People engage with domestic and corporate foreign exchange for a number of reasons, such as for the purchase of holiday money; obtaining goods from abroad and making payment in the native currency; buying a foreign property and emigration. The foreign exchange market is volatile so when choosing the right time to trade it is important to keep an eye on market movements, though this can be time consuming. Alternatively you could seek free specialist advice from a reputable currency broker, as they keep track of the latest currency fluctuations. Setting up an account with a leading currency broker should be simple, quick to do and totally free, and you’ll have instant access to in-depth and specialist advice – ensuring that you receive the most favourable result from your exchange. So what factors do you need to keep in mind when you’re looking for foreign exchange services?
Firstly, banks in general enjoy the largest profit margin of any institutions handling currency exchange, meaning that they offer the least advantageous deal to the customer. Banks buy currency on the interbank market and then sell it to customers after raising the exchange rate to increase their profit margin (the difference between the price a currency is purchased for and the price it sells for is known within the foreign exchange market as ‘the spread’). Therefore banks are offering customers less currency for their money than other providers and enjoying a larger profit. Currency brokers, on the other hand, offer a price as close to the interbank rates as possible and can better the bank’s exchange rate by up to five per cent. This offers customers the most cost-effective deal without even taking into account any additional bank fees.
Secondly, banks have various add-on charges which they apply when purchasing foreign exchange. They can impose minimum charges, flat fees, and handling fees to increase their profits, all of which make dealing with banks hard on the pocket. Alternatively, currency brokers offer commission and fee free services, meaning that the exchange rate the customer is offered is what the customer will receive.
Thirdly, banks aren’t as knowledgeable on the foreign exchange market as currency brokers as it’s not their specialism, but rather a branch of their services. Consequently this means that banks are unable to offer as much in depth analysis of future market movements. In comparison, currency brokers focus completely on the foreign exchange market and can offer expert advice.
In addition to currency brokers offering the best foreign exchange rates with no fees attached, they also have the ability to offer specialist services like forward contracts. If you’re purchasing property abroad the wait time for the completion of the purchase can be lengthy and cause some anxiety to homebuyers. If the market shifts negatively it can mean the property you’re purchasing is going to cost considerably more. Currency brokers can protect your funds from currency risk by ‘fixing’ a favourable rate so you won’t get stung if the market does move against you – and you won’t end up paying more than you initially expected.
All things considered, using a foreign exchange broker to manage your currency transfers could be the easiest and most cost-effective solution.