In the context of money transfers, currency exchange is when the sender initiates a transfer with one currency, and the recipient receives the funds in another currency. Banks usually profit from this service by not offering the best currency conversion rates.
Therefore, you should compare exchange rates between different services to find the best deal. You need to compare the specific currency you want to convert. That is because a service might provide a good deal when converting EUR to USD but a poor deal for GBP to USD conversions.
This guide will help you understand what you need to know when comparing currencies so that you can spot the best deal. In addition, it will save you money and time when sending money internationally.
What is the mid-market rate?
Money transfer companies that offer the mid-market rate for currency conversions provide the best possible rate. It is defined as the midpoint at which banks trade currencies with each other. This rate fluctuates, but it is the best rate available.
The mid-market rate changes because of global economic factors. The demand and supply of currencies have a knock-on effect on currency-pair conversion rates. Overall, banks only change the rate once per day.
Tips for comparing exchange rates
Comparing exchange rates may feel daunting, but it is simple and a handy way to save money. This section outlines the common tips you should follow to simplify the process of comparing exchange rates:
Exchange rate tools: money transfer companies may provide an exchange rate tool for their service. These tools are helpful because they share the exchange rates of the money transfer company you want to use. Also, they allow you to preview the exchange rates before creating an account. This can save you time if you are unhappy with the rates and do not want to create an account.
Preview rates before confirming a transaction: most money transfer services will show the exchange rate applied to the transaction you are executing. This is the specific rate you are getting, and it is the best one to compare. If you are unhappy with the FX rate, then you can back out of the transaction and look for a better deal.
Pay attention to trends: if you exchange specific currency pairs repeatedly over a long time, then you will get a feel for what rate represents a good deal. You may remember this information, or you can look at graphs to see a trading history. You can avoid currency conversions when the value is trending downwards and wait for a peak to get a better deal.
Money transfer companies: the best rates when sending money can be found with money transfer companies. Many do not charge a markup percentage on currency conversions, which means you will get a good deal.
Top 3 money transfer companies that offer competitive exchange
We understand that you may be confused about what money transfer service offers excellent FX rates. Therefore, we have created a list of the top 3 companies that you can try today for industry-leading exchange rates:
Wise consistently matches the mid-market rate for hundreds of currency pairs. For example, at the time of writing, 1 USD would get you 0.88 EUR, 0.74 GBP, and 1.27 CAD. In addition, the service provides graphs to check the trading history of currency pairs and clearly displays information on the rate you will get during a transfer.
Also, they charge completive fees and offer a range of payment options. Wise does a great job of allowing you to compare the fees and transfer time of each transfer option. The information is clearly displayed at each step of the transaction.
Instarem is another money transfer service that matches the mid-market rate. The FX rates for popular currency pairs at the time of writing are 1 USD to 0.88 EUR, 1.28 CAD, and 0.74 GBP. In addition, they have an FX rate calculator on the homepage, which allows you to compare exchange rates quickly.
Also, Instarem offers a global network of over 150 countries and charges competitive fees (0.25-1%). You can also contact the support team 24/7, and there is an InstaPoints reward program that allows you to earn points for transferring money.
VertoFX is a solid currency exchange solution for business clients. They have an in-house FX app that allows clients to get the best rates for money transfers. The combination of real-time insights and investments in their local currency is helpful.
VertoFX also provides mass international payments for businesses and a dedicated account manager that provides support. Getting the best FX rates for your business could be the difference between a profitable month and one that is in the red.
Overall, comparing exchange rates is important to save money while sending money internationally. You can consistently get good FX rates for hundreds of currency pairs by following the tips above. Also, consider checking out the three money transfer companies mentioned above to get a great deal.
We recommend that you continue researching exchange rates by checking out our guides on the mid-market rate and multi-currency accounts. It will help you manage your finances in different currencies while enjoying the best FX rates.