Using Foreign Currencies
Buying Products from Abroad
Many goods and services we purchase originate from foreign countries, consideration for associated exchange rates and banking fees do not usually enter our minds.
When a larger purchase, for example a holiday property on the ‘Riviera’, much time and consideration of the financial implications, accounting for associated exchange rates and other fees become a major concern.
Fluctuating Exchange Rate
A small fluctuation in the Exchange Rate can make an extensive difference to your costing’s. Even a 0.5% difference on a property purchase of say £200,000.00 equates to an additional cost of £1000,00.00. Then there are the associate transfer fees to take into account, this could be a one-off fixed fee plus an additional percentage of the overall transaction.
I here you say, “well it is not likely that I will be involved with such a large purchase, and if so it would not be an everyday occurrence”.
Now consider a typical smaller purchase of £2,000.00 or £10,000.00
In this textual & visual explanation I will consider that I am addressing on-line marketers and typically many transactions default to the ‘$’ USD
Obviously if your local currency is the euro € little of the given examples will apply.
I do suggest that a knowledge of the content is taken on-board as this applies to foreign currency exchange(s) regardless of the currency used & as mentioned previously, many business transfers default to using the USD $.
Wire Transfer .vs. Credit Card
In addition, consideration to the methods of transfer should be taken into account, namely a purchase made using a Credit/Debit Card .vs. Wire or Direct Bank Transfer.
Although a Wire Transfer is not as fast as a Card purchase, typically TEN working days for a wire/bank transfer, it may often be the case that a wire transfer is the preferable choice. This is solely down to associated computations and your personal preferences.
Suggested Action Plan
Of course you can transfer currencies with your bank, however their exchange rates & associated fees generally incur a higher expense than an individual needs to pay. It is not only the reserve of the Corporate and/or City Trader to employ alternative resources for this action.
It is often construed that Currency Trading is exclusively for the professional, however the very same tools are available to the average ‘Joe’ on the street.
Even if you wish to transfer monies to a friends bank abroad the process of doing so is ‘Currency Trading’, so in effect you are a ‘Trader’
The Smart Trader
Although I am British much of my time is spent living in Spain, effectively I largely distribute my time both in the UK and property in Spain.
As a consequence I not only have bank accounts in the UK but also in Spain.
The transfer of funds from one currency to another, in this case British Pound Sterling (£) to Euro (€) & on occasion vice versa.
To accommodate active transfers I have used the services of UKForex for many years. They offer transfer at the most favourable current exchange rate and competitive transfer fees, indeed there is NO transfer fee when monies transferred exceed a pre arranged amount, at time of publishing this article it is £3,000.