If you’re looking to transfer a large amount of money overseas, you will often see a confusing array of marketing messages from foreign exchange providers and currency exchange companies. They sound attractive, but what do they really mean?
“Interbank rate”, “mid-market” or “indicative rate” currency converters
These converters typically ask you to input the amount of money you want to convert, or they autofill with the details of an overseas property and then show the results.
In 2015 the Advertising Standards Authority (ASA) ruled that converters which return the interbank rate were misleading because they do not show the true cost of the conversion, or any idea of what that provider is actually charging.
If you see one, you can report it to the ASA or to the Financial Conduct Authority with your concerns.
“No fees”, “free transfers”
They say there’s no such thing as a free lunch and that’s true for currency transfers as well. A same-day currency transfer usually costs about £7. If the provider is offering this for “free” then they’re just charging you somewhere else instead, usually in the exchange rate. You need to know the total cost of the deal, either as a percentage of the total value of the transaction or as a monetary amount.
“Bank-beating exchange rates”
Whilst many specialist payment transfer firms can save you money compared to using your bank, they must provide proof of the savings and not just make an unsubstantiated claim. If a provider says this on their website or ad, ask where the figures are published and how you can check their claim independently.
“Best rate guarantee”
Obviously, there can only ever be one “best rate” so why are so many firms promising it? All of them use the same premise – you have to find a cheaper deal and they’ll beat it. The problem is that you have to be registered with multiple providers to get quotes to compare, and currency markets move so fast it’s almost impossible to do it simultaneously as required to qualify for the “guarantee”.
The only reliable way to guarantee the best rate is to ask providers what their total costs for the deal will be. Eris FX shows this as a percentage of the total deal size. You can see this clearly displayed by using our currency converter.
Save 4% compared to the banks
Again, these are unsubstantiated savings claims. The ASA ruled that without proof they are misleading and such claims should not be made. If the firm makes these statements it must back them up with evidence.
This is a commonly used marketing message, but it doesn’t mean anything. What is “commission”? The firm is making its money somehow so what are they calling the costs? Ask to see the total cost of the deal, either as a monetary amount or as a percentage mark-up.