Written exclusively for Expat Network by Tom Arnold, Commercial Director, Currency Index

Here are Tom’s top five tips:

1. Banks can be convenient, but rarely good value on exchange rates – Many expats these days are very clued up on the various currencies they are going to encounter while living and working overseas, and hold various currency accounts with their banks to more easily manage the logistics of holding and transacting these currencies. As a result though, sometimes there can be a temptation to keep things with their bank for ease sake, or an assumption that their bank is definitely offering the best exchange rate as part of the overall package.

Example: you are paid in USD for your offshore job and need to repatriate funds to the UK in GBP periodically for bills and payments to your family. You have both a USD and GBP account with your bank to accept your salary payments and for paying those bills, so you simply move the funds between those accounts as required, because it is easy and you can manage it using your bank’s online system. Convenient and easy, and as a long-term customer, with multiple currency accounts, surely the exchange rate applied will be similar to any other offering available. Very unlikely. For the extra day of moving your USD to a broker and having them deposit the Sterling in your GBP account, you could gain 2-4% extra Pounds for the same transaction.

2. Never lose sight of the exchange rate – As the banks lose market share to the various currency brokers, they obviously lose revenue and so come up with many ingenious ideas to try and encourage their existing clients to stick with them for the FX as well as the other banking services they offer. Common offers include free of charge transfers, zero commissions, midmarket rates but with a charge and in more complex scenarios hedging offerings using savings balances as collateral. Many of these offer a really good potential opportunity for you as an expat client managing global currencies, but you must never lose sight of the exchange rate.

Ultimately there is always a starting figure and an ending figure when moving funds between two currencies and the difference is the effective exchange rate of the transaction. Making sure that is close to the market is all that matters, irrespective of whether you saved a few pounds on a transfer fee, or thought you were saving a potential commission. Always compare and always read the fine print.

3. Smaller payments add up – When utilising the services of a currency broker, you will often hear the saving estimated at 2-4%. This is based on the banks generally offering rates 3-5% away from the market. So even if you are making smaller payments, such as regular mortgage or pension payments, utilising a broker is still going to offer you a saving, and while this might not seem like a huge amount on a small transaction, it will add up over time, especially when you consider transfer fees are normally cheaper with a broker too.

4. Hedge your bets with tranche trading – If you have a large amount of currency you need to exchange and move internationally, maybe as a completion payment for a property or a repatriation of a bonus payment, then making the most of the market is essential. Timing your transaction to coincide with favourable market movements is the goal, but this is not always easy. One of the very straightforward options open to you is to simply transact your larger amount at regular intervals in smaller tranches, thereby averaging the exchange rate over the period of your transactions. You might not get the very best rate, but you will do better than at least half the market.

5. Middle-men prove their worth – The global pandemic coupled with various large-scale financial events such as Brexit, have caused considerable volatility on the currency markets for the last few months and in fact years. During that time expats have had to deal with all of the same uncertainty as the rest of us, but with the added risks associated with their reliance on international money markets. During this time specialist currency brokers, offering an experienced and informed opinion on what is happening, and what analysis of the market leads us to believe might happen in the future, have provided a lifeline to expats. It is essential to use a specialist for such a complex and high value area of personal finance. You wouldn’t go to a mortgage broker to work out your pension, so why go to anyone other than a specialist currency broker to arrange your international payments?

Currency Index have been helping Brits make the move overseas for over a decade and have saved their client thousands of pounds along the way with their highly competitive exchange rates and bespoke currency strategies.