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Blog / Education / Why You Should Use An International Money Transfer Fees Calculator?

Why You Should Use An International Money Transfer Fees Calculator?

Why You Should Use An International Money Transfer Fees Calculator?

If you do not have any idea about the international payment transactions, then you may feel weird while receiving a less amount than you actually expected. Chances are, you Googled the exchange rate that gave you those expectations. Why are you not receiving that amount? Are you being ripped off?

The reason you received less than you calculated is because of international money transfer fees. Banks and private companies charge you for transfers overseas. But you must have an idea that the transaction fees differ from company to company. Some companies charge a fixed fee for every transfer, regardless of the size of said transfer. Other companies charge fees on a set percentage of the amount you send.

Many companies are out there in the market that actually charge a specific markup rate instead of any transfer fee. The rate you find in a Google search is known as the mid-market rate. The mid-market rate is the exchange rate that the international money transfer provider is getting. What they actually do is deducting a small percentage of the rate that allow you to receive considerably less amount than you were actually looking for.

All of these methods of charging fees are legitimate. However, it does not mean that you must obey by the rules and regulations of the banks or companies before you get sure about it. You can use a money transfer fee calculator to determine whether or not you have been ripped off.

How to calculate the fees you paid?

Technically, you can calculate the fees you paid yourself without too much difficulty. Simply Google the exchange rate on the day you sent the money and compare it with what you actually received. The actual difference comes up due to the margin gained by the company on the exchange rate or the fee you paid. However, you do not get any idea about your deal by calculating this that whether it is a good one or not.

Try using MoneyTransferComparison’s calculator instead. You simply input the amount you sent in the original currency and the amount you received in the alternate currency. You include the date on which you made the transfer and press calculate.

The calculator will say so if in case you got an excellent rate. If, however, you overpaid, the calculator will tell you how much more than the interbank rate you paid in both percentage form and in terms of actual currency. Importantly, they also show you how the markup you paid compared to the average markup charged by other companies, which is the information that truly determines whether you got ripped off.

The question you may be asking yourself is whether this is really necessary.

Does it matter?

It is clear that some companies charge more than others for international money transfers. But is the amount big enough to matter? That really depends on how much you are sending and whether you are sending regular amounts. For people who send money abroad once in a blue moon, the likelihood is that a bad rate won’t affect their pocket too heavily.

However, if you are sending huge investments, a difference of a percentage point can be huge. Alternatively, if you regularly send or receive money abroad, the amounts begin to add up over time.

The problem is that there is little regulation in what brokerages and banks are allowed to charge. Many brokerages will expand margins arbitrarily, without notifying you, leading you to lose money on regular transfers.

Banks in particular are renowned for their lack of transparency when it comes to international money transfers. For years, they took fixed fees for international transfers, and shared this information with customers. What they hid was the fact that they also took margins in the exchange rate, essentially charging people twice for money transfers.

This is why it matters that you regularly check that the amount you received constituted a good deal. You avoid banks and companies taking you for a ride this way, with the peace of mind that you will know if they try to rip you off and raise margins every once in a while.

What is the average markup?

International money transfer rates change over time and from company to company. However, if you were charged a markup of around 1.5%, you received what can be considered an average deal. But it does not mean that you will be charged higher for foreign exchange rates by other companies. What you need to do here is to stay updated about their new low rates offers and check whether they remain stick about it or not.

With banks and international money transfer companies using markups, fees are always going to be difficult to calculate exactly. If you are receiving or sending regular payments, you have the option to use hedging tools, which secure the current exchange rate for future transfers. This may not benefit you in the long run, but it does ensure you know exactly what you will be sending or receiving on each occasion.

Try different money transfer companies for transfers and see how they compare. Ultimately, you should settle for the company that gives you the best rates on a consistent basis.


Shelby Steve

Last updated: November 8, 2022

Shelby Steve is a skillful writer and an Engineer; He has taken a degree in Electrical Engineering and is a professional Research analyst and writer. He is a passionate writer and expert in Niches like Mathematics, Physics, Chemistry, etc. He is an expert in communicating his point of view in the most descriptive manner.