For expats living and working abroad there is an issue when it comes to being paid in Pounds Sterling and that’s when it comes to transferring their money into another currency.
Most people will use banks for the transaction but there is a smarter – and certainly a more profitable – way which is to use a foreign exchange broker.
To get the best value for their income, expats should be looking for the best exchange rate, zero commission and a low transfer fee.
That isn’t going to come from a bank but a foreign exchange service from a specialist broker will provide that value.
A broker will usually guarantee to beat a bank’s exchange rate and not charge a fee for the transaction and then transfer the money to anywhere in the world where the expat’s account is held.
If you are exchanging US Dollars or Euros then the money will usually be credited, and cleared, on the day of the transfer.
The interesting part for an expat earning a large amount is that they can monitor the exchange rates and then call a broker to make the transaction at a rate that suits them.
It’s not quite like playing the FX markets but most brokers also offer an alert service for when the exchange rate for the currency you are interested in rises to a better rate.
Most expats aren’t aware also that a broker will set up a regular payment scheme so amounts can be transferred automatically to another currency to ensure it always has money in it.
Expats could also consider setting up a forward contract for when they have large amounts to transfer.
This is an excellent way to help protect against currency fluctuations so should the expat believe the currency will fall they can hedge against it by having a broker guarantee the current exchange rate for future use.
However, the broker will ask for a deposit of up to 10% of the amount to be transferred in order to protect the agreed exchange rate. Once done, it doesn’t matter where the currency goes after that.
Fixing the exchange rate is particularly useful if an expat is buying property in the country where they live and work.
The substantial amounts involved mean that any slight currency valuations could cost you dearly – so hedging against this by fixing a currency transaction rate will potentially save you thousands of pounds.
You could also, obviously, lose slightly too but the attraction is that the figures will be fixed so you will know exactly what your budget will be.
Getting the Best Exchange Rate
If you are looking at exchanging currency, and need advice on how to get the best rates, contact us today to find out more. Complete the form here www.iexpats.com/contact-us/