May 152012
 

By W.H.A.| SpeedyPay.info

If you’re a foreigner living and working in the USA or some other Western country, and looking for ways to send money to your family back home, you’re in luck. Most Western nations have active and extensive money services markets. So there are plenty of options for sending money overseas. Another benefit of an active money services market is that healthy competition means lower rates for you.

Here are six super tips for finding a money transfer service for overseas remittances. These tips are based loosely on an article by Investopedia, with my own thoughts added in.

1. Banks Are the Best Option

Citibank

Citibank is a good example of an international bank with branches in many foreign nations. This can be a convenient and cheap way to transfer money to family members overseas.

The best and most cost effective choice for sending money to a family member or friend overseas is an international bank with branches in both countries. You could have an account in the USA and grant access to the account to your family member overseas. Or your family member could set up an account, and you could simply deposit money in it. Either way, it will cost nothing at all, and the funds will typically be available the next business day.

Before opening an account, talk to the bank and verify that the branch in your home country and the branch overseas are connected; in other words, that the same account can be accessed from both countries.

2. Paypal is Quick and Affordable

If a bank account with an international bank is not an option, Paypal is not a bad second choice. ┬áPaypal’s money transfers are instant, and quite affordable (in fact, when sending money from one account in the U.S. to another, they are free).

3. Don’t Wait Until the Last Minute

Start comparison shopping well in advance of when you need to send the money. Talk to the banks about their rates for international wire transfers. Look at affordable options like Paypal and Xoom. Check out specialized remittance agencies that serve the part of the world to which you want to send your money. Find a service that is affordable and reliable.

The problem comes when people don’t do their research, and all of a sudden they have to send money right away. Then they go to one of the ubiquitous and well known money transfer agencies like Western Union or MoneyGram. Don’t get me wrong, these services are extremely reliable, and have agents in every country of the world. But they are not cheap! For example, a $500 Western Union transfer to Mexico will cost $14 if you visit an agent in person. If you send transfers every month, those fees add up.

For last minute transfers, Paypal would again be the cheapest option if it is available in both countries.

4. Send More Money, Less Often (Rather than Less Money, More Often)

It’s often cheaper to send larger amounts of money than smaller amounts (cheaper in terms of the percentage of your transfer amount that you pay in fees – not in total dollars).

For example, if you wanted to use Western Union to send $100 (American dollars) from Los Angeles, California, to Indonesia, it would cost you $15 in fees. If you wanted your recipient to pocket $100, you’d have to pay $115. Let’s say you walked into a Western Union shop every week for nine weeks, and every week you sent $100. You’d end up paying $135 in fees.

On the other hand, if you sent the $900 all at one go by Western Union, the fee would be only $68.

So it’s much cheaper to send large amounts. It pays therefore to plan ahead, save the money you need to send, and send it in a large lump sum.

5. Shop Around

It’s easy and affordable to send remittances to very popular destinations, like Mexico (from the US), or India or Pakistan (from the UK). But if you’re sending money to a more remote or less popular destination, you’ll have to do your homework to find an affordable, safe money transfer service. Shop around and compare rates.

6. Know Your Exchange Rates

Some remittance services earn a profit by converting currencies. They might charge a low transfer fee, but ding you on the exchange rate. Before making a money transfer, look up the current exchange rate. Many websites can give you this information. I personally like Yahoo Finance’s currency converter.

Once you’ve checked the current exchange rate, make sure the rate being charged by the money transfer agency, remittance service or bank is close to that.

Be smart with your money, do your homework, and find a service that works for you.