Getting the best Exchange Rate? Don’t Bank on it!

Chris Hall, payments manager with commercial foreign exchange brokers, Currency Index, explains how foreign currency exchange services can save you money when transferring funds overseas while providing a direct alternative to the banks. Banks Vs brokerages Specialist currency brokers exist because they can provide better exchange rates than high street banks. Most large currency brokers turn over enough currency to buy at similar levels to the banks, but because they do not have anywhere near the amount of overheads, they can pass these exchange rates on to their clients and remove any additional charges, depending on the figure involved. Keeping an eye on the market Currency brokers are more professionally equipped to deal with clients’ needs relating to currency transfers because they know what is happening in the market each and every day. Local banks tend to have one rate to give their customers which they won’t relate to any market movements during the day. The exchange rates can change by a few percent points each day, which the banks do not always take into account with their flat rate. Meeting your particular needs There are many advantages for individuals in using a currency brokerage, on many occasions clients will be dealing with a dedicated manager who understands their particular requirements and the importance of meeting these needs. By contrast, most high street banks will simply hand over a form to be completed, without asking what the transfer is for. On many occasions, a different type of contract will be of more use – an option a client won’t receive at many banks. Business transactions made easy Businesses can thrive on expanding internationally by using suppliers in different countries to reduce costs. Using a currency broker who can provide the client with competitive rates and a dedicated account manager can make the tasks of paying overseas suppliers quick and easy. Getting it right The client always has to be 100% sure they are agreeing to the correct type of contract and understand the difference between a Spot and Forward contract. Clients also need to make sure they are sending the funds to the correct location. If they are settling a deposit on a transfer for overseas property and miss the deadline because they have given the brokerage the wrong details, they risk losing the property. It is always worth double checking with the agent that they have the correct details. Try to get something via email or fax so that it can be directly passed on to the broker, this will avoid any risk of mis-keying and entering the wrong details. Making sure the currency brokerage is bona-fide The best clients can do to check on a currency brokerage is to make sure they are registered with Her Majesty’s Revenue and Customs (HMRC) as a ‘Money Service Business’ and the FSA to ensure they are listed as an ‘Authorised Payments Institution’. Saving money Due to the fact that currency exchange rates can change on a second-by-second basis, there are always savings to be made. Across the board, currency brokers normally give clients better exchange rates than the banks – anything between 1% and 4%, which can provide substantial savings. Most brokerages also give free transfers if the client transfers over a certain amount. Peace of mind Using a currency brokerage over a bank during the financial turmoil is generally a safe option. Currency brokers will not speculate while they are in possession of the clients’ money, they understand that on many occasions the sums involved are large and are often life savings or money gained from the sale of a property. In addition, reputable brokers do not lend or borrow money, so are largely unaffected by the credit crisis.