Why use an FX broker?
That’s probably the most commonly asked question when introducing the services of Currencies Direct to any new client! The answer is easy – because we can save you more money!
Banks traditionally are not so good at dealing with currency exchange, they want to keep your money and lend you money but transferring it from country A to country B is not their speciality.
When you look on the internet you will see the exchange rate at that time (e.g. the GBP/EUR pairing). What you are seeing is the INTERBANK rate – in other words the rate that banks trade with each other, the wholesale price effectively. What you – as a member of the public – will trade at will be a marked up rate (i.e. the retail price). But what the banks will do is take a much wider margin on the interbank rate (sometimes as much as 6%). Brokers, whose business is solely to trade currency, will take a much smaller margin (typically around 1 – 1.5%, depending on the amount transferred).
So, for a No.1 reason to use a broker as opposed to your bank, you should, on average, save around 3-5% on rate alone!
But that’s not all – banks will always take a fee over and above that for the privilege of moving your money from A to B. Brokers normally do not – in the case of Currencies Direct all transfers are free of charge, even low value transfers. Ok, effectively they are not ENTIRELY free of charge – as there is obviously a margin taken on the interbank rate. But that’s how the company makes money – no-one can run a business for nothing I think it’s fair to say. And at least the charge is transparent for the client – when you make a transfer with Currencies Direct you will know, in advance of deciding whether or not to go ahead, exactly how much sterling/euros/dollars/dirham etc etc.. you will end up with.
What many people don’t realise is that a bank will apply the exchange rate for an international money transfer at the moment the transfer is carried out – rates change every few minutes so you won’t know exactly how much you will get until the transfer is done and dusted and it’s too late to change your mind…
There you have it, that’s a good enough reason to get started hopefully? There are many other advantages and reasons to opt for this type of service and over the next few articles we’ll cover off other benefits of using an FX Broker for moving your money..