The information here is relevant regardless of what country you reside in and what currencies you want to deal in. The following will be explained -
1.Why you should use a Foreign Exchange Broker for any currency transfer and how to select a good FX Broker.
2.Types of currency transactions.
I work as a property finder in Spain. Many of my clients needed help with their foreign currency transfers for the purchase of their property here as they had no idea how much money they could waste if they did not follow some simple tips. Surely it makes sense to get the best exchange currency rates without paying horrendous fees ?.
Hopefully the information will be of use to anyone
who has to perform an International currency transfer.
Savings Tips To Get The Best Exchange Currency Rates
Follow these tips and they could save you a fortune and get you the best exchange currency rates on your currency transfers securely with NO FEES..
Tip 1
If you have to perform a currency transfer – do NOT use a Bank. The Bank will NOT give you the best exchange currency rates and will make all kinds of expensive charges as well !. Instead use a good Foreign Exchange (FX) Broker – they specialise in International currency transfers. They should provide a charge FREE currency exchange with the best exchange currency rates. Use a Bank and you will literally be throwing money away.
Tip 2
People often use their Bank because “its’s better the devil you know”. BUT if you use an FX Broker, where your monies are in a totally separate segregated account, you know your monies are safe and you can get the best exchange currency rates. CHECK the Broker has this facility. Also check the Broker is fully regulated by the Financial Services Authority – most aren’t !.
Tip 3
Use an FX Broker which does not make any charges whatsoever for the currency transfer. Some Brokers do – so CHECK !. No point getting the best exchange currency rates and then losing out on hefty charges.
More tips for best exchange rates
Types Of Currency Transactions
There are four different types of transactions:
• Spot Contract
A spot contract is undertaken when you buy currency at the prevailing exchange rate at the time of the transaction and make payment within two working days. This transaction is typically used for deposit payments on property or for full payment if the funds to pay for the transaction are available.
• Forward Currency Contracts
A forward contract is undertaken when you fix the exchange rate now for a specific date from one to 24 months in the future. As an example, your final payment for a home abroad may be the equivalent of £150k . You could seal that exchange rate today with a small deposit, and pay for the bulk of that transaction at the completion of the forward contract. To secure the exchange rate, private clients will have to pay for at least 10% of the value straight away (a margin deposit) and the balance on or before the end of the contract.
• Time-Option Forward Contracts
You may also reserve a time-option forward contract. This contract allows greater flexibility in paying. For example, a property developer may give you a date of January 2011 as an approximate completion date but may inform you it could take a bit longer. Your dealer may recommend that you set a date for your forward contract of May 2011 and you are free to settle that contract anytime before the maturity date with no penalty.
These forward contracts should be seriously considered as recently the strength of the euro against the pound has meant that several clients have had to cancel purchases as they had insufficient funds to complete !. (For exanple their 200k GBP which would have bought 230k euros suddenly would only buy 210k)
• Limit Order
Limit Orders allow a client to set the rate at that which they would like to exchange their currency. The Broker should monitor the market for you and if the rate can be achieved, buy the currency on your behalf. They would then notify you of the due date for your payment. This is very important for contracts of substantial value where a small currency fluctuation may have huge implications.
Finding A Good Broker
We work very closely with a great , fully regulated, FX Broker who will get you the best exchange rates securely. They provide a great service and understand that it may all be a little daunting for you if you have never done this before.
Whoever you use – do your due diligence. Do a google search and make sure there is no bad press out there. Investigate ALL the charges and ensure they are FSA authorised and your monies are secure .
Hope this article saves you 1000′s !.
Si
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