Top ten tips for currency exchange

Expats with interests in two or more countries often make regular international payments with their own private funds. Here, Nat Davison, of Personal FX, shares his top currency exchange tips.

Expats with interests in two or more countries often make regular international payments with their own private funds. To ensure that employees or clients have thought about the best way to move their money, an increasing number of HR directors and mobility managers are looking to currency companies as designated service providers. Here, Nat Davison, of Personal FX, shares his top currency exchange tips.Currency broker or bank?1. Currency brokers can get individuals more for their money than high-street banks when transferring currency abroad. Because they trade currency in large volumes, currency brokers can offer rates that are up to 4% better than the banks, and they tend to waive commission and cover bank transfer fees.Dedicated contact2. When opening an account with a currency broker, you are allocated a dealer who deals with you personally. Your dealer will not only strive to get the best exchange rate for all your transactions, but they will also ensure your converted currency is transferred securely to an overseas bank account. Your dealer will handle your account over the phone or via email.3. Choose a currency broker before you relocate. It's best to have everything in place early, as, once you move, you may well need to send funds abroad from the UK quickly.Managing payments4. The most straightforward transaction a currency broker offers is a spot contract. These are simple, one-off transactions, usually required at short notice; they are ideal if you need to transfer currency quickly.5. One of the most useful facilities offered by currency brokers is the forward contract, a type of 'buy now, pay later' solution. Forward contracts allow you to fix an exchange rate for months in advance. Forward contracts offer peace of mind and allow you to budget safely. Generally, a 10% deposit of the total amount to be transferred is required.6. Currency brokers also offer regular payment schemes, which allow you to transfer money at regular intervals between the UK and abroad. To help you budget, you will be able to fix your rate of exchange for months in advance. Regular payment schemes are useful for making mortgage payments, paying property maintenance bills, transferring rental income back to the UK, or receiving your UK pension abroad.Competitive rates7. Most currency brokers will offer competitive exchange rates for transactions of more than a certain value – for example, on amounts above £2,000. However, your personal dealer will discuss the most economical route with you.8. Currency brokers charge only a nominal fee for electronic onward payment. How much the fee is could depend on the speed of settlement required, as well as the destination.Regulation and security9. From November 2009, the money transfer market has been regulated by the Financial Services Authority (FSA). This means currency brokers will have to be registered with the FSA and operate within the FSA's 'conduct of business' rules. More importantly for consumers, currency brokers will be answerable to the Financial Ombudsman Service. This should reassure consumers that currency brokers are a safe, efficient alternative to banks for transferring money abroad.10. When choosing which currency broker to use, be sure that your money will be held in a transaction account that's separate and identifiable from company funds. If possible, check the company's credit rating and how long it has been trading.For related news and features, visit our Employee Finance section.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.

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