Steps to compare exchange rates before sending funds to another country

Sending funds from one country to another has become very convenient, safe, cheap, and fast. There was a time when the only way to send money to any other country was through the bank of the sender in his or her country and to the account of the beneficiary in the bank of the other country. The only other way was through an agent or agency with branch offices and outlets in various towns and cities in the country where the recipient or beneficiary was. The recipient had to appear in person in the center nearest to his or her location, show identification, and receive the converted local currency in cash.

The factors that influence currency exchange rates between countries

It is a good exercise to study the reasons for fluctuation in the exchange rates of the currencies of 2 countries.

• The currency exchange rate between 2 countries is volatile and is determined by the buying power of the currency of a particular currency in another country. Keeping a watch on the buying power and the level of trade between the 2 countries is a key factor in deciding on the exchange rate.
• The interest rate of money in a particular country determines how much foreign currency enters the country and the volume that enters. This determines the currency exchange rate between the countries.

Developing expertise in comparing exchange rates

There are now several added options to send money from one country to another. But several factors need to be watched out for before choosing an option, just for the best exchange rate and negligible transaction charges.

• Compare exchange rates- Compare the exchange rate may not be enough. People need to watch out for firms, sites, or apps that offer the best exchange rate but have hidden charges and higher transaction charges. The trick is to look for sites, apps, or service providers who let senders choose their preferred exchange rate between their country and the currency of the country they wish to send money to while keeping their service charges and transaction fees low.
• The way to compare exchange rates is to make a table and note the exchange rates of any two countries, including the country where the sender is based. The way to compare exchange rates is to select the currencies of the 2 countries and see what exchange rates different apps, sites, banks, and service providers are offering. It is recommended that this exercise be done periodically to get a good idea of the exchange rates that the sites, banks, and service providers are actually offering over time. People must remember to compare exchange rates by including the official exchange rate at that particular time.
• Looking for hidden and additional charges- In the haste to compare exchange rates while looking to transfer funds between 2 countries, people should watch out for other charges, including service charges, transaction charges, and service fees. Many sites, apps, and service providers entice people by offering the best exchange rates. People only discovered much later that they have ended up paying more when the amount in the local currency received by the beneficiary becomes known and a back-calculation is done. A good way is to not only select sites and apps that are very transparent with their charges but also to enquire and learn about all possible charges that a service provider can charge.
• Using reliable channels- One such reliable channel is MasterCard and even visa cards. These cards are available in almost all countries, and both the sender as well as the beneficiary need to have MasterCard or visa card cards and accounts. The sender can initiate a request to transfer money to another country, provided the service provider is available in the other country. After the money transfer is initiated, the amount in the local currency of the selected country will be deposited in the debit or credit card of the beneficiary or recipient. This mode is considered safe and reliable as the card service provider is common in both countries.
• A security measure for the best exchange rates- It is important to select a site or app to transfer money to another country and check to see whether the service provider is authorized to transfer money into that country. Many countries have security measures that include a mandatory deposit of the transferred amount in a safe account before it is finally transferred to the account or card account of the intended beneficiary. Once people compare exchange rates on a regular basis, they will find that authorized service providers usually provide high exchange rates.

Making a regular comparison of exchange rates between the currencies of countries and knowledge of the factors that cause the exchange rates to rise or fall can help senders get the best exchange rates.