Basic questions about international (US to Europe) money transfer
January 17, 2021 3:54 AM
My father (not internet savvy, no smartphone, etc.) in the US needs to make some large payments in Europe over the following year or so, and I would like to help him figure out an easy way to set up economical transfers.
1) I think it would make things easier if I do the individual payments from here (Germany), given that I regularly do electronic bank transfers, so he would want to just transfer 1-3 big sums over the course of the year, I am guessing on the order of 50K EUR all together.
2) My understanding is that it is more economical to use a transfer service like xe.com or transferwise. The latter seems more straightforward. But then, I take it, one still needs to arrange a transfer to that service from one's bank, so he will still need to go to the bank physically to do it. 3) Also, I am having trouble finding out what the differences in rates will be. His bank has a nominal transfer fee for international transfers (given the amount of money involved), so I guess the difference will be in the exchange rate offered. I wonder if someone could give me an estimate of what that difference would be between just using one's bank and using xe or transferwise.
4) Any other tips or warnings, for someone who hasn't done this sort of thing before, would be helpful!
Thanks.
1) I think it would make things easier if I do the individual payments from here (Germany), given that I regularly do electronic bank transfers, so he would want to just transfer 1-3 big sums over the course of the year, I am guessing on the order of 50K EUR all together.
2) My understanding is that it is more economical to use a transfer service like xe.com or transferwise. The latter seems more straightforward. But then, I take it, one still needs to arrange a transfer to that service from one's bank, so he will still need to go to the bank physically to do it. 3) Also, I am having trouble finding out what the differences in rates will be. His bank has a nominal transfer fee for international transfers (given the amount of money involved), so I guess the difference will be in the exchange rate offered. I wonder if someone could give me an estimate of what that difference would be between just using one's bank and using xe or transferwise.
4) Any other tips or warnings, for someone who hasn't done this sort of thing before, would be helpful!
Thanks.
I would highly recommend TransferWise. The last time I looked they have comparisons on their site regarding the difference in charges you will pay using then Vs using a bank. When you carry out a transaction via TransferWise the charges are very clearly laid out before you make the transfer, and in most cases are much lower than what you would be charged by a bank.
posted by mani at 4:37 AM on January 17, 2021
posted by mani at 4:37 AM on January 17, 2021
As an American who’s lived abroad for over a decade, can endorse Transferwise as least painful method of transferring funds from US to Europe.
posted by Concordia at 5:33 AM on January 17, 2021
posted by Concordia at 5:33 AM on January 17, 2021
I live in the Netherlands and have used Transferwise to transfer money in both directions.
You can check out the Transferwise pricing for yourself.
The way it works is like this:
1) You create an account on Transferwise and set up to send money from the US to your Euro account in Germany.
2) Transferwise will give you the details of a US account that your Dad needs to transfer money into. This may also be easier for your Dad as domestic US transfers are likely easier to do with his bank than an international one.
3) After a few days, usually, the money will be transferred and converted to Euros and appear in your bank account. You can track the status of all this online.
Note that there is a transfer fee and then there is the actual exchange rate. The money will be exchanged of course at the time it is transferred and Transferwise will do that calculation for you when you first setup the transaction.
I have a multi-currency account with Transferwise, by the way. This is optional. What this means is that when someone sends me dollars from the US it sits in my account as dollars. I can then either exchange it immediately or exchange it later - or never as it can be used to transfer to another US account for example. You also get a fixed US Bank account (with sort code, etc) than anyone can send money to you anytime and it just looks like a regular US bank account to them because that is what it is.
posted by vacapinta at 5:35 AM on January 17, 2021
You can check out the Transferwise pricing for yourself.
The way it works is like this:
1) You create an account on Transferwise and set up to send money from the US to your Euro account in Germany.
2) Transferwise will give you the details of a US account that your Dad needs to transfer money into. This may also be easier for your Dad as domestic US transfers are likely easier to do with his bank than an international one.
3) After a few days, usually, the money will be transferred and converted to Euros and appear in your bank account. You can track the status of all this online.
Note that there is a transfer fee and then there is the actual exchange rate. The money will be exchanged of course at the time it is transferred and Transferwise will do that calculation for you when you first setup the transaction.
I have a multi-currency account with Transferwise, by the way. This is optional. What this means is that when someone sends me dollars from the US it sits in my account as dollars. I can then either exchange it immediately or exchange it later - or never as it can be used to transfer to another US account for example. You also get a fixed US Bank account (with sort code, etc) than anyone can send money to you anytime and it just looks like a regular US bank account to them because that is what it is.
posted by vacapinta at 5:35 AM on January 17, 2021
I'm not sure what the upper limit is, but I used PayPal this way when the more traditional wire transfer route just proved impossibly difficult for the situation.
posted by Violet Blue at 7:24 AM on January 17, 2021
posted by Violet Blue at 7:24 AM on January 17, 2021
I am in the Netherlands, with a US bank account. Transferwise all the way, for either direction.
Does he have internet banking set up for his account? That was a necessary step for me when I moved money from the US account.
Also, I have heard far too many horror stories about Paypal to use them for anything bigger than a breadbox. A friend had money with them tied up for months for nonsensical reasons.
posted by Tunierikson at 8:22 AM on January 17, 2021
Does he have internet banking set up for his account? That was a necessary step for me when I moved money from the US account.
Also, I have heard far too many horror stories about Paypal to use them for anything bigger than a breadbox. A friend had money with them tied up for months for nonsensical reasons.
posted by Tunierikson at 8:22 AM on January 17, 2021
TransferWise definitely had the best combination of low cost and ease of use when I moved funds between my accounts in the US and UK while living abroad.
If you go this route, your father wouldn't be transferring funds directly to a foreign account, so he wouldn't need to incur an international transfer fee from his bank. He can just make a simple ACH transfer or even use a debit card.
posted by theory at 8:44 AM on January 17, 2021
If you go this route, your father wouldn't be transferring funds directly to a foreign account, so he wouldn't need to incur an international transfer fee from his bank. He can just make a simple ACH transfer or even use a debit card.
posted by theory at 8:44 AM on January 17, 2021
Nothing is going to be easy easy, you'll need the routing and account numbers as well as possibly the physical addresses of both banks. But using any service is going to save you a ton of money (like $50 per transfer) compared to wiring money through your bank. I have used Xe.com to transfer a couple thousand bucks and it was pretty easy and very cheap. The thing I like about it is they don't hold your money. It goes through the worldwide Automated Clearing House (ACH) and so it's not like PayPal or one of the app services which are not banks and can more or less leave you out to dry for months with zero reason or regulatory accountability.
posted by wnissen at 6:11 PM on January 17, 2021
posted by wnissen at 6:11 PM on January 17, 2021
I'm in the Netherlands regularly transfer money to a US bank account in batches of about €10,000 to €12,000. I've used Transferwise a few times and found their fees to be very reasonable for amounts around €1000, but for larger amounts, wire transfer via my bank is much cheaper. Like right now, Transferwise tells me it will be €41.89 to transfer €10,000, which is pretty pricey.
However, Transferwise does offer a guaranteed exchange rate when you start the transaction, so you know exactly what you're going to get on the other end. Maybe some banks also offer that, but mine doesn't, so I'm at the mercy of whatever the exchange rate is when the transaction gets processed. Transferwise also has an exchange rate alert feature that you can use if you want the dollar to be at least over a certain threshold before you do the transfer.
posted by neushoorn at 12:29 AM on January 18, 2021
However, Transferwise does offer a guaranteed exchange rate when you start the transaction, so you know exactly what you're going to get on the other end. Maybe some banks also offer that, but mine doesn't, so I'm at the mercy of whatever the exchange rate is when the transaction gets processed. Transferwise also has an exchange rate alert feature that you can use if you want the dollar to be at least over a certain threshold before you do the transfer.
posted by neushoorn at 12:29 AM on January 18, 2021
Thanks to all, this is really incredibly helpful.
Neushoorn, I was under the impression that banks will generally use a worse exchange rate, whereas Transferwise uses the "neutral" rate (i.e. not like the different exchange rates you see for buying vs. selling currencies). So I thought that though transferwise's fee goes up according to the amount (it seems to be about .45% for the transactions I am looking at), that will still be overshadowed by the difference in exchange rates. For example, transferwise shows a comparison with Chase on its website and while Chase does not have"fees", the exchange rate is on the order of 2% worse, making transferwise about 20-25% as expensive. Does one just need to check with the bank for exchange rates?
posted by melamakarona at 2:17 AM on January 18, 2021
Neushoorn, I was under the impression that banks will generally use a worse exchange rate, whereas Transferwise uses the "neutral" rate (i.e. not like the different exchange rates you see for buying vs. selling currencies). So I thought that though transferwise's fee goes up according to the amount (it seems to be about .45% for the transactions I am looking at), that will still be overshadowed by the difference in exchange rates. For example, transferwise shows a comparison with Chase on its website and while Chase does not have"fees", the exchange rate is on the order of 2% worse, making transferwise about 20-25% as expensive. Does one just need to check with the bank for exchange rates?
posted by melamakarona at 2:17 AM on January 18, 2021
I’m not the person you’re asking, but I do have a bit of insight into the exchange rate question, having used both bank wires and TransferWise for different situations.
When you send a wire, who you ask for the exchange rate depends on where the conversion happens. If the currency is being converted by the bank before being sent (that is, Chase or whoever the sending bank is offers to convert to Euros before sending to Germany), then you ask the sending bank. If the sending bank doesn’t have the ability to convert before sending so the money is being wired across in US dollars, then you ask the receiving bank what exchange rate they use for incoming wires (it’s best to specify that you’re receiving a wire- many banks will have separate rates for converting cash vs electronic transfers or checks).
There is, however, a third, outside option. Depending on the payments being made, your father could just sign up for Service Credit Union. They were previously a military-focused credit union that, as a result of member demand, started offering German IBANs on their US accounts. They’re also now open to everyone, not just the military. Your father would sign up and get both a US routing/account number and a German IBAN. Use the US account number to have money direct deposited into the account In US dollars, provide the IBAN to whoever he needs to pay. Because the request to take money out is presented to the credit union in euros, they do the conversion, and their total fee structure isn’t as good as TransferWise but isn’t as bad as some of the big banks can be and allows your father to handle it all himself, if he would prefer it that way.
Quick example: I set up an annual donation to VPRO (Dutch public TV station) for 22 euros every December 15. This past December, the credit union processed it for $27.44. That’s an exchange rate of 1.247. Wall Street Journal says the highest the “neutral” rate went that day was 1.217. So the credit union took 3 US cents per euro.
posted by yangj08 at 10:13 PM on January 18, 2021
When you send a wire, who you ask for the exchange rate depends on where the conversion happens. If the currency is being converted by the bank before being sent (that is, Chase or whoever the sending bank is offers to convert to Euros before sending to Germany), then you ask the sending bank. If the sending bank doesn’t have the ability to convert before sending so the money is being wired across in US dollars, then you ask the receiving bank what exchange rate they use for incoming wires (it’s best to specify that you’re receiving a wire- many banks will have separate rates for converting cash vs electronic transfers or checks).
There is, however, a third, outside option. Depending on the payments being made, your father could just sign up for Service Credit Union. They were previously a military-focused credit union that, as a result of member demand, started offering German IBANs on their US accounts. They’re also now open to everyone, not just the military. Your father would sign up and get both a US routing/account number and a German IBAN. Use the US account number to have money direct deposited into the account In US dollars, provide the IBAN to whoever he needs to pay. Because the request to take money out is presented to the credit union in euros, they do the conversion, and their total fee structure isn’t as good as TransferWise but isn’t as bad as some of the big banks can be and allows your father to handle it all himself, if he would prefer it that way.
Quick example: I set up an annual donation to VPRO (Dutch public TV station) for 22 euros every December 15. This past December, the credit union processed it for $27.44. That’s an exchange rate of 1.247. Wall Street Journal says the highest the “neutral” rate went that day was 1.217. So the credit union took 3 US cents per euro.
posted by yangj08 at 10:13 PM on January 18, 2021
Good info about how the exchange rate calculation works between banks. I think Transferwise's general premise is exactly as you describe, melamakarona, my experience has just been that the math doesn't necessarily work out that way 100% of the time. But my experience is also influenced by my originating bank having a flat fee of €14 for wire transfers, which is lower than the fees Transferwise uses as comparative examples.
A quick comparison... I just realized that my bank publishes their daily exchange rates online. So if I want to transfer €10,000, minus €14, it's €9986 * 1.20610 = $12,044.11. With Transferwise, it would be €10,000, minus a €41.89 fee, so €9958.11 * 1.21100 = $12,059.27. So Transferwise is slightly better, but not significantly. But it does give you the option of locking in that 1.21100 rate, which can provide peace of mind.
posted by neushoorn at 1:14 AM on January 19, 2021
A quick comparison... I just realized that my bank publishes their daily exchange rates online. So if I want to transfer €10,000, minus €14, it's €9986 * 1.20610 = $12,044.11. With Transferwise, it would be €10,000, minus a €41.89 fee, so €9958.11 * 1.21100 = $12,059.27. So Transferwise is slightly better, but not significantly. But it does give you the option of locking in that 1.21100 rate, which can provide peace of mind.
posted by neushoorn at 1:14 AM on January 19, 2021
This is really amazing information! We were in fact arguing last night about which bank sets the rate, and so I guess we were both right :)
I have one more quick and very practical question. We are considering the possibility that he opens a transferwise balance/multi-currency account in his name (just to avoid any potential tax questions that might arise if it looks like he is transferring large sums of money to me) and then I could maybe do some transfers for him from there, so I am wondering what is the actual process for doing transfers from one of those accounts, specifically, what sort of security do they use. Here in Germany my bank uses an app on my phone to verify that I am making the transfer, which would not be convenient if I were to do stuff for him. Or is this a bad idea?
posted by melamakarona at 1:26 PM on January 19, 2021
I have one more quick and very practical question. We are considering the possibility that he opens a transferwise balance/multi-currency account in his name (just to avoid any potential tax questions that might arise if it looks like he is transferring large sums of money to me) and then I could maybe do some transfers for him from there, so I am wondering what is the actual process for doing transfers from one of those accounts, specifically, what sort of security do they use. Here in Germany my bank uses an app on my phone to verify that I am making the transfer, which would not be convenient if I were to do stuff for him. Or is this a bad idea?
posted by melamakarona at 1:26 PM on January 19, 2021
TransferWise’s security is also mostly app-based with some SMS/e-mail options, I think. I remember when I sent transfers from my computer it would sometimes pop up a thing on my phone asking if it was me logging in. If done directly within the app itself It’d send a SMS to the registered phone number occasionally.
Sending a transfer when you have the destination IBAN means logging in, selecting the option to make a transfer, adding the recipient if they’re new or selecting them if you’ve sent to them before, then adding amount, memo, funding source (balance, debit card, bank transfer), and confirming (if verification is required, it’ll happen on this step) before the transfer is sent. Sending when you’re giving the recipient your IBAN works the same as it does with any German bank account- make sure there are enough euros (I don’t think TransferWise will auto-convert so it will fail if you don’t have enough already), provide the IBAN to whoever you’re paying, they take money out.
Legally speaking, and in terms of remaining on TransferWise’s good side, if you set off any red flags with them they can be quick to ask questions and freeze transfers, so I would make absolutely sure that you have permission to speak on his behalf, possibly requiring access to the e-mail and phone number provided at sign up to communicate with TransferWise if/when needed. If you have the app set up on your phone and full access to the SMS/e-mail provided at registration time, and permission to communicate with TransferWise on behalf of your dad, it could work without issue, you just can’t let them catch on that you’re doing that because it’s against their rules.
posted by yangj08 at 8:03 PM on January 19, 2021
Sending a transfer when you have the destination IBAN means logging in, selecting the option to make a transfer, adding the recipient if they’re new or selecting them if you’ve sent to them before, then adding amount, memo, funding source (balance, debit card, bank transfer), and confirming (if verification is required, it’ll happen on this step) before the transfer is sent. Sending when you’re giving the recipient your IBAN works the same as it does with any German bank account- make sure there are enough euros (I don’t think TransferWise will auto-convert so it will fail if you don’t have enough already), provide the IBAN to whoever you’re paying, they take money out.
Legally speaking, and in terms of remaining on TransferWise’s good side, if you set off any red flags with them they can be quick to ask questions and freeze transfers, so I would make absolutely sure that you have permission to speak on his behalf, possibly requiring access to the e-mail and phone number provided at sign up to communicate with TransferWise if/when needed. If you have the app set up on your phone and full access to the SMS/e-mail provided at registration time, and permission to communicate with TransferWise on behalf of your dad, it could work without issue, you just can’t let them catch on that you’re doing that because it’s against their rules.
posted by yangj08 at 8:03 PM on January 19, 2021
I successfully set up and used Revolut to send a payment to Europe to someone who did not use PayPal. I did not have to go to my bank. I did have to set up ACH transfer into. It was not a huge amount of money so I didn’t compare rates/costs, but just went with what was most convenient for the person I was paying.
posted by Salamandrous at 5:58 PM on January 22, 2021
posted by Salamandrous at 5:58 PM on January 22, 2021
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posted by koahiatamadl at 4:30 AM on January 17, 2021