Can I really save by using a currency dealer versus a bank?
Savings available by using a currency broker rather than a bank to carry out a currency exchange can be significant. Based on rates taken at 10:01 am (BST) on the 16th May 2016 a transfer of £10,000 into euros could realise a difference of €296 between using a high street bank and a currency broker. €12132 would be achieved via the bank while €12428 would be achieved with FC Exchange. There would a further saving by using the broker as no fee would be charged for carrying out the transaction. [Ed’s note, to put this in perspective, that’s enough of a saving to cover the cost of a night for two in a good hotel in Champagne and a crate of the bubbly stuff to take home).
Do I have to transfer money to a currency company’s account before conversion is done?
To carry out a foreign currency transaction with a currency broker is a relatively simple process. Anyone wishing to carry out a transaction must first be registered with the broker. Once registered each client will have a dedicated point of contact with whom to discuss rates and agree that rate when it is right for them. When the rate is agreed the account manager will lock that rate in and the client then has 5 working days to send their funds to FC Exchange in order to complete the transaction. Once the funds have been received they will then be sent straight away to the beneficiary account.
I’m buying a house in France but don’t need to transfer the payment for 3 months, can I make savings by talking to a currency company now or should I wait until I need to transfer the money?
As the exchange rate market is in a constant state of flux it is worth starting to monitor exchange rates in advance of the date that a transaction would need to be made. By registering with a currency broker they can provide you with regular updates on market movements and monitor rates on your behalf. One area where brokers differ from banks is that they will offer the ability to agree a rate up to two years in advance of the required transaction date, allowing people to take advantage of a rate that is in their favour. There is no cost or obligation in talking to the broker but it could lead to achieving a better rate of exchange by being able to secure a favourable rate in advance.
I have to pay a mortgage and bills in France which means I have to transfer money each month – is this something I should consider doing through a currency dealer? Will it save me money or is the amount, for instance Euros 1000 too low?
For regular payments like this it is worth speaking with a broker. The savings available on ‘smaller’ regular transactions are not as evident on a single transaction but, multiplied over a period of a year for example can become more worthwhile. On €1000 or equivalent you could expect to save around €50-55 each month therefore realising in excess of €600 more each year. In addition the process of using a
broker can make the transactions easier to manage, e.g. by setting
up a ROPS (Regular Overseas Payments) plan with the broker.
By Euan McLachlan, currency expert at FC Exchange who
is always happy to help and answer currency questions