When moving to Portugal, using a specialist currency exchange company instead of a traditional bank for converting a large sum like £100,000 to euros (€) can often result in significant savings. Here’s how specialist exchange companies generally compare to banks and what you might expect:
1. Specialist Currency Exchange Companies
- Examples: Wise (formerly TransferWise), OFX, Currencies Direct, Moneycorp, Revolut and XE.com
- Exchange Rates: These companies typically offer exchange rates that are closer to the mid-market rate (the rate at which banks trade currency with each other). The margin above this rate is usually smaller than what banks offer.
- Fees: Specialist companies often charge lower fees compared to banks. Some charge a flat fee, while others might include the fee in the exchange rate markup.
- Services: These companies often provide additional services like forward contracts, limit orders, and rate alerts, allowing you to manage when and how your currency is exchanged.
2. Bank Exchange Rates
- Exchange Rates: Banks typically offer less competitive exchange rates, with a wider margin above the mid-market rate. The difference between the bank’s rate and the mid-market rate is where banks make their profit.
- Fees: Banks often charge higher fees for currency exchange services, which might include a percentage of the transaction or a flat fee.
- Convenience: Banks might be more convenient if you already have an account with them, but the rates and fees are generally higher.
3. Comparing Costs
The difference between using a specialist exchange company and a bank can be quite significant when transferring large amounts.
For a £100,000 transfer:
- Bank Example: Assume a bank offers a rate of 1.1400 with a £25 transfer fee.
- £100,000 at 1.1400 = €114,000
- After the fee, the amount transferred = €113,975
- Specialist Exchange Company Example: Assume a company offers a rate of 1.1520 with a flat fee of £10.
- £100,000 at 1.1520 = €115,200
- After the fee, the amount transferred = €115,190
4. Potential Savings
Using a specialist exchange company instead of a bank could potentially save you around €1,200 on a £100,000 transfer, depending on the rates and fees at the time of transfer.
5. Recommendations
- Compare Rates: Before making a transfer, compare the rates offered by various specialist companies and banks.
- Check for Fees: Pay attention to both the exchange rate and any additional fees.
- Timing: Currency rates fluctuate, so if you have flexibility, you might benefit from timing your transfer.
Overall, specialist currency exchange companies generally offer better rates and lower fees than traditional banks, making them a more cost-effective option for large transfers.
How do Wise companies compare?
When comparing Wise (formerly TransferWise), OFX, Currencies Direct, Moneycorp, Revolut, and XE.com, there are several factors to consider, such as exchange rates, fees, available services, and overall user experience. Below is a comparison of these companies:
1. Wise (formerly TransferWise)
- Exchange Rates: Offers exchange rates close to the mid-market rate with a transparent fee structure. You see the exact rate and fee before you transfer.
- Fees: Fees are typically a small percentage of the transfer amount, often lower than banks.
- Speed: Transfers usually take 1-2 business days.
- Services: Focuses on person-to-person and business transfers. No cash pickups.
- User Experience: Known for its transparent pricing and easy-to-use platform.
2. OFX
- Exchange Rates: Competitive rates, though not always as close to the mid-market rate as Wise. Rates can improve with higher transfer amounts.
- Fees: No transfer fees for large amounts (typically over £1000), but smaller amounts might incur fees.
- Speed: Transfers take 1-2 business days, with faster options available.
- Services: Offers a wide range of services, including forward contracts, limit orders, and risk management tools for businesses.
- User Experience: Good customer service with phone support and a user-friendly platform.
- Exchange Rates: Competitive rates, often better than banks but slightly less transparent compared to Wise.
- Fees: No fees for transfers, but the exchange rate includes a margin.
- Speed: Transfers usually take 1-2 business days.
- Services: Offers personal and business transfers, forward contracts, limit orders, and market guidance.
- User Experience: Provides dedicated account managers and personalised service, making it appealing for those needing more guidance.
4. Moneycorp
- Exchange Rates: Competitive rates with a focus on larger transfers. Rates improve with higher amounts.
- Fees: Fees vary depending on the method of transfer (online, phone, or in-person). Larger transfers might be fee-free.
- Speed: Typically 1-2 business days.
- Services: Wide range of services including forward contracts, limit orders, and market insights.
- User Experience: Offers personalised service with account managers, which can be beneficial for large transfers or business needs.
5. Revolut
- Exchange Rates: Offers interbank rates during weekdays with a small markup on weekends.
- Fees: No fees for basic transfers under certain limits (e.g., £1,000/month on free plans). After the limit, there’s a small fee.
- Speed: Instant for other Revolut users; 1-2 days for other transfers.
- Services: Mobile app-based, offering currency exchange, banking, and crypto trading. Useful for everyday currency needs and smaller transfers.
- User Experience: Excellent for tech-savvy users who need quick, everyday currency exchange, but less tailored support compared to others.
6. XE.com
- Exchange Rates: Offers competitive rates, similar to OFX, with a margin applied to the mid-market rate.
- Fees: No fees for most transfers, but the exchange rate includes a margin.
- Speed: Typically 1-3 business days.
- Services: Provides currency conversions, transfers, and rate alerts. Lacks advanced financial tools but is user-friendly.
- User Experience: Well-known for its currency conversion tool and straightforward platform. Not as personalised as Currencies Direct or Moneycorp.
Summary
- Best for Low Fees and Transparency: Wise is the most transparent, with fees shown upfront and rates close to the mid-market rate.
- Best for High-Value Transfers and Personal Service: OFX, Currencies Direct, and Moneycorp offer personalised services with good rates for larger sums, including useful tools like forward contracts.
- Best for Everyday Use: Revolut is great for small, frequent transfers and multi-currency accounts but may not be ideal for large sums due to limits and weekend markups.
- Best for Simplicity: XE.com provides a straightforward service with competitive rates, but with less focus on personalised service or advanced tools.
Each of these services has its strengths, so the best choice depends on your specific needs, such as transfer amount, need for additional financial tools, and preference for user experience.
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