What Is a Correspondent Bank Fee? Here's Everything You Need To Know
A correspondent bank fee, sometimes known as an "agent charge", "foreign bank fee", or "intermediary bank fee", is a fee that is sometimes charged by banks when a third-party bank is needed to send money from one account to another.
In the world of international banking, it's often the case that banks don't have the networks or the resources to be able to conduct financial transactions directly to all other banks across the world. In these cases, banks make use of another type of financial institution, known as a correspondent bank, to help get the job done.
That's where correspondent bank fees come into the picture. Correspondent banks are permitted to detract a fee of any amount directly from funds being transferred using the SWIFT network, all without your knowledge or permission.
Correspondent bank fees are just one type of bank fee you might expect to pay when sending money abroad. Unfortunately, they usually cannot be anticipated until long after you instruct a bank transfer to another currency, meaning these fees are anything but transparent.
How Expensive Are Correspondent Bank Fees?
To start off with, it's very much worth noting that not every money transfer you send abroad will result in a correspondent bank fee. These fees will typically only be charged when you send your money to a country where your bank doesn't have any branches, for example, or to a bank with whom your bank doesn't have an established relationship.
As a rule of thumb, therefore, the larger your bank and your beneficiary's bank, the less chance there is that you'll be charged a correspondent bank fee.
If you do end up being charged a correspondent bank fee, the amount can vary significantly. What's more, the amount will not be made transparent to you — not even in your bank's fee schedule. This is because it's the correspondent bank, rather than your own bank, that subtracts the fee from your transfer. In the end, correspondent bank fees can vary anywhere between USD 10 and USD 100, or more, per transfer.
It's also worth bearing in mind that these fees tend to come in addition to the slew of existing fees and charges that your bank itself already will have in place for the service of sending money abroad. These might include any combination of exchange rate margins, commission fees, and fixed fees.
How To Avoid Correspondent Bank Fees
Aside from choosing to send your money abroad with large, well-established multinational banks, there are other ways to dodge having to pay a correspondent bank fee on your international money transfers.
In most cases, using a money transfer provider instead of a traditional bank will not incur a correspondent bank fee and will ensure that all the fees you'll be paying when sending money to another currency will be made clear upfront. What's more, those fees are usually considerably cheaper in the first place! (Take a look at our full in-depth guide to international money transfers to learn more about why this is the case).
Depending on where you come from and where you'd like to send money, the transfer provider that's cheapest can differ considerably. Our analysis has found that TransferWise, Azimo, Remitly, and WorldRemit tend to be the cheapest providers on average across the globe. However, we'd recommend that you use of our free comparison engine to get the up-to-date rates and find the cheapest provider on every transfer.
The Monito Glossary
When it comes to moving money, don't let yourself be bogged down by all the jargon. Explore The Monito Glossary to get up to speed with everything you need to know about money transfers.
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