Banks accused of 'grubby' tactics over international money transfers

Currency company launches campaign to "clean up" hidden costs.

Currency company TransferWise is calling for an overhaul of the international money transfer market and what it calls the 'grubby' tactics of banks offering poor exchange rates.

It's called its campaign bath4banks and says it's time for the industry to "clean up".

It’s a fun way of making an important point – if you use a high street bank to send money abroad, you are going to pay a lot for the privilege.

Banks versus the brokers

Let’s take a look at how much you would get if you converted £10,000 into US Dollars from a handful of high street banks:

Source: lovemoney.com international money transfer centre

So you could be waiting a fair while before you actually get the cash, and you’ll tend to get less than $14,900. Now let’s take a look at what you could get from a handful of specialist online brokers:

Source: lovemoney.com international money transfer centre

As you can see, not only do you get far more for your money, you’ll probably get the cash quicker too. There’s a difference of $370 between Barclays and TransferWise, a frankly ludicrous amount.

[Related story: Number of people keeping finances with one bank declining]

Why brokers are so much cheaper

If you pop down to your bank to transfer money overseas, you will suffer from a poor exchange rate. Banks think that by offering a ‘commission-free’ or ‘fee-free’ transfer, they can get away with offering that poor exchange rate. They take a healthy chunk of your cash, and you get stung without really realising it.

With brokers, things are a little different. Their whole business is moving money across borders, so they need to offer a better service than you’ll get from your bank. As a result, while you may pay a fee, you’ll get a far better exchange rate and end up with more money as a result.

Compare rates on international money transfers from brokers and banks at lovemoney.com