In 2000, we sent an estimated USD126 billion in international remittances. By 2020, this figure reached USD689 billion, staying strong despite the coronavirus pandemic and a spike in global unemployment. 1 India and mainland China have had the largest intake of foreign remittance for more than 10 years now, and people are sending more money from the US than any other country in the world.1
No matter where you're sending your money to or from, we often share the same concerns about currency fluctuations and the transfer speed. There's also the cost, security and convenience to think about. So how do you make sure you get the most out of your money when sending it abroad?
Bank draft, wire transfer, money order or online remittance – for the occasional transfer, you might not be fussy with how you send your money. There are many options but you should prioritise what's important to you. Some methods are easier but take longer. Some are more expensive but get there quicker. Always ensure you use a reputable, trusted provider.
If you know you're going to be transferring funds to multiple locations overseas on a regular basis, it may be more convenient to use just one service that can cover all of your financial requests, such as your bank. HSBC's extensive correspondent banking network, for example, enables you to send more than 40 different currencies to over 200 countries and territories worldwide.
The foreign exchange rate is the rate applied when you convert money from one currency to another. Exchange rates move up and down over time and can vary depending on which bank, or company, you use to make the exchange. Global events, such as natural disasters or changes in leadership, can affect worldwide currency markets. For example, when it was announced in 2016 that the UK would be exiting the European Union, the pound sterling dropped 10% against the US dollar overnight.2 Interest rates and inflation can also influence exchange rates. Even small variations can quickly make a big difference, especially when transferring large sums.
If the cost of the transfer is your biggest priority, consider comparing several providers: costs may differ because providers each set their own fees. When calculating the total cost of your overseas money transfer, ask:
HSBC Global Transfers allows you to make transfers for most currencies at real-time exchange rates. Not only that, there are no fees for transferring money between eligible HSBC accounts. For countries and regions with onshore trading regulations, we give an indicative rate as the exchange can only take place when the transfer reaches the receiving bank. Check the amount being received by the payee, including the rate and fees, to ensure a full comparison is gained before making a decision to send your funds with the provider.
Learn more: 7 essential FX tips to save you money
Protect yourself from currency volatility by planning your international money transfers. If you time it right, your money will go further. Bank, public and religious holidays can delay your transfers, which might mean you lose out on that favourable exchange rate. This goes for both the sending and receiving country. The worst time to exchange is on the weekends because markets around the world are closed. But remember: weekends don't always fall on a Saturday and Sunday! Some Muslim countries, like Egypt, operate on a Sunday to Thursday work week.
Exchange rate and currency fluctuations can affect your overseas investments. Your international mortgage could become a lot dearer if you are converting your devalued home currency into a stronger foreign currency to cover the payments. These are just a few of things to consider when you are financing an overseas property.
Peer-to-peer payments or digital wallets may only require a phone number or email but compatibility issues can lead to problems. The recipient may not be able to access the service you're using. Making a wire transfer? Inputting the wrong information can lead to delays. Even worse, your money may end up in someone else's account: in January 2021, the US Internal Revenue Service sent over 13 million government stimulus payments to invalid or closed accounts.3
Double check those details!
If you accidentally send money to the wrong recipient, contact your bank or the service provider immediately. If you are an HSBC customer, you may have up to 36 months to make a claim, but the sooner you do it the better chance you'll have of getting your money back.
Domestic and international transfer terms vary by country and region. Knowing your jargon will make sending money easier. It may also help you avoid making simple but costly mistakes.
Along with finding a service that meets all your needs, make sure the provider is trustworthy, too. If something seems too good to be true, it probably is.
It might be a sign of a transfer scam if you are:
If you're not using your bank, take the time to check that the transfer company is authorised by a regulatory agency, such as the Financial Conduct Authority (UK); the Consumer Financial Protection Bureau (US); or the Financial Consumer Agency of Canada.
With HSBC, you can stay up-to-date on the latest scam warnings and online security usage guidelines.
Saving the best – or the worst, really – for last. Unlike a bank transfer, there's no way of tracing this money once it goes missing. It's not illegal in the US to send your money through the post but you're advised not to. Most couriers won't deliver the cash for you either. If you do feel like slipping something into a birthday card, write a cheque or make it a money order instead. At least that way it can be traced.
HSBC Holdings plc has prepared this article based on publicly available information at the time of preparation from sources it believes to be reliable but it has not independently verified such information. HSBC Holdings plc and the HSBC Group (together, "HSBC") are not responsible for any loss, damage, liabilities or other consequences of any kind that you may incur or suffer as a result of, arising from or relating to your use of or reliance on this article. The contents of this article are subject to change without notice. HSBC gives no guarantee, representation or warranty as to the accuracy, timeliness or completeness of this article.
This article is not investment advice or a recommendation nor is it intended to sell investments or services or solicit purchases or subscriptions. This article should not be used as the basis for any decision on taxation, estate, trusts or legacy planning. You should not use or rely on this article in making any investment decision. HSBC is not responsible for such use or reliance by you. Any market information shown refers to the past and should not be1 seen as an indication of future market performance. You should always consider seeking professional advice when thinking about undertaking any form of prime residential or commercial property purchase, sale or rental. You should consult your professional advisor in your jurisdiction if you have any questions regarding the contents of this article.
1 Migration and Remittances Data, UN World Migration Report 2020
2 Value of the pound since Brexit, IG online
3 Update on Economic Impact Payments, irs.gov Newsroom. January 2021