Regardless of their background, all people come in contact with currency exchange at some point. Whether you’re going on a holiday, or maybe you’re an overseas worker or buying things online from another country. The majority of the people lose literally hundreds or thousands of dollars every year without even noticing.
We’ve been using TransferWise for over two years now and with good reason.
Where banks charge between 2% to 6% in currency exchange fees. This is a lot of money you’re throwing away in just the blink of an eye.
TransferWise only charges 0.5% to 1% in currency exchange fees. The more you transfer, the lower the currency exchange fees will be. If you top up your TransferWise account with a debit card or a bank transfer, there are no fees for depositing the money, and you can generally take your time.
Exchanging your money for another currency in airports is probably the worst idea. Mostly because the exchange rates are down right terrible. On average, when the actual exchange rate of the currency pair EUR/PHP is 61, you might get an echange rate of 52-53 in airports.
What does this mean?
If you’re converting 1000 EUR, if you use a service like TransferWise, you will get roughly 61000 PHP. If you convert the money in the airport, you will get at best 53000 PHP. That is a difference of 8000 PHP or 131 EUR.
The fees are high for the following reasons:
- People need foreign currency fast.
- There is a person literally waiting for people to come in, he needs to be paid.
- Businesses are expensive to run in airports.
Western Union & MoneyGram
These are services used by many overseas workers sending money to their families. Mostly because it is simple and straightforward. But as we will point out below. You lose a lot of money on simply fees.
Have your beloved ones open a bank account in the destination country or have them sign up for TransferWise. You can use TransferWise to transfer the money, and save a lot in currency exchange fees. This will benefit you or your beloved ones.
Converting 1000 EUR to USD
|MoneyFram||5 EUR||1206.25 USD||-29.56 USD (-2.5%)|
|Western Union||29.90 EUR||1149.63 USD||-86.18 USD (-7.5%)|
|TransferWise||4.98 EUR||1235.81 USD|
Converting 1000 EUR to PHP
|MoneyGram||5 EUR||62791.86 PHP||-1142.92 PHP (-1.8%)|
|Western Union||4.90 EUR||62741.57 PHP||-1193.21 PHP (-1.9%)|
|TransferWise||9.90 EUR||63934.78 PHP|
TransferWise: Border-less Accounts
TransferWise allows you to create border-less accounts. What does this mean? Basically you can create a virtual bank account that comes with an actual IBAN and SWIFT or an account number with a routing number (U.S. banks). You will be able to send money to it in a straight forward way as if you were using a normal bank account.
TransferWise currently supports the following currencies with local bank details:
- AUD (Australian Dollar)
- EUR (Euro)
- GBP (British Pound)
- USD (United States Dollar)
Aside from the currencies mentioned above, you can still store other currencies such as PHP, SEK and so on. But without bank details. You can move the money freely between your bank accounts.
TransferWise: Free MasterCard
The company is currently also experimenting with their own cards. It is recommended to top up your TransferWise account(s) with money before using the cards. That way you will avoid any unnecessary fees.
Standard pricing (after beta testing phase):
- Free to pay with currencies in your account
- Free ATM withdrawals up to £200 / month
- 2% fee to withdraw over £200 / month
- Small fee, between 0.35% and 1%, if you need to convert a currency.
The fees are generally very generous when compared to fees by other banks. Banks usually charge either a fixed amount per withdrawal or they charge 1.5-2.5% for a withdrawal. It is also worth mentioning that up to 200 GBP or equivalent is exempt from frees for ATM withdrawals. Most people never exceed this amount.