I am actually writing a post because it does seem so many people are confused with how, where AND when individuals (and companies) can actually get the unbeatable rates, security, and avoiding fees and charges. Im am talking about transfers from account - account, for example £ account - $ account, Regular small international transfers up to large purchases
Transfer Fee - Banks and some brokers charge same day, TT (telegraphic transfers), CHAPS, unless a BACS payment - 2-3 days free of charge. Banks will charge £15 - £50 a time with 2-3 day international transfers, whilst Brokers can charge £10 TT. However some brokers do not charge the client the fees, they will take it out of their profit, no matter how small the transfer. You can find by you using online or telephone banking, funds will move in a matter of minutes up to 3 hrs via Fast Payment system from UK bank - UK bank, subject to the bank providing FPS and is free of charge. Finding out your daily limit and each transfer limit will benefit you.
Commission - In my personal opinion, in these days charging commission is over charging because banks and brokers make enough profit just by doing the transfer, taking what rate they buy it and sell it to the individual. Most people have caught on and the majority offer 0% commission, But please don’t fall into the trap that this is a special offer, it isnt at all special.
Set Limits - This is a brokers preference, however, you won’t need to look real far for a broker who will not set limits, and still handle with no fees and charges, no matter how small or large the amount.
How do banks/ brokers make money on a trade? - Banks buy and sell using interbank rates, which you can see on-the-spot rates on financial TV channels. Banks will take a set large profit margin, whilst brokers can vary their profit margin, but take a much tighter one. for example, if the Interbank rate for GBP-EUR is at 1.15. Banks will sell to individuals, on average 1.10-1.12, whist brokers will sell around 1.1450-1.13. Brokers will buy their currency from banks and tight spreads from banks at commercial wholesale rates, which can be around 0.002-0.005 off interbank.
When to buy? - Banks won’t tell you, some brokers won’t tell you, but top brokers will guide you with data when it can be a good time to transfer. There are 2 times to trade, at the right time, or at the last minute, which can possibly be a difference of 2 points (a possible example during a matter of days = GBPUSD 1.67 at right time - 1.65 at last minute) on a £100,000 pound transfer, that is $2,000 difference. Make sure your broker cares about when is the right time to transfer. There is a fine line for giving advice though. FSA regulated brokers CAN advice you, non-FSA regulated brokers CANNOT advise you, however they can lay out what is happening in the markets and INTERPRET what will happen, but you make up our own decision.
Financial products - Limit orders, stop losses, forward contracts, can be handy. Your broker will recommend them if they would benefit you. If you want to transfer currency at a later date but like the current rate, forward contracts are useful and 5-10% deposit is required and can last 2 years, depending on the broker. Limit orders and stop losses are used to reduce the risk of missing a target rate (limit order) and rate going below a certain point (stop losses). these two are commonly used if a vital transfer has to be done after the weekend. It is common for brokers to provide a rate alert or a limit order forward option, so when it hit a good rate, they will contact the client, then you have to option to complete the transfer or agree a forward contract.
Security – A very important word in financial services sector. Due to recent turmoil in the banking system many brokers have changed bankers. 100% guaranteed safety and compensation of client funds is ideal. Banks such as Bank of Ireland are protected 100% by the Irish government. Always make sure the account the broker has is a segregated account to separate client funds. All money services Businesses should have a MSB number so you can verify them via HM Customs and Excise, and they will monitored by Serious Organised Crime Agency (SOCA) who work closely with FSA for the prevention of money laundering. So your broker, to open an account will ask for photocopies of ID and address verification as well as sign to agree their Ts and Cs. This would only take minutes on your side. Make sure you find out if their calls are monitored and recorded. You can even ask for the recording of the call to be sent on email to you, just for your peace of mind.
I really people should ask around 2 or 3 different brokers for rates, If you have a rate that is better than the 2nd broker, saying so will only benefit you. It maybe a great idea to get into a Group Booking, but I have only heard of two other companies that provide them. Smaller fx brokers, don’t have the big marketing budgets and big expenses and I have only heard of three companies will actually write 'unbeatable' rates. This doesn’t meant to say smaller to better, because the 'big' fx companies can provide travel money, prepaid currency cards and pay on credit card for example. Some brokers don’t even work on a commission basis. I’m Not!
Regards,
Ashley Ingle
Excel Currencies.
