With more and more Brits moving abroad to live – or spending a few years travelling the world – sending money to them in far-flung corners of the globe is becoming more common. You’d think, therefore, that banks would have figured out an easy and affordable way to make this possible. In fact, transferring money through your bank or a money transfer organisation can be both costly and complicated.
Never ones to be beaten, here at MoneyMagpie we have found you a brilliant alternative. If you’re hoping to send money abroad to loved ones, read on to find out exactly how to do it without incurring all the usual extra costs.
In short, a prepaid card. Essentially, these clever little things work just like pay-as-you-go phones. You load them up with money, then spend it on whatever you want. And you can’t spend any more than is on the card, so you can’t get into debt.
The really clever bit is that you don’t actually have to move your funds to get the money overseas. If you want to give the money as a present, you can send the card in the post. Once the recipient has received it, you can put money on the card for them to spend.
You can have one or more cards that debit from the same account which other people can then use with their own individual PIN. All you need to do is put money into the card account, and they can spend it themselves.
- It’s possible to have a prepaid card, even if your credit rating is poor. Because there’s no borrowing involved, there’s no risk for the provider.
- They’re not necessarily for over 18s only. Again, because there’s no risk for the company, most are happy to let anyone over the age of ten use a prepaid card.
- They do charge for things which normal credit or debit cards don’t – some, for example, charge a fee for withdrawing cash at an ATM – so choose wisely and appropriately for the person who will be using the card.
- Most are widely accepted and are either MasterCard, Maestro, Visa Electron or Amex. Again, check which will be most suitable for the person you’re sending it to.
- You can easily load these cards with sterling – and your balance is then exchanged at the current rate.
There are many different prepaid cards out there, all with slightly different charges and terms and conditions. Follow our step-by-step guide to clear up any confusion:
Step 1 – Choose the right card
Here are our favourites:
This card comes in either US dollars or Euros and has no monthly fee, no loading fee and no transaction fee.
You’ll incur charges for withdrawing cash from an ATM – €1.50 or $2 depending on where you withdraw the money. The card incurs 1.4% cost on all transactions and an additional £1 for overseas ATM withdrawals. UK ATM withdrawals for the £ card incur a £1.50 charge but do not incur 1.4% on top of this.
Despite only being available in dollars, sterling or Euros, the card can be used anywhere in the world. If you use the card outside the ‘issue currency’ you’ll be charged a 1.4% exchange rate. Better still, they use a business exchange rate which means you’ll get more foreign currency for your pound.
Bread FX Prepaid Mastercard
The Bread FX Prepaid Mastercard has the best rates amongst currency cards. You load it with sterling and it converts to Euros at a good rate. You can only load it with Euros so it’s perfect for anyone going on holiday in Europe.
- Purchase fee: It’s free to sign up but it requires a £10 deposit, which is refunded after your first load of £50.
- The minimum load is £50.
- Transaction fees:
- In Euros – free
- In other currencies – €2
- An exchange fee of 2.5% applies to all non-Euro transactions.
- ATM withdrawals:
- In Euros – €1.50
- In other currencies – €2, along with the 2.5% non-euro transaction fee
- Loading fee: It’s free to load.
Caxton FX Prepaid Currency Card
There are no regular fees with this card – you’ll only be charged for ATM withdrawals and point of sale transaction in the UK (£1.50, €1.75 or $2), and over the counter cash internationally and domestically (£4.50, €6.50, $8, plus 2% of withdrawal amount if used internationally). If you use the card in a currency other than Euros or dollars, you will be charged a 2.75% exchange fee on all transactions and withdrawals.
The exchange rate is fixed when you load money onto the card, which means you’ll get more for your money if the currency is gaining against the pound.
The main drawback is that the minimum load is pretty high – £100/€150/$200.
Other things to look out for when choosing your prepaid card:
- The customer helpline – is it a premium rate number, or are calls charged at local rates?
- Card renewal – will the company charge you to renew the card once it expires?
- Load charges – most are free, but some companies charge if you load the card from a credit card rather than a debit card or by bank transfer.
- Lost or stolen cards – what is the provider’s policy if your card is lost or stolen? Will they charge you for a replacement card?
Step 2 – Apply
Once you’ve chosen the card that’s right for you, apply online with your own details using the links above. You should normally get the card within seven working days, and the PIN will follow separately.
Obviously this means the card will have your name on it rather than the recipient’s. With chip and PIN security – and assuming you’ll only send it as a gift to people you trust – this should not cause any problems.
Step 3 – Activate and load the card
Once you know the right person has safely received the card, you can activate it on the provider’s website and put the desired amount into the account.
You’ll have to tell the recipient the PIN number over the phone, and they can then spend the money you’ve put on the card.
A word of warning
Hopefully, it will be obvious that you should only use this method of money transfer with close relatives or other people you trust.
It’s definitely the cheapest way to send money overseas, and as long as you’re sensible, it should work perfectly. In future – for birthdays, say – you can always put more money on the card.
As an alternative, you might be more comfortable opening an account with a card for yourself and then requesting another card – in the other person’s name – which is linked to your account. Just be aware that some companies will charge you for a second card.
As well as their Currency Card, FairFX have also introduced FairPay – a payment service that allows you to transfer money internationally. Whereas the Currency Card has a minimum spend of just £50 and a maximum of £2,500, the FairPay service allows customers to transfer larger amounts of money internationally with a minimum transfer of £600 to a maximum of £50,000.
FairFX are far from being the only ones offering such services. There are more than 100 foreign exchange brokerages in London alone. They all offer quite a similar international money transfer service as an intermediary party, and thrive off the fact banks are extremely expensive and offer sub-par foreign exchange rates. The differences between companies are quite subtle, and the rates which are offered by them are quite similar as well. Therefore, to navigate through the complex world of foreign exchange providers and international money transfers, you need to conduct a thorough research. We recommend you to start off by reading Money Transfer Comparison’s reviews .
FairPay offer business level foreign exchange rates and won’t charge you a fee for the transaction – although you should be aware that the bank you’re transferring the money to might deduct a fee or taxes, so make sure you know what, if any, fees you might incur before you transfer any money. Similarly, FairPay advices customers that the account the money is being sent to should be in the same currency as the money being sent (e.g. sending US$ to US$ denominated account), otherwise the bank will charge a fee for converting the amount.
This method of transferring money is quick and easy – it takes between 1-3 business days to get through the system, the rate you see is the rate you get and you can either use the FairFX online payment facility or use your debit or credit card.
Find the current exchange rate and set up a transfer 24 hours a day, seven days a week.