How does an international wire transfer work?
There are a variety of reasons you may need to send money abroad. You might be wiring a one-off payment to a loved one in another country, making a deposit on a holiday home, or regularly transferring your pension due to a relocation.
Regardless of your reason, wiring money internationally can be an expensive and time-consuming process with some American banks. Money transfer services can offer a more efficient and affordable option, often with lower exchange rates and fees than banks. They may also allow you to send larger amounts, which can be ideal for covering foreign property costs.
How do you send international wire transfers?
If you’re sending a wire transfer internationally through your bank, you will need to instruct them where to send payment. You can provide the recipient’s details by visiting a branch, calling your bank, or filling out an online form. Fees will vary depending on the bank and the location of the recipient.
Wire transfers through non-bank transfer services tend to come with lower costs. It may also be more convenient to complete the process online rather than visiting your branch in person. You will need to create an account with the organization and wire money online or over the phone. Once you make the payment, the organization will forward it to the recipient’s account.
These services can also offer you more flexibility when it comes to choosing exchange rates. Options include transferring funds at the current exchange rate, which can be quicker and simpler but may cost more.
You can also choose a forward contract. This is ideal if you want today’s competitive exchange rates, but need to transfer funds at a later date, as you can lock-in the current rates for up to 12 months.
You may also be able to opt for a limit order. Nominate your preferred exchange rate, and the transfer service will make your payment as soon as this rate is available. Limit orders can last up to 12 months, but tend to come with high minimum transaction amounts.
Considerations when sending international wire transfers
The Office of Foreign Assets Control monitors international wire transfers sent from the United States. This agency assesses if international payments have any connection to illegal activities, such as money laundering or terrorism. If an international wire transfer appears suspicious, it may be frozen.
To prevent and discourage illegal activity, banks and transfer services also report international money transfers over $10,000 to the IRS. This includes related international transfers that total $10,000 or more. Organizations will also collect information on transfers over $3,000. If you plan on sending a large amount of money abroad, it’s a good idea to consult an accountant first.
Do international wire transfers have fees?
Sending international wire transfers by bank can be expensive. A recent analysis of 40 major U.S. financial institutions found that the median outgoing international wire transfer fee was $45. Costs can also apply when receiving an international wire transfer, with the median fee being $13.
Additionally, banks charge consumers a higher markup than the mid-market rate when converting currency. Banks tend to charge this as a percentage of the total wire transfer amount. Non-bank transfer services can help consumers avoid these expensive markups, with some companies charging customers the mid-market rate.
How long does an international wire transfer take?
Unlike domestic wire transfers, which can reach the recipient’s account in a few hours, international bank wire transfers take longer to process. This is due to more checks, with both the domestic Automated Clearing House (ACH) and its foreign equivalent needing to clear the transfer.
Times vary based on several factors, such as the bank and the destination of the recipient, but it should take around two working days. Transfer services may be able to process international wire transfers faster than banks, with TransferWise sending funds to some countries in a few hours.
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