With much of the UK employment market in decline, increasing numbers of us are living and working abroad. But how do you avoid high exchange rates or commission charges when it’s time to transfer money to the UK?
Warmer weather, higher pay scales and competitive relocation packages – these are just some of the reasons Brits are fleeing a depressed jobs market at home and seeking career success abroad.
A study by IT recruiters IntaPeople analysed popular online search terms entered into Google UK and found that searches relating to working abroad increased by 15.54% – or over 2 million – towards the end of last year.
It also found that Australia, Canada and Dubai were the most popular destinations for job seekers wanting to work overseas, with professional job seekers lured by an average salary increase of £20,000 compared to the earnings of colleagues back in the UK.
But while working abroad is becoming an increasingly attractive option, there’s one easy way to eat into those salary increases – and that’s to transfer money back home.
The main problems are unfavourable (and fluctuating) exchange rates, expensive commission and regular transaction charges – all of which can eat into your hard earned cash.
Luckily, there are ways to keep those costs to a minimum. We take a look at the most popular.
Getting a low exchange rate
When you shop around for a competitive exchange rate, the different rates you’ll be quoted will depend on something called the currency exchange margin.
Put simply, when large institutions such as banks exchange currency they pay something known as the interbank rate.
When you are given a quote for exchanging currency, the figure you are given comprises the interbank rate plus the currency exchange margin – the markup added by the organisation when exchanging your currency.
To illustrate, imagine you’re working abroad in a Eurozone country and the interbank rate stands at 0.87. If a bank or broker then quotes you an exchange rate of 0.85, the currency exchange margin is 0.02 Pounds for every Euro you exchange.
It’s clearly in your interests to find a lower currency exchange margin, especially if you’re exchanging relatively large sums of money – because the more you exchange, the more the margin rate can cost you.
When hunting down the lowest rates it’s worth checking out what banks can offer, but you’ll normally find the best deals on offer from specialist currency exchange brokers – because they specialise in currency exchange, they can afford to offer lower margin rates.
Securing an exchange rate in advance
If the exchange rate between the currency of your host country and sterling is particularly unpredictable, it can pay to secure a good rate in advance if you have to transfer major one-off payments to the UK.
This is another advantage offered by currency exchange brokers. Depending on the currencies involved, you can fix the exchange rate for up to 12 months in advance – allowing you budget exactly for a transaction.
Keeping regular payment costs down
Unlike most banks, currency exchange brokers tend not to charge currency transfer fees. This is crucial if you have to transfer money to the UK regularly while working abroad – such as paying an UK mortgage or sending money to your family.
Currency transfer fees can add up to about £30 per transaction, so you could easily lose over £300 over the course of a year if you’re not careful.
Similarly, some currency providers will also charge commission on each transaction – adding costs onto the exchange rate you’re offered. Again, because currency exchange brokers are specialists, they don’t charge commission – keeping your costs low.
Finding a currency exchange brokers
While other currency providers offer a convenient service, using a currency exchange broker like TORfx to transfer money to the UK is a no-brainer if you’re working abroad.
Not only are you likely to get a better exchange rate, but you shouldn’t fall foul of commission or currency transfer fees. And if you need to make large single payments or transfer regular payments, a broker will help you keep the costs predictable and low.
And that means you’re not only likely to earn extra money while you’re working abroad, you’ll be able to keep more of it!