When is the best time to send money abroad?

At the end of August 2019, uncertainty over Brexit and other world events caused the pound to gain around 5% against the euro. UK residents who sent money to Europe during this period saved a lot—as much as thousands of dollars. 

This isn’t the only case of people taking advantage of market motion in their favor. Some people even set alerts on their choice currencies so they’ll know when the rates are good for them.

When you’re sending money internationally, good timing is everything. However, it’s a hard thing to predict. The markets are always moving, and there’s no way for you to pinpoint a single "best" time to send money. (Sorry!)

So, what do you do?

You take time to understand the different factors that influence international money transfers. When you do, you can make your transfer at the right time. 

According to our research, these are the best times to send money abroad.

In the middle of the month

Many expats send money back home every month to support their loved ones financially. But the mistake they make is they send money home the minute they get paid. If you want to spend less on international money transfers, you must consider exchange rate fluctuations.

If there’s no need to send money urgently, plan your transactions in advance. Most international money transfers happen during the last 5 days of the month and the first 10 days of the next month. This is when bank branches and money transfer outlets are very busy. 

Some financial institutions have a tendency to spike their fees when it’s most busy. To avoid these spikes, as well as long queues and delays, make your transfer when there’s no rush—during off-peak times. Send money midway through the month--on a weekday or a weekend. 

Additionally, if you’re sending money to loved ones abroad to help them with their bills or to pay international bills of your own, making your transfer in the middle of the month will ensure that your payment reaches its destination with plenty of time.

When the exchange rate is in your favor

There’s no way to predict how the exchange rate will fluctuate because it depends on international market movements. Even remittance organizations have no control over exchange rate movements.

If you’re not sending a lot of money, the fluctuating decimal point may not make much of a difference. Also, you may not be able to wait for the exchange rate to drop because of the needs of your family or your financial commitments. 

However, if you have a white-collar job, a high-powered job, or run your own business, you may have money to spare and take advantage of low exchange rates. In this case, you can save money and send a lump sum home when the exchange rate goes down. 

Another option is to schedule your money transfer in advance. If you know you’ll need to make a payment in the coming weeks or months and you like the rates now, you can schedule a forward contract that will save the current rate for a transfer in the future.

What affects the exchange rate?

1. A country’s interest rate: if it goes up, so does the currency’s value.

2. Inflation: when the inflation rate in a country is low, the value of its currency increases.

3. Imports and exports: if a country spends more money to import goods than what it makes from exports, its currency’s value decreases.

4. The mid-market rate: this is the exchange rate used by banks to trade foreign currency between each other. It changes depending on the currency, the market, the bank, and even the time of day. You can find the mid-market rate on Xe’s Currency Converter.

5. Political events: political stability and instability affect the value of a country’s currency.

6. Global economic trends: major worldwide events—like the global recession of 2008—affect the rise and fall of currency values

When fees are low

According to the World Bank, the global average cost of sending $200 was 6.8% in the first quarter of 2020. This means that most people paid approximately $13.6 USD to send $200 USD internationally. Sending money back home is an expensive affair for most expats.

However, not all money transfer companies charge high fees; some actually charge very competitive rates. Some add a markup to the exchange rate while others charge a flat fee for each transaction. Some transfer agents are transparent about fee spikes while others are not—they simply increase their fees without warning. So, it’s up to you to stay alert and avoid these unfair fee hikes. 

Take time to compare fees so you can get the most attractive deal.

3 things to look out for when sending money abroad

1. 0% commission or "no fees”

Most banks will tell you that they charge 0% commission or no fees for international money transfers. While this is true, banks do add a markup to the mid-market rate, and it could be very high (often at least 4-6%). Don’t take banks at their word when they say they charge zero fees.

Before you send money abroad, check how the exchange rate you’re being offered compares to the mid-market rate on Xe. Some banks add a markup to the mid-market rate. This is where they make money, so, there’s nothing like “0 fees for currency conversion.”

Don’t just compare your quote to the mid-market rate. Also compare quotes from multiple providers. While transfer fees are inevitable, banks and other providers will often offer rates that are even more in their favor. And if you’re sending a large amount, that marked-up rate could make a big difference in your wallet.

Bottom line…if someone claims to offer no fees at all, it’s probably not the truth!

2. The fee changing with different transactions

It’s worth noting that some money transfer agents increase or lower the fees based on the amount you’re sending. These adjustments can happen at any time, and most companies don’t give prior warning to their customers—so they never expect the changes.

For example, back in 2018, Western Union lowered the fee and rate markup for sending 1000 GBP to EUR. However, for a few weeks that same year, the company added a £2.50 GBP fee onto the cost of sending 1000 GBP to EUR.

3. Routes not being priced similarly

Some remittance organizations charge you more to transfer money from your country of residence to your home country than vice versa. For instance, it may be cheaper to send GBP to EUR than EUR to GBP. In most cases, people in Germany and Italy pay almost 6 times more to send money to the UK than people sending money in the opposite direction.

That’s where a little research goes a long way. Not all companies price routes differently in both directions. If you frequently switch between two countries, choose a company that charges the same rate in both directions.

With Xe, any time is a good time to send money abroad

It’s tough to know when it’s really the “best” time to send money abroad. But if you use Xe, you get to save more thanks to our competitive rates. You can even set your desired interbank rate and get alerts on your currency pairs. 

Avoid making assumptions about how you’re being charged. Use our Currency Converter to see the live mid-market rate, and always shop around before sending money.

You work hard for your money, keep more of it with Xe. Open an account today.