How to Avoid Hidden Fees When Sending Money Internationally

Currency Exchange
April 23rd, 2025
How to Avoid Hidden Fees When Sending Money Internationally

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Sending an international money transfer may seem simple, but there can be hidden fees and poor exchange rates. This means that less of your amount of money ends up where it should. If you are sending cash for an overseas holiday, paying for international tuition, or moving a large amount of money to family in another country, it is important to know how to get the best deal. Be sure to pay attention to the transfer costs involved.

This guide explains the hidden fees you should know about. It also shows you how to avoid them.

What Are Hidden Fees in International Payments?

Hidden fees are extra costs that you may not notice right away when you use a money transfer service or a bank transfer. These costs can include:

Exchange Rate Markup

Most providers do not offer the exchange rate that you find on Google or XE. They often add a markup. This means your foreign currency recipient gets less in the end.

If the exchange rate for GBP to EUR is 1.17, your provider might only give you 1.13. This means they have added a foreign conversion fee to the rate.

Transfer Fees

A transfer fee often increases the cost of the exchange rate. This fee can be a flat fee like £10 for each transfer. It can also be a percentage of the amount of money sent. Major banks such as Barclays, HSBC, and Lloyds usually charge higher fees than specialist providers.

Intermediary Bank Charges

Some traditional banks work with other banks to process transactions. These other banks are known as intermediary or correspondent banks. They may charge extra fees during the process. This can reduce the final amount that is received.

Currency Conversion Fees

If you use a credit card or debit card, your bank might add a fee for currency conversion. This usually happens when you transfer money in one currency but send it in another currency.

Additional Costs by Payment Method

Different payment methods incur different charges:

  • Bank transfers: They are usually less expensive but take more time.
  • Card payments: They are faster but may come with higher fees.
  • Instant money transfer services: These are great for quick payments, but they often cost more.

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How to Avoid Hidden Transfer Costs

Compare Different Providers

Don’t rely on only one bank or app. Different providers have different fees. They also offer various foreign exchange rates. By looking at several options, you can find low fees and a favorable exchange rate for your international payments.

Check the Total Cost – Not Just the Fee

Always check the full cost:

  • Transfer fee
  • Exchange rate offered
  • Amount your recipient will receive

This helps you see the overall costs.

Use Specialist Money Transfer Services

Specialist providers are often easier to understand than traditional banks. They usually show fees upfront. They provide competitive rates and have fewer middlemen involved. This can reduce the risk of extra charges during the process.

Choose the Right Payment Method

The cost of your transfer typically varies based on how you pay.

  • Payments from a bank account usually have lower fees.
  • Using a credit card can be simple, but it often costs more.
  • Payments with a debit card give a nice balance between speed and cost, but they may still include markup or foreign conversion fees.

Send Money in the Recipient’s Local Currency

Sending money in local currency can save you money on extra fees from the bank of the person receiving it. If you send money to Vietnam, using Vietnamese dong (VND) may cost less than sending it in USD or GBP.

Table: Comparing Providers by Fee Type

Provider Type Exchange Rate Markup Transfer Fee Intermediary Fees Overall Transparency
Major Banks (e.g. Barclays, HSBC) Higher Flat + variable Likely Low
Specialist Providers Lower/None Often flat Rare High
Instant Transfer Apps Moderate Variable Sometimes Medium

Tips for Sending Large Amounts of Money

If you need to move large amounts of money, like when paying for a property in another country or for tuition fees:

  • Look to see if your provider offers better rates for larger transfers.
  • Consider getting professional advice if the transfer involves legal or financial issues.
  • Use currency conversion tools or alerts to find good rates before you confirm.

Tips for Sending Large Amounts of Money

Correct as of 24 March 2025

FAQs About Avoiding Hidden Fees in International Transfers

What are the best ways to reduce fees on international transfers?

Compare service providers. Try not to use a credit card when possible. Send money in the recipient’s local currency. This will help you avoid extra currency conversion fees.

Is a bank transfer cheaper than using a credit card?

Yes, this is usually the case. Credit cards can charge foreign exchange fees, cash advance fees, and higher prices. A bank account transfer or using a debit card usually costs less.

Are traditional banks more expensive than apps?

Yes. Big banks like Lloyds, Barclays, and HSBC often have higher fees for transfers. They also provide less attractive exchange rates than app-based services or specialist providers.

How can I know the real cost of a money transfer?

Check the transfer fee, the exchange rate, and the actual amount of money your recipient will get. This will help you see your overall costs better.

Are there hidden fees with instant money transfers?

Yes, sometimes. Instant money transfer services may not show all the fees clearly. They might also add a markup to the exchange rate. It is important to check their pricing carefully before you send money.

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