I regularly transfer money to overseas bank accounts and so I've taken a look at the cheapest ways to do so.
1. CurrencyFair
CurrencyFair is a person-to-person exchange for 20 currencies. It's very cheap, consistently, though there have been occasions when I could have saved a few pounds going elsewhere.
My most recent transfer was in August for £2,000. Including the fee of €3 (£2.40) and the cost in the exchange rate set by those exchanging with you (including another 0.15% fee from CurrencyFair), it cost me £5.80.
This is ludicrously cheap in historical terms, but not unusual for CurrencyFair, which for me has varied between costing £10 or so and even making me a profit, due to a favourable exchange rate. And that's for transactions in the thousands of pounds.
As usual, the deal you get for minor currencies could well be weaker, but with Currency Fair you can still expect an amazing deal.
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2. TransferWise
But if I want to shave my prices down even further, some competition has caught up with CurrencyFair, putting even more downward pressure on prices.
TransferWise is a quasi person-to-person exchange in that it does ship money directly from one person to another, but exchange rates aren't set by the users.
It makes up for that closed exchange with a steady, extremely low price that you can calculate in advance for any currency, without needing to look at today's real exchange rates.
15 of the 18 currencies listed on its pricing page have a charge of 0.5%, with a minimum fee of £1. TransferWise uses the real, interbank exchange rate, so you can be sure that a £2,000 transaction to a euro account will cost you a total of £10, with no hidden costs.
While that's higher than my example for CurrencyFair, CurrencyFair fluctuates more, so it is sometimes more expensive than TransferWise in my tests.
Transactions under roughly £500 are likely to be cheaper with TransferWise due to the fee differences. As you approach £1,000 the cost probably evens out, with each transfer service winning sometimes.
As it rises beyond that, I expect that CurrencyFair wins more often, but it won't be by much.
3. Azimo
Azimo writes “We have the best rates” so I put that promise to the test on the website, which transfers money in over 40 currencies to well over 100 countries.
According to the website, the “total cost” of a £2,000 transfer to France is just £1. However, add in exchange-rate differences, which Azimo seems to have forgotten in its total cost figure, and the total cost is in excess of £14. This is still a very good price, but it doesn't look as cheap – or as transparent – as CurrencyFair and TransferWise.
All the above three options are available as apps as well as websites.
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4. Brokers
You can get a personal money transfer service through a boker.
TorFX and HiFX are the cheapest brokers for a £2,000 transfer to euroland. I used HiFX for many years, since it generally had great prices at around £30-£35 for a £2,000 transfer, although the newer, online peer-to-peer exchanges are now considerably cheaper.
5. Have banks caught up at last?
I've checked several banks over the years from internet bank smile to Halifax and HSBC. Looking again now, the price of banks' overseas money transfer services has not really come down.
Banks have no reason to compete on price, because so many of their current account customers don't bother looking anywhere else.
You can expect to pay 10-60 times more for transfers through your old bank than with the first two options on this list! The Metro Bank doesn't display prices online, so don't expect it to be competitive either.
More great alternatives to come
In Five more ways to transfer money abroad, I look at some more great ways to transfer money and warn you off some more misleading ones. They could be even better for you than CurrencyFair or TransferWise.
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This article has been updated from an earlier version