Most cost-effective way of transfering money from UK to US

October 22, 2009 12:30 PM

Need to transfer modest amounts of money from UK to a US bank account every 2-3 months. What would be the most cost-effective way to do so?

I am working in the UK. I need to pay off study loans in the US, with the first loan installment due in a couple of months. I intend/ need to transfer between anywhere between $500 to $2000 to my US bank account regularly, say every 2-3 months.

The most cost-effective way that I know of would be to take out the money in the UK, change at the Post Office (with 0% commission rates), and physically the money to the US, and place it in my bank account there. This, of course, assumes my plane ticket is paid for and I am not robbed (I have done this before, and I was fine, but I don't want to do a regular basis).

Wire transfer appears to be the second cheapest method, and I am happy to pay the wire transfer fees (~20 pounds, depending on the bank). However, I understand that the bank have non-competitive exchange rates, which are hidden costs of the transfer (~50 pounds will be 'lost' in the exchange).

I considered making regular transfers from my Paypal UK to my Paypal US account. This would be extremely convenient, but there are hefty commissions -- about 5%, and I think more is taken off from the receiving end (?)

Anyway, I was wondering whether people had any personal experience with wire transfer and non-competitive fees. Any additional ideas are also appreciated. Would appreciate if there were no comments like, "But if you just paid a little more, you could save yourself the hassle!" as I am willing go through a fair amount of hassle just to pay less fees.

I have family in the US who are probably willing to cash in a check for me every month, if this makes any difference.

posted by moiraine to work & money (10 answers total)

Sorry, I somehow missed many, many typos during preview.
posted by moiraine at 12:32 PM on October 22, 2009

It would be worthwhile to find out what options Citibank and HSBC offer. I think that there have been changes in recent years, but you may be able to get a US account and a UK account with the same bank in a way that permits transfers between accounts for little or no fee.
posted by sueinnyc at 1:11 PM on October 22, 2009

There are plenty of foreign exchange companies who will do this for you & get you better rates than you'll get from a UK high street bank.

Caxton FX advertises a lot in the press, but I'm sure there are others: You set up an account & get a quote, transfer them the money directly (which is pretty much instantaneous between UK banks these days) and they credit the foreign currency account you've nominated.

All very straightforward. I think you can even do it all online these days.
posted by pharm at 1:28 PM on October 22, 2009

I use ukforex. At the time it was simpler than barclay's (my uk bank). It is a minimum £1,000 with a £7 charge. I do it online at £1000 at a time which translates to about $1600. It keeps me nicely disciplined to accumulate some savings. Even if I don't need to send all that money home, I have that minimum to meet.

Also, get forbearance on your loans if you need till you get setup. You will be surprised how much money flies through your hands when you move to another country. I did, it helped.
posted by sundri at 1:29 PM on October 22, 2009

I've used xe.com's service and have been pleased with it. I'm pretty sure there are quite a few similar questions already on Ask. You should probably search a bit and see what's already been said on the topic.
posted by syzygy at 2:18 PM on October 22, 2009

I guess I'm looking for more specific, quantitative advice with some general ballpark percentages thrown around from people who might have done similar comparisons, rather than more general advice... I already know about wire transfers between banks, Western Union, forex exchanges, Paypal transfers.
posted by moiraine at 2:44 PM on October 22, 2009

Another vote here for XE. Last time I used it (about 2 years ago) it was free (make sure you use the free transfer from your UK account, the same-day transfer costs) - XE make their money on the exchange rate rather than via fees.
posted by Nice Guy Mike at 3:59 PM on October 22, 2009

Assuming a $1000 transfer let's weigh up the options. First of all, the last thing you want to be using t change money is the Post Office. It has a terrible rate. Best Foreign Exchange or Thomas Exchange Global in London will give you a rate of 1.640 today. With posting the cash costing about £6 including Airsure tracking, you're looking at paying about £616 for $1000.

The PayPal rate is awful: 1.70923225. Plus you get hit with the 3.4% fee. Don't bother.

UKforex has minimum of £1000 but for comparison's sake, it has a rate of 1.6188. That means you need to pay ~£625 total including the £7 fee.

Moneygram is much cheaper than Western Union, but with the fees you're looking at about £671. Don't go there.

Personally, I think the best option is probably a little out of the box. Get a Nationwide Flexaccount and mail the card to the US. It has a Worldwide Load of 1%, no cash withdrawal fee and no interest on cash withdrawals either. It also uses the visa rate for exchanges. This makes the total cost for $1000 to be £610.
posted by turkeyphant at 2:35 AM on October 23, 2009 [1 favorite]

Don't fall for the 0% commission thing. Places that say this are gouging you on the exchange rate. You can get up to date exchange rates for most currencies that all the providers are offering here.

However, I wouldn't go the route of dealing with cash through the post. I also live in the UK and for the past six years, I have been paying my student loans with cheques. I write a cheque in sterling from my HSBC account here and send it to my parents in the US, who then deposit it to my US account and send a check in USD from my US account to my loan provider. (In reality, my parents have about a year's worth of pre-written, pre-signed cheques that they deposit at the same time every month, so I don't have to mail one every month, but whatever works best for you). This is dependent on whether the US bank is willing to take a cheque written out in sterling, which my bank is willing to do. I'm not sure what kind of exchange rate they're giving me since they way the process the cheques is a bit strange, but I think they're probably fair and this is the most hassle-free way I have found of dealing with this.

You could also call HSBC and see if they can work with you. I know that they'll allow you to open accounts in different countries (and different currencies) and allow you to transfer cash beetween the accounts. However, I'm pretty sure there are transfer charges for this.

Whatever you're looking at, remember these things: transaction charges, exchange rates, commission. You are not going to find a way to do this for free, you're going to have to compare the different charges involved and pick the best deal which is also the least amount of hassle. I can't believe that in this day and age, there isn't a more straightforward way of doing this, but there ya go.
posted by triggerfinger at 7:26 AM on October 24, 2009

Posting cash or using a debit card will give you much more bang for your buck (or bucks for your pounds) than posting sterling cheques which then get skimmed off by the US banks.
posted by turkeyphant at 9:40 AM on November 2, 2009