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Studying abroad: Use Foreign Exchange companies and save on money transfers
Anyone who has studied abroad knows how long a month can take. You're getting a monthly allowance from parents or a scholarship, but it seems that when you most need it your next deposit is still weeks away.
Before you arrived, you wondered what you'd even need that much money for. Meals and residence were either covered or were set out clearly in your budget, and you had plenty of disposable income. But you're in a new country after all. There are sites to be seen, delicacies to taste, and events different from anything you've experienced of back home.
And, of course, you're unfamiliar with the costs of living in your new country. Before you know it, you've spent half of your budget on breakfast cereal, and have to choose between shampoo and deodorant.
It’s not even that you're overspending all that much. You’ve been careful, but every time you withdraw money from the bank, the number on the screen is exponentially smaller.
This is a common scenario, that occurs to even the most frugal students. Most of the time, the problem is one that can be easily fixed.
Banks charge high transfer fees
Hidden bank costs are the bane of everyone’s existence. They’re in the policy you haven't read, and come off without so much as a whisper. Often you don’t even know you're paying them until you look at a past statement.
But bank fees can be especially severe for students abroad. Banks are known to charge exorbitant prices for international transfers, meaning the money that arrives is significantly less than what was sent.
When every buck counts, you can’t afford to be losing those chunks.
Exchange rates fluctuate
Then there’s the problem of exchange rates. Currencies fluctuate throughout the day, occasionally shooting up or down. Even without particularly major movement, if your currency slowly drops for a few days, the amount that arrives on the other end can be significantly less.
Say you're transferring $1000 to England. At the current exchange rate (£0.66 for each dollar), that’s £660. Let’s say the pound strengthens over the next two weeks to £0.60 per dollar. All of a sudden, that $1000 is worth £60 less!
What’s more, most banks won’t be able to provide you with the best possible exchange rate. Even if the currency is stable, you might find yourself losing money.
Luckily there’s a better way to transfer money abroad.
Using Foreign Exchange companies
Banks are an easy option. They're convenient - you already deal with them on a regular basis. But they will cost you a lot of money.
Foreign Exchange (FX) companies, however, offer you better value and save you money, and are just as easy to use.
Since FX companies are primarily involved in working with foreign money transfers, their own costs are far less than those of the banks, and they in turn charge you far less.
They're also in a position to get you far better exchange rates. Their exchange rates are approximately 4% better than those you'll get from a bank.
Lock in exchange rates
Additionally, FX companies generally offer an option to “lock in” an exchange rate. You choose a period of time up to 24 months, and the company gives you the same exchange rate for all subsequent payments.
This can be very useful when you're working on a tight budget. When you're studying abroad, you need to have a good idea of how much money you're going to receive every month. By locking in an exchange rate, that amount is not left up to chance, or the volatility of the currency.
Studying abroad should not mean counting coins
While it’s important to spend frugally when living abroad, it’s more important to be frugal in receiving your money.
Your experience in a foreign currency should not be tarnished by the constant checking of funds. It should definitely not involve following every fluctuation of your home currency, and mentally converting your cash every time you want to buy a drink.
Using FX companies is by far the most cost-effective way to transfer money. You'll save on bank fees and bad exchange rates, and you'll also save on peace of mind.
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