A Q&A with Expat Tax Online

Whatever the size of your international payment requirement - from sending a small amount as a gift to a relative to purchasing a property overseas - it’s important to take control by understanding how to get the best exchange rate for your money and avoid any hidden costs.

Gary O’Driscoll - Head of Private Dealing at Clear Currency - shared some top tips with our partner US Expat Tax, for you to consider when exchanging money and transferring it overseas.

What impacts exchange rates from one day to the next?

Currencies strengthen and weaken by the minute because banks and investors purchase huge volumes in response to political and economic news, including: interest rates, inflation, GDP, consumer confidence and elections.

In some instances, the impact of the political and economic variables that influence exchange rates can be severe - as has been proved in recent times. Take Brexit for example. On 23 June 2016, the UK voted to leave the EU - a decision that took markets by surprise. Last-minute polling suggested that ‘remain’ had the edge, so when the Brexit result reverberated around the world the pound fell off a cliff, experiencing its largest intraday collapse in 30 years.

What mistakes should people know about when sending money abroad?

Assuming you will get the base rate

People often assume that they will get the rate they see online. However, this is the base rate; the rate you end up with will always be below that - and the difference is what you are being charged.

“There’s a base rate. If you were to use us, we would provide you with our rate, which will be slightly below that - but that is inclusive of our fees and charges. That way, we will let you know exactly how many dollars you are going to get.” Gary O’Driscoll, Head of Private Dealing.

Assuming your bank is the most cost-effective option

Banks offer a wide range of financial services, making them seem the obvious choice when sending money overseas. However, when it comes to exchanging currencies and executing international payments, they can’t deliver a specialist service. Banks' diverse offering means their resources aren’t focused on helping you obtain the best possible exchange rate or ensuring your funds are sent as quickly as possible.

Consequently, they will charge a wide margin to perform the transfer, meaning you won’t receive the best exchange rate available. They typically charge transfer fees of up to £30 per transaction as well, which quickly add up if you need to make international payments often.

“A bank will let you do the exchange and you don’t always find out what rate you’re going to get. [For example] they will tell you they’re charging you $25 dollars, but one thing to note is that’s $25 plus their exchange rate. It’s not always as transparent as you think." Gary O’Driscoll, Head of Private Dealing at Clear Currency.

Engaging the services of a currency specialist like Clear Currency is anything between 2-3% cheaper than a bank - not only because you will receive a better exchange rate; you won’t be charged an international transfer fee either.

A lack of control when making international payments

A common mistake people make is sending money to a bank account overseas without exchanging it first. If you adopt this opaque approach, you won’t know what exchange rate you are getting - potentially making the cost of your transfer unnecessarily expensive.

Clear Currency will let you know what exchange rate you are getting and send the funds in the currency you are exchanging into, so you know exactly how much you will receive when you make the transfer. This transparent service gives you peace of mind when sending your money overseas - especially if it’s a large sum.

Failing to consider the volume of your transfer

The volume of your international payments is sometimes out of your hands. However, it’s prudent to be aware that less frequent, larger transfers are more cost-effective than regular, smaller transfers. Not only will this reduce your exposure to transfer fees; it provides you with access to better exchange rates.

“The more that we can purchase on the markets that one time, we get a better rate, so we’re able to filter that down to our clients.” Gary O’Driscoll, Head of Private Dealing at Clear Currency.

Clear Currency

Clear Currency specialises in helping clients that are making international payments to save money when making international payments - both large and small.

Transferring large sums of money into another currency and transferring them overseas can be daunting and confusing. Aware of this, we use their knowledge and experience to cut through the jargon and give you a friendly and personal service.

We recognise that it’s impossible to accurately predict how exchange rates will perform; therefore, it’s prudent to plan for all eventualities. With this in mind, we will assign you a dedicated account manager. In addition to helping you benefit from quick, easy, reliable and secure transfers, they can help you mitigate the impact of currency risk on your budget.

Why not set up an account today and start saving on your international payment requirements. It's free, takes only a couple of minutes, and means you can make secure low-cost payments internationally.

“We try and help both individuals and businesses to save money on transferring currency by giving them an alternative service” Gary O’Driscoll, Head of Private Dealing at Clear Currency.

Expat US Tax

Expat US Tax is an experienced team of expatriate tax professionals helping Americans and Green Card holders minimise their tax wherever they choose to call home. To avoid complications to their clients’ tax affairs, they offer a range of services: US-UK filing, US-UAE filing, US-AU filing, US-CA filing, GILTI Tax, Streamlined Tax.