Top Reasons to Avoid Using Canadian Banks for Money Transfers

Money transfer operations are a big business in Canada. Prior to the Internet boom and the rise of Fintech enterprises, banks dominated the international money transfer scene. Typically, the cost of wire transfers in Canada is substantially more expensive than it is in Europe and elsewhere. As a case in point, the Royal Bank of Canada can charge upwards of $20 for outgoing wire transfers for bigger amounts.

The rising bank costs of sending money abroad are a disincentive to everyday folks who are looking for efficient ways of converting CAD into EUR, JPY, ZAR, USD or other currencies. There are less expensive options than the UK and Canadian banks, such as credit unions but even their cost structures cannot compare to reputable international money transfer services companies. Truth be told, the transfer fees are relatively insignificant and Canadian banks don’t have commission per se. The real costs involved in currency transfers lies in currency markups.

What Are Currency Markups and How Can You Avoid Them?

By far the biggest cost component of any Forex transaction is currency markups. This relates to the exchange rates of the currencies. Assuming an official exchange rate of 1.248 for the USDCAD pair, you would receive CAD$1.248 for every USD$1 you spend. For every USD$1,000, you would receive CAD$1,248. If a bank decides to offer you a rate of 1.205 on the USDCAD pair, it means that you will receive $1.205 for every USD$1 that you are exchanging for Canadian dollars. The profit markup of the Canadian bank is determined as follows:

1.248 – 1.205 = 0.043 divided by the market rate (1.205). This results in 0.0356. We now multiply this figure by 100 to get the percentage markup on the bank’s rate. In this case, it is 3.56%. Now, let’s assume you were traveling from the US to Canada, you would be subject to a markup percentage of 3.56% on currency exchange. As you can tell, the wire transfer fee is insignificant. It’s the markup fee that really matters here. With a $100,000 transfer, you would receive 3.56% less than the official exchange rate. That is CAD$3,560 less on your US dollars.

Experts advise currency traders to shop around for the best rates at the bank and non-bank foreign-exchange providers. It is important to calculate things like markups and how they differ from the official exchange rate with all transactions. Excessive markups should be avoided at all costs. Banks make their money by widening those margins as far as possible, and that’s where they catch you when you’re transferring money abroad. Anytime you receive less money for your money, you are being fleeced by banks and Forex providers. Shop around to narrow that gap as much is possible.

The cost of transferring money to/from Canada to another country should not be determined by the profit-making desires of big banks. Personal and business money transfers should be facilitated by way of efficient, cost-effective, and secure international transfer mechanisms. Nowadays, senders have figured out that the best ways to transfer money abroad are not banks – they are international money transfer services. For starters, clients should only utilize fully regulated, secure and reputable money transfer facilities.

Top-tier companies like WorldFirst, Moneycorp, and others have won plaudits from users around the world. Companies like WorldFirst are ideal for transferring money from Canada or the US, with some 150+ currencies supported, a quick and easy registration process, and no fees levied on transactions over $10,000. With a 97.8% customer satisfaction rating from reputable review sites, companies like WorldFirst are far more efficient than banks when it comes to satisfaction, affordability, and user-friendliness.

Money Transfer Services

People who are looking for ways to move money from the UK to Canada will naturally be interested in comparing High Street banks like HSBC and Lloyds to international money transfer companies. A myriad of leading companies now exists, and banks are having to play catch-up with the cost-cutting methods employed by money transfer companies. There are reasons why money transfers abroad come at such a high price. The localization of individual firms is an important point.

Nowadays, most companies in the business of transferring money abroad do not have local offices outside of the United Kingdom. They cater to UK patrons domestically, but on the other hand – the receiving end abroad – there are few if any local branches. By contrast, if a company has local branches abroad, it stands to reason that customer satisfaction levels will be much greater, the efficiency of operations will be enhanced, and the process will be expedited without any hitches. And the currency markups are minimal at these non-bank providers, and that’s precisely where people save money.

When companies have local offices abroad, it is possible to avoid intermediary fees. This makes it much easier to gauge precisely how much the overseas recipient will be receiving once the funds transfer takes place. The best advice offered by professionals is to always seek out money transfer companies with offices in both the UK and in Canada. That way, you can save more on every transfer. There are 3 primary reasons why people use currency trading specialists, notably for personal payments purposes, immigration purposes, overseas property, and mortgages. If you are living and working in a country with a strong currency, it makes sense to use that to your advantage to pay off your mortgages and real estate abroad.

Avoiding Bank Fees: A Quick Tip

Money transfer companies can help in this regard. Consider that the cost of bank drafts from one country to the next can range from £15 – £30 in the United Kingdom, and upwards of $50 from the United States. By comparison, the money transfer companies we have listed do not have any fixed fees. They also don’t have any commissions, while banks charge a commission between 0.1% and 2% of the total amount you are transferring. The theory states that if you’re sending money abroad on a regular basis, you could be looking at markups as low as 0.1% overall, whilst with banks, the overall fees including markups could range from 1.5% through 4%. On a £100,000 transfer, that can be as high as £4,000 with banks. That’s why people are switching from banks to non-bank currency transfer services.

David Jackson

David is a personal finance expert, a professional male model, and an entertainment writer.