The UK has a large immigrant population, mostly from Europe but also from other countries around the world including the US. Although the number is small compared to other countries, significant amounts of funds are still being transferred between the countries every day. When you’re transferring money to the US and back, it is worth remembering that all of the banks and money transfer companies have differing charges and offer varied exchange rates.
It would take too long to cover every possible method of transfer so taking different situations into account, here are our recommended methods.
So What is the Best Way to Send Money to the US?
If you are moving from the USA to the UK
All of the banks in the UK allows you to transfer money to and from the US and it’s a very easy process to do so. However it’s worth remembering that the fees charged by banks for international transfers are high, and you will not be getting the most competitive exchange rate.
To avoid large fees, consider using an online money transfer service.
Honourable mention: HiFX gives you competitive exchange rates for transfers of US dollars. A good choice for payments that are under $10,000.
Sending money for business
If the business is sending currency, consider these two important points:
- The Exchange Rate Margin is the difference between the rate you are offered and the wholesale exchange rate published by xe.com.
- The specific business products on offer. These could be forward exchange contracts, limit orders and foreign currency accounts.
Our Verdict: Think about HiFX. They have a £0 fee structure in place and competitive exchange rates. This will allow you to maximize overseas receipts or payments. They can also provide Foreign Currency Accounts which will allow you to keep your funds in a foreign currency, only converting them as and when you need to. To learn more about HiFX, read our review here.
Buying or Selling a Property
If you are in the process of buying a property in the USA or have recently sold a property and want to get the money back to the UK, you need to find a provider who has a strong presence in both countries. This will give you peace of mind and flexibility in what is usually a stressful time.
Our Verdict: OFX is the obvious choice for international property transactions due to its local account managers in each country. They are licensed and regulated in both the UK and the USA.
Sending Money Home
Western Union, for example, are the ideal choice for sending small amounts internationally, like gift money for friends or relatives. Other companies may waive transfer fees if you are sending a large amount. Discussing your specific needs with a money transfer specialist is critical to getting the right deal for you.
Our Verdict: You can achieve a spread of 1% or perhaps lower if you use the right exchange specialist such as OFX or TorFX. You can also ensure you get the lowest fees and create an ongoing strategy. Hedging tools may also be available.
Honourable mention: Western Union need to be mentioned simply for the use of use of their cash pick up service and their worldwide reach.
Payment for tuition can be a big expense. You need to pay tuition fees regularly but there are also multiple other expenses associated with studying. For the tuition fees and other larger payments, you need to ensure that you shop around for the best exchange rates. When it comes to smaller transfers, make sure you keep a careful eye on the fee you are being charged.
Our Verdict: Transferwise. This is a fairly new but up and coming company based in the UK. It is perfect for students and the parents of students who need to pay study bills. Alternatively, you can click here to read our review on Transferwise.
Tools to Help you Send Money to the USA
The Costs of Sending Money to or from The USA
Attempting to figure out the complete cost of a money transfer can be difficult as it all depends on the transfer method and the fees involved. Hence why the margins aren’t always clear. To help you, we’ve compiled a list of the most common charges you’ll face when sending money from one account to another.
- The Transfer Fee – This is also called a Telegraphic Transfer (TT), a Wire Transfer or a Remittance Fee.
- Exchange Rate Margin – The difference between the rate you are getting and the wholesale rate you see on xe.com.
- Correspondent Bank Fees – The fees that your bank charges for guaranteeing your transfer gets to the right account. It is taken out when the funds arrive in the recipients account, it’s always very difficult to estimate it and impossible to reverse.
- Receiving Bank Fee – If you’re transferring foreign currency into an overseas bank then that bank will charge you a fee for doing so. In this instance, if you send British pounds to an American bank then the American bank will charge you.
What are the options?
Banks in the UK have more competitive fees and better exchange rates than most other banks around the world as there is much more competition for this kind of service in the UK. Using a bank is the fastest way to get money between accounts.
This is a great option if you are looking to send less than £1,000. The fees will be similar to those you’ll find at a bank but the exchange rate will be better. If the person you are sending money to also has a PayPal account then the process is even more convenient.
Money Transfer Company
Money transfer companies such as HiFX and OFX are definitely the cheapest option if you are sending anything over £1,000. They offer low or no fees and the exchange rates are better. It can take a little longer to make the transfer which is a disadvantage. You’ll initially have to set up an account with them. This process can be as short as ten minutes or as long as two days depending on the company. When you eventually make the transfer, it can also take one day longer than a bank.
You can click here to watch a quick and easy-to-follow video on how to make an overseas money transfer with OFX.
How to use a Money Transfer Company (instead of a Bank)
Transferring money in this way is similar to using a bank but with a few distinct differences. Here are the basic online steps.
Setting things up (one off)
- Log in to their website and enter the details required. Make sure you have your ID available.
- Wait for account approval, you’ll then receive a login and a password.
- Ensure you have the banking details of where you are sending the money and enter them. The receiver is usually known as the ‘Recipient’ or ‘Beneficiary’.
Transferring the Money
- Advise the amount you want to send and get a quote.
- Reconfirm the details, accept the exchange rate offered to you and confirm the amount in sterling.
- You will receive a confirmation of the deal. You will pay them in sterling before the amount is sent to the USA.
Information You’ll Need Before Making Your Transfer
When sending funds overseas you will need the following information about the account you are sending to.
- Account name of the recipient
- The ABA number (also called routing number or routing transfer number)
- The SWIFT code of the bank
British banks are also identified by sort codes which are similar to an ABA number. If transferring money TO a British bank, you may also be asked for an IBAN. This is a 22 digit number beginning with GB.
Here are a list of SWIFT codes for the larger US banks.
How Long Does it Take to Send Money to the USA?
If you’re looking for speed then Western Union and PayPal are your best options. Transfers take a matter of minutes. If you’re sending money to a bank account using a bank then the process will take 1-2 days. If you’re using a money transfer specialist that could increase to 2-3 days.
Related link: How Long Does It Take To Transfer Money Overseas?
Is There a Minimum Transfer Amount?
Banks and PayPal do not have a minimum limit but some money transfer specialists do. Before using them make sure you check their minimum transfer amount.
Tina has got a place at a top US university to study marine biology and she and her parents are looking at the best way to transfer money to pay for expenses.
The cost of tuition is in excess of £10,000 a year so they employ the services of Transferwise to ensure that they get the best deal on fees and exchange rates. They also ask for advice on the best way to transfer funds to cover the cost of accommodation and other everyday living expenses.
To send small amounts of spending money they plan to use their Paypal accounts for the sheer speed and simplicity.