Transferring money abroad is increasingly becoming a common occurrence with emigration, presents to family members or holidays just some of the reasons a transfer could be needed.
£107,400 is the average amount transferred when moving overseas according to TransferWise, the money transfer service.
The most likely reasons for sending cash overseas are property & living expenses, closely followed by shopping and family events according to FairFX.
Banks are using the lack of knowledge of alternatives in order to collect high fees on transfers, with a £250 transfer to Germany costing £17.50 at Lloyds Bank and £20.80 at Santander according to Consumer Intelligence. Specialist providers such as Western Union would charge £1.09 for the same transaction, with app TransferWise second at £1.70.
Jenifer Swallow of TransferWise asserts that banks are taking advantage of consumer's lack of knowledge in the sector:
“It’s unfair that banks are not transparent about what they’re really charging customers for this service," she said. “Banks charge anything from 3pc to 7pc of the transaction amount for an international payment. These transactions are regularly advertised as costing ‘just £5 or £10 upfront’ or even ‘fee free’ – but sending £250 to the eurozone with a Santander current account costs a hefty £22 in fees. Much of the charge is hidden within a poor exchange rate.”
Ian Strafford-Taylor of FairFX says that the banks use less efficient methods of transfer, adding to the cost to the consumer:
"Banks are notorious for slapping consumers with big fees when it comes to international money transfers.
"Additionally, rates advertised on companies’ websites and the indicated rate given over the phone can vary by as much as 1pc, with the majority of firms offering better rates on their website than on the phone."
Santander is one provider that says it was investigating ways of lowering costs.
Speak to your financial adviser to put a long term financial plan in place.