Watch Monito's Video On How to Avoid Paypal's Fees
A Youtube Creator at Monito, Jonny helps you understand all you need to know about hidden fees, exchange rates and the best services to move your money across borders.
A writer at Monito, Byron possesses a keen interest in the intersection of personal finance and technology. A former journalist, he strives to bring complex information to life in a way that can be widely understood and appreciated.
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This video bring tips about how to avoid Paypal's hidden fees.
How to avoid paypal's fees Video Transcript
In today's video, we're going to look at PayPal and the high hidden fees they charge for spending money in a foreign currency. I'll explain to you how people hide their fees to make money from your foreign purchases without you even realising.
And also stick around to the end, because I'll not only show you how to avoid these fees, I'll also share with you a great alternative to PayPal so you can save money when spending money in a foreign currency.
If you've ever bought something from a foreign company, it's likely you had to pay some sort of foreign currency fee, for example, I'm in the UK and there's a filmmaking course that I recently bought that's in the US.
When I purchased this course, I was offered two options to pay via card or PayPal. If you're familiar with using PayPal, you probably appreciate the ease in which you can purchase if your account details are saved. It can take just a couple of clicks because of how convenient PayPal is.
I don't really blame you for using it when purchasing in a foreign currency. Let's take me for example, if I were to buy this course again at $997 and use PayPal, all I have to do is enter my email address and press paper out.
It even says the safer, easier way to pay it. How nice. But ignore their pleasantries. This is where I want you to pay attention. You see, PayPal has given me an amount this purchase will cost in my local currency, which is £771.
They've also given me their PayPal conversion rate, which in this case is £1 to roughly 1.29 USD. So the first thing we need to do is take that £771 and check if it's anywhere near the original price of $997.
So we do a quick Google search. Wow. So according to this, it's actually £736. So if I was the press continue and pay this way with PayPal, I would have ended up spending £771, which is around 30 to £35 more than if I was to use the mid-market, a.k.a. the real exchange rate.
Wow. That's that's all. Thanks to this PayPal conversion rate, which is £1 to 1.29 USD. If we check Monito.com, we can see what the real exchange rate is right now for £1. Wow. The mid-market exchange rate right now is actually £1 to 1.35 USD.
So basically, PayPal is just taking advantage of people that aren't familiar with the exchange rates so they can make money from their foreign transactions. To avoid this let's begin by clicking See Currency Options, it’s kind of small and hidden.
And now we have two options. My local currency GBP or the foreign currency USD. Let's click USD. Wow. PayPal really doesn't want you to use this option. Look at this aggressive red font with an exclamation mark that tells me because PayPal doesn't want us to use this option, we probably should. And instead of them, taking care of the exchange rate our banks will do it instead. Although it probably won't be exactly what the mid-market real exchange rate is, our banks will very likely give us a better deal.
One of the best ways to make this purchase would be to use the Wise Multi-Currency Account and card. This is especially useful if you're someone that routinely purchases from foreign companies or spends money abroad. It's basically a great foreign currency account.
For example, with this account, you can receive up to 54 different currencies. So if I've received U.S. dollars, I could then buy products from the U.S. with this card and incur no transaction fees or hidden fees within bad exchange rates.
I would just pay the original amount, which in my case was $997. But what if I don't have dollars or any other foreign currency? Instead, let's just say I've deposited £800 into my Wise account to cover this particular transaction.
Well, if I make this purchase using my wise card right now, according to their website, Wise would charge me a fee of around $4. And thanks to the fact they only use the mid-market a.k.a. real exchange rate, I will end up spending around £733 for this course.
Remember how PayPal wanted to charge me £771? Using this Wise card would be a much better option and probably a better option than any high street bank. But it's important to note that the wise card is limited to a total amount that you can purchase per day, which in the UK is £1,000.
Although, according to the Wise website, this is just the default and the maximum is £10,000. So you may be able to request a larger limit. You can't necessarily buy sports cars or houses with this card, but it is great if you're going to frequently make foreign purchases that sit beneath the limit.
So don't let PayPal rip you off by exchanging your money at the point of purchase. If you must use PayPal ensure you select that bit of blue text, which says see currency options and you ignore that red font and pay in your currency.
Just let your bank take care of the exchange rate. And if you want to take it one step further, I recommend you sign up for a Wise multi-currency account and card and use it to spend money in a foreign currency. It's likely to save you some money.
I hope you enjoy today's video. If you'd like to find out more about the Wise Multi-Currency Account, then check out this review we made. And of course, if you have any questions, feel free to comment below.
I'll see you on the next video. Goodbye.
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