If you are using a bank for currency exchange, you are likely losing 4% or more of your money due to the bank giving you a poor exchange rate. Travel agencies, airport currency exchanges and other such business are little better. If you live abroad or spend a lot of time abroad, and consequently need to convert and transfer money abroad on a regular basis, this can be a major expense. There are three common problems with currency exchange and transferring money abroad:

• Cost. If you are using a bank to transfer the money, you are losing up to 4% (or even more) on the currency exchange rate just to change currency. Secondly, both the sending bank and the receiving bank are likely charging transfer fees (often around 60 euros between the two banks). As an example, if you transferred 1000 euros per month, you would lose about 100 euros every month in these fees (40 euros on the poor currency exchange rate, 60 euros on transfer fees) which equates to 10% of the money being transferred. If you transferred 2000 euros per month, you would lose about 140 euros every month (80 euros on the exchange rate, 60 euros on transfer fee) which equates to 7% of your money every month.
• Inconvenience. It is inconvenient to contact your bank every month (or every few months) to arrange a money transfer.
• Risk. If you forget to transfer money and you end up with insufficient funds in your account to pay a cheque, the cheque may be rejected. In many countries (e.g. UK, USA, Canada), this is generally treated as merely an unfortunate accident. In some other countries, it is considered a serious offence. For example, in France a bad cheque can result in you being blacklisted with the Bank of France and banned from having a cheque book for up to 10 years.

To avoid the latter two problems (inconvenience and risk), it is wise to set up a direct debit to have money transferred to your bank account abroad on a regular basis. This saves you time and helps to prevent insufficient funds in your account. In terms of the cost, there are two approaches. One is to look at the fees charged by the various banks and transfer your account to one which has lower fees. Although this can reduce the amount you pay, all the banks charge relatively high fees (in terms of a poor exchange rate, plus direct fees) and you may not want to change banks. Consequently, it is worth considering the alternative approach of using a currency exchange specialist. They offer a much better exchange rate than banks and have lower fees (in many cases, no fees). Consequently, instead of paying up to 10% of your money (see examples above), you should be paying around 1% total for the currency exchange and transfer. Here is how it would typically work:

• Set up account. You set up an account with a currency exchange specialist the same way that you set up an account with a bank. There are no fees or obligations for this, and it should take under an hour.
• Transfer money to specialist. You then transfer money from your bank account to your currency exchange specialist.
• Transfer money to destination bank. You tell your exchange specialist to transfer money from your account with them to your account abroad. As they have much lower fees than your bank, you save a considerable amount.

If you want to transfer money on a regular basis, you can have all this happen automatically. Simply set up a direct debit from your bank to your currency-exchange-account, and set up a standing order from your currency-exchange-account to your bank abroad. If you set up a standing order, your have two main choices: transfer a set amount in euros (e.g. 1000 euros each month) or transfer a set amount in your national currency (e.g. euros equivalent of £1000 or $1000). If you are concerned about currency fluctuations, some currency exchange specialists allow you to lock in an exchange rate for up to 2 years. This way, your euro income will not be affected by changes in the currency exchange rate.

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