05 Oct The Best Times to Send Money Abroad
You work hard for your money, which is why navigating the hidden fees and exchange rates related to transferring money back home is so frustrating. At every turn, it seems that traditional banks and transfer agents are trying to take a bigger cut of your earnings – money that can go a long way for your family and loved ones.
There are certain costs related to exchanging money that is, unfortunately, unavoidable. Fluctuations in exchange rates are unlikely to change anytime soon. But, there are also strategies you can take to save money each time you send money abroad. Timing your transfer is one such strategy that can make a big difference.
The Telegraph cites one such example where timing made literally a thousand-pound difference. Uncertainty over Brexit and other world events at the end of August caused the British pound to gain about 5% in relation to the Euro. Imagine you were making a transfer from London to Madrid for a purchase valued at €250,000. At the end of August, the transfer would have cost you around £231,500. But, on the 15th of September, the exchange rate improved – and you would have paid around £220,000. That’s a savings of £11,000 purely due to changes in the exchange rate.
Timing is everything, but it’s also a hard thing to predict. Here are some things to watch for when finding the best time to send money abroad.
Learn what factors influence exchange rates
You can’t truly predict how an exchange rate will fluctuate, but there are certain factors that influence an exchange rate’s movement. Paying attention to these factors can help you improve the timing of your international money transfer.
- Interest rates: typically, when a country’s interest rate goes up, so does the value of its currency.
- Trade imports and exports: when a company is spending more to import goods than it is making from its exports, the value of its currency will decrease. Currency values rise when the opposite scenario takes place.
- Inflation: when a country has a low inflation rate, the value of its currency will usually rise.
- Political events: instability in the political realm scares investors, which then leads to a drop in the value of that country’s currency.
- Interbank exchange rate: an interbank exchange rate is the mid-point between buying and selling currency pairs. It gives you a good barometer for where the current exchange rates will be. You can find the mid-market rates on Google.
- Worldwide economic trends: events like the global recession in 2008 play a big role in the rise and fall of currency values
Read the news on a semi-regular basis to stay up to date on some of these factors.
Check for fee spikes
Some transfer agents, including Western Union, will raise their fees without warning. Western Union CEO Himet Ersek said in a 2018 earnings call that the company does take “ pricing actions around the competitive locations,” elaborating that “we have been doing that street corner pricing, weekend pricing, different band pricing, next day pricing. We have been doing that for many years and we will continue to do that.”
Some transfer companies are transparent about fee spikes, and others are not. There’s no law mandating they have to let consumers know when there are extra hidden fees. It’s up to you to keep an eye out and avoid these unfair pay hikes.
Aim for a weekend midway through the month
Fee spikes are usually tied to when the transfer agents are most busy. One tactic to take to avoid these spikes, as well as to avoid lines or delays in sending your transfer when you want it, is to avoid these peak demand hours. A weekend or a day that’s midway through the month is usually when remittance offices are less busy.
“Most people send money home the minute they are paid. Our records show that 75% of all transactions occur during the last five days of a month and the first ten of the next. This spike in traffic means that branches and outlets are busier,” reports one company. Alternately, bypass the queues altogether by using blockchain technology to transfer funds.
Factor in transfer time
Unless you’re using SendFriend, your transfers may take one to five business days. Most transfers happen same-day, as long as you meet the bank’s cut-off times:
- Wells Fargo: 5 PM Eastern Time
- Chase Bank: 4 PM Eastern Time
- Bank of America: 5 PM Eastern Time
- Citibank US: 5:15 PM Eastern Time
“As long as you make your transfer request on a business day before your bank’s cut off time, it should be processed the same day,” reports TransferWise. But, weekends and holidays can throw off your transfer timeline. Keep in mind that the best time to send money abroad might be determined by when your family needs it most. If you know someone back home has bills coming up, make sure to time your transfer to arrive by when they need it.