Currency Exchange for Moving to Portugal
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:
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 and Other Companies Compare?
When comparing the major currency exchange services, each has distinct advantages:
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Wise - Best for low fees and transparency, with upfront fee disclosure and rates very close to the mid-market rate.
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OFX, Currencies Direct, and Moneycorp - Best for high-value transfers and personal service, offering personalized services with competitive rates for larger sums and useful tools like forward contracts.
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Revolut - Best for everyday use, great for small, frequent transfers and multi-currency accounts but may not be ideal for large sums due to limits and weekend markups.
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XE.com - Best for simplicity, providing straightforward service with competitive rates but with less focus on personalised service or advanced tools. Note: We used this service and recommend them.
The best choice depends on your specific needs, such as transfer amount, need for additional financial tools, and preference for user experience.
