If you regularly send money overseas, chances are you're looking for ways to save money on those transfer fees. So seeing advertisements for "free money transfer2 or zero-fee money transfers abroad gets you excited. You're going to save money on your remittance, right?
There's no such thing as free lunch. Banks and money transfer operators have staff to pay, offices to rent and bills to pay, too. The advertisement might say it's free but they profit from the transaction somehow through exchange rate fees..
But don't just take my word for it.
Here are examples of companies claiming to offer no-fee money transfers abroad:
Western Union UK
Offers fee-free money transfers. The catch? They make money when they change your currency during the transfer. For instance, as of February 4 2015, when you transfer 500 GBP from a UK credit card to a Polish bank account, Western Union will charge you a 3.16% currency exchange fee, or 15.8 GBP when you transfer money.
Habib Bank Ltd
Free money transfer service, but the website's FAQ says the sender will be responsible to pay fees and taxes.
Provides fast and free money transfer, but their terms and conditions webpage states that a currency exchange rate and transfer fee may apply to international transfers.
If a money transfer operator claims that they don't charge fees or commission, it just means they're compensating for that loss through a wide margin in exchange rates. Although some companies claim to give "great exchange rates", they still earn because of the currency exchange fee. This fee is the difference of the exchange rate they quoted when you send money, and the real exchange rate currently traded in the market, also known as the interbank rate.
For a complete guide on how currency exchange rate margin works, have a look at this guide. Unless you're familiar with how international money transfers really work, it's hard to see these hidden fees. Other people don't even bother checking the interbank rates because they rely on the money transfer operator's online calculator, which doesn't show the interbank rates.
Don't be Fooled by Fee-Free Transfer Services
Before you send money, do a little due diligence by comparing all the associated fees, charges, commissions and exchange rates first. I hear you, it's complex and might take a lot of time. But don't worry, we've made the job easier for you. Use our comparison tool to see a clear and transparent overview of ALL the money transfer options, so you can choose the best one for your needs.