July 9, 2015

Quick guide - International money transfers to Munich


The World is a Global Village: you use WhatsApp to stay connected with your family in your home country and also to chat with your friends in Munich; you attend a Webinar hosted in Sydney and connect with participants from Tokyo to Zurich; you play online with someone sitting in Dubai and you watch your favorite American TV show while on holidays somewhere in Italy…

Technology has brought the world closer and made it more agile, more connected. So... 

Why are international money transfers so expensive?

They are expensive because you are using a bank. It doesn’t matter if you are an American student at the LMU receiving a small monthly transfer from your parents or an British expat who has just relocated to Munich and needs a one-time large money wire: if you use a bank, you are likely overpaying for sending your money abroad.  

First of all banks charge you a flat fee (regardless of the amount) every time you make an international wire. In average:

US ---------------> Munich ........................... 35 - 45 USD
UK ---------------> Munich ........................... 25 - 40 GBP
Australia --------> Munich ........................... 30 - 40 AUD

But mostly the big expense comes from the hidden costs of banks using an exchange rate that is in average 1%-4% lower than the actual applicable!

I used to trust that my bank would give me the “official” exchange rate (oh! gullible Elena); until recently, when tired of paying so much in fees, I went out and asked Google (and the expat forums of course!). And do you know what I learnt? I learnt that sending money abroad doesn’t have to be expensive. But if banks are ripping you off on the exchange rate… 

What’s the alternative? 

A company specializing in just that: international money transfers. And who are they? There are many companies out there, but the following four ones seem to be the main players amongst the expat community in Germany:
Let's compare the above four to learn about their fees and how honest is their exchange rate when wiring for example 500 USD to a German account in Munich (in EUR).

WESTERN UNION ......................................... 500 USD = 428.25 EUR
Fee ......................................................... 5 - 20 USD
Exchange rate ............................................ 1 USD = 0.8565 EUR

Screenshot of the Western Union calculator


MONEYGRAM ............................................ 500 USD = 435.25 EUR
Fee ........................................................ 15-31 USD
Exchange rate ........................................... 1 USD = 0.8705 EUR

Screenshot of the MoneyGram calculator 

CURRENCYFAIR ......................................... 500 USD = 446.69 EUR
Fee ....................................................... 4 USD
Exchange rate .......................................... 1 USD = 0.9006 EUR

Screenshot of the CurrencyFair calculator

And the winner is...

TRANSFERWISE ....................................... 500 USD = 447.68 EUR
Fee .................................................... 5 USD
Exchange rate ....................................... 1 USD = 0.9044 EUR


Screenshot of the TransferWise calculator

According to Bloomberg the Spot Exchange Rate for today is 1 USD= 0.9058 EUR, so comparing all four rates TransferWise gives you the most favorable (and honest) one.


IN BRIEF: 1 USD = 0.9058 EUR is the spot rate

WESTERN UNION .......................................... 1 USD = 0.8565 EUR
MONEYGRAM ............................................... 1 USD = 0.8705 EUR
CURRENCYFAIR ............................................ 1 USD = 0.9006 EUR

How to do a transfer with Transferwise

The following video explains really well every step. 



Last consideration: the amount is key

I have been playing around a little with different amounts (in both directions USD to EUR and viceversa) for a couple of days. After this exercise, in my opinion TransferWise is the clear winner for amounts up to 600 USD/EUR. Once you go over the 600 limit then CurrencyFair is slightly more favorable.

One of the major advantages of TransferWise and CurrencyFair is that they are very transparent, upfront from the very first step. They have a currency exchange + fee calculator in their landing pages, so it is very easy to compare both rates within seconds.

Do you have experience with TransferWise or any other company? Let us know your experience and feedback.

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