The importance of choosing the right FX company for your money transfers

The foreign exchange market can be a real mystery for people who are coming across it for the very first time. Each currency has a different value, which changes daily due to economic factors that have a major impact.

It is easier to understand how the foreign exchange companies work than the effects of various economic events happening as we speak. Whenever looking forward to sending money to a different country, you need to be constantly aware of the fees that apply. They are hardly nonexistent in banks, but easier to handle should you choose the right foreign exchange company.

This guide will give you an exhaustive understanding of how important it is to find the right FX company for your money transfers, and how you can ensure you don’t have to pay any unexpected fee in exchange rates.

How do FX companies work?

Currency trading is one of the most popular activities both in centralised institutions and outside. It does operate in various places at the same time, each seller having its own rate.

A foreign exchange company is an established forex broker. Just like a bank, it offers currency exchange and conducts international payments. Unlike money transfer companies, though, they carry out high-value transfers. This is a bliss for people living abroad and receiving money from a different country. To use the amount, the money is exchanged into the receiving country’s currency and this could raise some problems.

Fortunately, the forward contract is useful enough to set an exchange rate for a period of two years. The level you agree upon with your foreign exchange company is a feature you can find only here. Even though it might turn into a disadvantage, as the future exchange rates could be more advantageous to you, you have nothing to worry about should the fluctuations go in the opposite direction.

Setting up an exchange rate is a streak of luck also when you have to pay for an asset in a different currency. Variations may increase the amount you own with every new payment, as months go by. However, the right FX company will transfer your money at the fixed exchange rate without having to deal with unexpected fees.

What transfer fees do FX companies have?

Besides the exchange rate, every international money transfer company or bank has transfer fees. Most of them are different not only in value, but also by the method they are applied.

Various banks and independent money transfer services require a fee per transfer. The amount that is charged can be either a flat fee of $25 per transfer or a higher one. This is calculated using the percentage formula that is applied to the total amount you wish to transfer.

This strategy is seldom applied to foreign exchange companies. Instead of charging high transfer fees, some of them focus on making a profit by applying a margin to the exchange rate. This is truly helpful since there are providers that do not even charge a transfer fee. On the contrary, banks are known to apply fees not only for sending money, but also to have unfavorable exchange rates.

This is why you should always compare various providers. While some of them have the best exchange rates, others win us over the small (or nonexistent) transfer fees. For instance, there are certain companies great enough to make the best option when you want to send money from NZ to Australia. TorFX is worth a view, while World First catches anyone’s attention from the beginning.

What happens if I choose the FX company on a whim?

Making a decision based on insufficient information can lead to two results. Apart from choosing either a bank or a foreign exchange company that applies both high transfer fees and unfavourable exchange rates, you could actually stumble upon a great provider.

However, chances for this to happen are rather low. Instead, you could employ a better strategy known to provide you with the best result – and most importantly, with no hidden fees. Knowing the amount ready for transfer, coupled with the settled exchange rate and the (non)existent transfer fee are the only necessary details to help you get going!