5 Ways to Tackle and Pay for Overseas Bills

Man using computer to pay for bills onlineThere are many reasons why you may have to pay for overseas bills. It may be for education or medical reasons, or just simply have household bills to settle for an overseas property. Paying for bills abroad can be difficult so here are five ways to ensure that the costs to pay your overseas bills are reduced with the minimum amount of hassle.


  • Credit Card

If you pay bills overseas on-line with your credit card then you will almost definitely be charged by your card issuer or bank. This can be anything from 3%-5% of the amount paid. However, you won’t have to pay a flat transaction fee in addition to this.


When is this a good option?

If the bill you are paying is relatively small, i.e. under £200, then this method may be cost effective.


Pros & Cons of paying an overseas bill by credit card

The main advantage is that using a credit card is an incredibly easy method to pay your overseas bills. But, your credit card issuer fee will be a percentage of the amount you are paying. If your bill is a large one, so is your fee.



  • On-line international money transfer

As long as the person you are transferring the money to has a bank account, then this can be a very good option. By using a bank or a money transfer specialist, you can simply transfer the funds directly into their account.  However, this is only an option for larger bills as most money transfer companies set a minimum transfer amount of £1,000.


When is this a good option?

This is a great option if the bill you are paying is over £1,000 and of course the recipient has a bank account already in place to receive funds. If using this method, it is very important to remember to reference the bill you are paying, either by a pre-agreed reference or with the invoice number of the bill. This ensures that the recipient knows who has paid them.


Pros & Cons of paying an overseas bill by on-line international money transfer

In comparison with using a credit card or PayPal, the exchange rate you’ll get from a money transfer specialist will undoubtedly be better. However, the process is a bit more complex. For smaller amounts you can still expect charges of between £18 and £22 so you need to consider if the amount you are sending warrants the cost.



  •  PayPal

PayPal is the most popular and well known company who facilitate on-line payments. Setting up an account is very simple and most billers have a PayPal account and will accept payments into it.


When is this a good option?

If you have a PayPal account and there’s money in it, plus the recipient has a PayPal account, then this is a very good option for transferring amounts up to £200.


Pros & Cons of paying an overseas bill by PayPal

If both sides have existing PayPal accounts then this method is very quick and very easy.  Convenience comes with a charge though. PayPal will charge a flat fee on top of a percentage of the payment made. If it’s a bill under £200 then this won’t matter so much, but for larger bills you may want to find a cheaper option.



  •  Western Union

Western Union is no longer as highly regarded as an alternative such as Transferwise and PayPal. This is because some consider it old fashioned in comparison. However it is still worth considering as an option.


When is this a good option?

Western Union has a massive global reach and this is still their key advantage over other options. If you are paying into a country which doesn’t have a particularly well established banking industry such as parts of South America, Asia or Africa, you may struggle to pay directly into a bank. This is where Western Union’s reach can be a massive advantage.


Pros & Cons of using Western Union to pay your overseas bills

The cost is the biggest disadvantage to using Western Union as there is no flat rate fee. The cost of the transfer and the exchange rate you receive all depends the amount of money being transferred, where you are sending it to and how the recipient wants to receive it.



  •  Set up a local bank account

Most people nowadays do most of their banking on-line. Therefore, setting up a bank account in the country where you want to pay the bill may seem like a good idea. If you have an apartment in Spain and are paying all of the utility bills in Euros, then it makes sense to have a Spanish account to pay the bills from.


Once you have the account in place you can simply transfer money from your British account, into your Spanish one, to ensure that funds are in place ready to pay bills.


When is this a good option?

If you are a dual citizen of the country concerned and have a lot of bills to pay there, then this could be a good option.


Pros & Cons of paying an overseas bill by a local bank account

PayPal and credit cards come with a lot of fees and charges, so you will certainly be saving money in that respect. Paying a bill in the currency in which it was issued also makes a lot of sense. The hassle comes with actually having to visit the country to open the bank account in the first place, and then having to maintain a balance to pay the bills. Opening a bank account may not even be permitted in the country concerned.


Things to consider when you pay your overseas bills

Here are some things to think about when paying bills abroad:

  • What is the amount I need to pay? If it’s under £200, then credit cards and PayPal are good options. Any more than that then they could prove expensive.
  • How often do you need to pay this bill? If it’s a monthly bill then it’s worth investigating the possibility of opening an account in the country concerned, or speaking to a specialist money transfer company.
  • Before deciding, always consider the fees involved.
  • What exchange rate am I being offered?
  • Are there any discounts for early or on time payments?


Case Study

Trevor has a holiday home in France which he has owned for a number of years. He needs to pay regular small utility bills and a one off community fee every year of £1,500. Up until this point he has paid the smaller bills on an ad-hoc basis through his PayPal account and paid the larger one on his credit card.


In order to make the process simpler and cheaper, the next time Trevor visits his holiday home he sets up a French bank account with direct debits to pay the utility bills. He also sets up a standing order from his British account to ensure the French account is kept topped up.


For the community fee he employs the services of a money transfer specialist who ensures his payment can be transferred with the minimum fees.

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