Home Guides Send money to and from a bank account

Send money to and from a bank account

There are a lot of reasons why people choose to send money to and from bank accounts internationally. International bank transfers are a safe, convenient and reliable way for international money transfers. However, international bank transfers are expensive with banks often taking a large cut in the form of fees and exchange rate margins. Here is everything that you need to know if you intend to send money to and from a bank account internationally.

Compare Rates
United States
USD
Spain
EUR
GBP

What is an international bank transfer?

It is a service offered by banks that lets you send money from your bank account to another person’s bank account elsewhere in the world. These transfers are made easy by international standards such as SWIFT (the Society for Worldwide Interbank Financial Transactions) SWIFT enables money to travel between various banks on the SWIFT network. Each bank on the network has a unique identifier, which is used to send money from your bank account to the intended recipient’s account.

Normally, you initiate an international money transfer through your online banking services, enter the recipient details and then make the payment. The bank then processes the transfer and routes it to the intended recipient’s bank account. 

What are the key advantages of using international bank transfers?

There are a variety of reasons that using international bank transfers is a desirable way to send money abroad, such as:

  • Reliability: It is a reliable method of money transfer. You already trust your bank with your money
  • Convenience: Convenience is a huge benefit. You can simply send the money from your bank’s online portal
  • Security: Bank transfers are safe and secure

What are the key disadvantages of using international bank transfers?

Additionally, there are certain drawbacks when moving money by bank transfer. These include:

  • High fees: There are high fixed fees involved
  • Hidden costs: Receiving and intermediary banks may also charge fees
  • Possibly poor exchange rates: Rates vary, but international bank transfers often attract the highest exchange rate margins
  • Take a few days: Bank transfers are not as fast as some other money transfer methods

How do international bank transfers work?

From a user’s perspective, a bank transfer works by inputting the details of the account you wish to send money to and how much you wish to send – with the money then moving from the payee’s account to the recipient’s. We go into this in more detail below, but underneath this process is a system relied on by banks around the world to keep these transactions safe and secure.

We have already talked about the SWIFT network and how it helps transfer money from your bank account to another bank account in another corner of the world. Here are some more details on how it works. 

SWIFT is an international messaging network that financial institutions use to securely transmit instructions and information through a standardised system of code. SWIFT assigns a unique code to each financial organisation, which has either 8 or 11 characters. This code is also known as the bank identifier code (BIC), SWIFT ID, SWIFT code, or ISO 9362 code. 

Whenever someone makes an international transfer request, it is processed at the initiating bank and then sent to one or more banks within the overlapping SWIFT networks with the initiating bank till it reaches the destination bank account. 

Each international bank transfer may involve 1-3 intermediary or correspondent banks. These banks are like links that lead to the recipient’s bank. Your money transfer instructions pass through these banks on the way to the destination bank account. Each of the intermediary banks may levy a fee, which takes out a chunk from the transfer amount leaving a lesser amount in the recipient’s bank account. 

It must be noted that although there are other services like CHIPS and Fedwire, SWIFT is the most widely used network owing to its huge membership and its robust coding system.

How to send money from your bank account to an overseas bank account?

There are various ways you can initiate an international bank transfer. You can do it online, by giving instructions to the bank in person, or over the phone. 

If you choose to send money directly from your bank account to an overseas account through internet banking, you need to follow the steps mentioned below. While the exact process may vary depending on the bank you are sending money from, some basic steps remain the same. 

  1. Login to your bank’s online banking portal
  2. Click on the link to make a payment and choose the option to add a new payee
  3. Enter the country where you want to transfer money and enter the recipient’s details. You may have to provide the following details: 
    • The recipient’s bank name and address
    • The recipient’s name and address
    • The recipient’s bank account details  including account number and sort code or routing number
    • The recipient bank’s SWIFT code. You may have to provide Bank Identifier Code (BIC) or an International Bank Account Number (IBAN)
  4. Select the bank account you will be sending funds from (in case you have more than one account with the same bank)
  5. Enter complete details of the transfer including the currency and amount you are sending to the overseas account. Some banks may also ask you to schedule a recurring transfer
  6. Once you have reviewed all the details, you can submit the transaction

Depending on the financial institution you are sending money from, you may need to visit the branch in person to make an overseas transfer. You will need to provide your identification, bank account details, and the recipient’s details.

You can even use phone banking to make an international bank transfer. This works well when you cannot use or do not wish to use online banking and do not want to visit the branch either. You can even contact your bank’s call center and the executive will help you make the transfer, but you will need to have your bank information and answers to your security questions handy in order to verify your identity. 

How much does it cost to send money to an overseas bank account?

As we said earlier, sending money from your bank account to an overseas account can prove quite expensive. There can be fixed fees, exchange rate mark-ups and other fees involved making the total cost quite high. In fact, the actual amount that reaches the recipient’s account could be quite a lot less than what they may expect if you don’t consider all the factors before making a transfer. Let us check out some of the fees you may have to pay for your international bank transfers.

Fixed fee per transaction

Banks have high international transfer rates ranging from $20-$50. There is a fee for both ingoing and outgoing bank transfers. Bank of America and Citibank charge between $35 and $45, Chase charges $40 to $50 and US Bank charges $50 per international bank transfer. 

Banks may also charge an initiation fee, which can range from $10 to $35 depending on how you make your transfer- over the phone or in-branch. Your bank may also levy a tracer fee of about $15 if you request tracing services for a bank transfer you have already done.

Exchange rate mark-ups

When you make an international transfer via your bank, do not expect to get the same exchange rate that you see on Google or elsewhere. The rate that you see online is the interbank exchange rate: the rate banks and other big financial institutions use when swapping one currency to another. You can read more about the exchange rates and finding the best exchange rate in our guide.

When you make a transfer from one currency to another via your bank, you seldom get this rate. In fact, most banks charge a 2-4% mark-up on the interbank exchange rate. This means, if you plan to send $500 to your family or friends in the UK, you may end up paying about $40-$60 in the exchange rate and transfer fees. 

Other Fees

Unfortunately, there could be several other fees that you may have to pay for your international bank transfers. The intermediate banks and the recipient’s bank can also charge some fees. These intermediate banks may take away anywhere between $10 and $20 and the recipient bank can also charge a similar amount for inbound transfers. 

Here is a summary of the fees you might expect to pay for sending money to an overseas bank account:

  • A fixed transfer fee: $30-$50
  • Exchange rate mark-ups: 2-4%
  • Fee to intermediary banks: $10-$20
  • Inbound transfer fee the recipient pays to their bank: $10-$20

How long does it take for the money to reach an overseas account?

The transfer time depends on a variety of factors including the origin country and the country you are sending the money to. Normally, an international bank transfer takes about 2-4 business days.

Is there a limit on the amount that can be sent from a bank account to an overseas account?

Most banks place some daily limits on the amount you can send from your account to an overseas account. The limits vary across banks, and there is often both a minimum and a maximum limit for international bank transfers. You must confirm the limit from your bank before you go ahead with the transfer otherwise it might not go through and you’ll have to break your proposed transfer up into a few smaller transfers.

How can you beat the high costs involved in international bank transfers?

Basically, the problem with bank transfers is that they are expensive. While you trust them to offer you the best rates and charge minimal fees, in reality, you end up paying a lot more. Thankfully, there are many non-banking money transfer companies that can help bring down your international money transfer costs substantially. The Idea is that you are still transferring money from your bank account, but you are routing it through an intermediary service provider to save costs. 

These online money transfer companies rely on the latest technologies and efficient operations to reduce their costs significantly, and they pass on these savings to their customers. More often than not, these companies would offer you the mid-market/interbank rates and just charge a nominal transfer fee, which is normally less than 1%. Some companies do charge a mark-up on their exchange rates, but that’s the only cost they expect you to pay. 

There are few that may charge both a mark-up on the rate and a transfer fee, however, the total costs are still much lower than what you pay to your bank. The best thing about these money transfer companies is that they are upfront about what they charge. So, even before you make a transfer, you know exactly what amount will reach the recipient’s account.

Moreover, these money transfer services have cutting edge technologies that help shorten the transfer times, allowing the same day and even near-instant transfers on many routes. These companies are regulated and meet all the security standards of the country they are registered in. 

In short, it is always a good idea to consider and compare all alternative options when you have to transfer your hard-earned money overseas in order to get the best deal. Banks might be the most recognisable financial institutions, but often they’re far from the best value. To help you get started with money transfer providers, we’ve put together a list of top 10 money transfer companies.

Summary

International bank transfers are a secure and familiar way to send money to an overseas account. You just need to login to your online banking account or walk up to the nearest bank branch to make the transfer. However, with bank transfers, you end up paying high transfer fees and getting weaker exchange rates. The amount that reaches the recipient account is much lower than it could be.

This doesn’t mean bank transfers are necessarily to be avoided, just that it is a good idea to compare them against other options. Banks do have a number of advantages that come with being such large institutions, such as security and reliability, but you can often find a better deal elsewhere.

The right thing to do is to evaluate all available options and choose the one that offers the lowest fee and best exchange rate. There are several international money transfer companies that help you send money overseas safely, quickly and at a much lower cost compared to banks. 

These companies often let you make transfers at mid-market rates and charge only a nominal upfront fee. Some may charge a small markup on the exchange rate, but it is much less than what the banks charge. Online money transfer providers are fully regulated and offer the same kind of security as banks. So, make sure you compare all available services and find the best option for your situation.