellent exchange rates and a much faster service than the regular high street bank.
What is the Interbank rate?
Currency exchange brokers deal with the same special ‘interbank’ or ‘forex spot’ rate as the regular bank this is the rate that you see published daily on currency charts and offers a base rate to see where currencies lie, but is only actually accessed by large financial institutions who make masses of transactions on a daily basis.
While banks offer each other the interbank rate for currency dealings, they don’t offer the same rate to regular customers. Instead, they take a percentage of this to cover their overheads and offer the customer a poorer rate as a result. So, what you see on the currency chart is not what you will actually receive if you go to the bank and carry out a foreign exchange transaction.
Currency exchange brokers can offer a rate much closer to the latest interbank rate because they have much less overheads to deal with and are also constantly dealing directly on the market. Say for instance you have a house in the United States then the best way to transfer money to the USA for your bills will be through such a service. In addition, they don’t charge extras like commission fees or dealing fees.
When do I need a Currency Exchange Broker?
We use currency companies when we go on holiday or a business trip they offer a cheap way to exchange pounds sterling for whatever local currency you need. So why do we need currency exchange brokers? Currency exchange brokers are for larger transactions of around £5,000 and above which you need to make from your UK account to a foreign currency account.
Making a Transfer
This is the easiest part: inform your broker that you want to make a foreign exchange transfer you can do this by emailing him/her directly or giving them a call. They will ask you how much you want to transfer and to which currency. They will then quote you the latest GBP/EUR exchange rate if you are happy with it, then you can give them the go ahead.
They will send you a short online application form to enter your recipient’s bank details send this back and they will confirm once again the transfer and rate. Once it’s done, the money should arrive in around 3 to 5 business days.
Can I Fix an Exchange Rate?
If you are planning, say, an overseas mortgage payment for a house in Spain in six month time, you might want to hedge the risk that the risk that the exchange rate moves against you when the day for the first payment arrives.
To do this, you can set up a special ‘forward’ contract with your broker, which fixes today’s rate for a set period of time (up to two years). Speak to your broker about this option if you think it would be a safer bet than waiting until it’s time to make mortgage payments.