What Immigrants Should Know About Sending Funds Abroad

Laura McMullen
By Laura McMullen 
Updated
What Immigrants Should Know About Sending Funds Abroad

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In 2015, immigrants in the U.S. sent $135 billion abroad — only to give some of that money to the banks and companies processing the transfers. But a savvy sender can find a better deal on the fees and foreign exchange rates that many financial institutions charge. Here’s what you should know:

Banks’ international wire transfers can be pricey. Your first inclination when sending money internationally — or making what’s known as a remittance — might be to perform a wire transfer at the bank. This term refers to an electronic transfer of funds from one financial institution to another. A transfer can take several days and require the sender and the recipient to shell out for fees.

How much? International wires cost around $40 on average, according to a NerdWallet analysis of large U.S. financial institutions. Plus, the recipient might have to pay to receive the money. Note that setting up recurring payments or scheduling a wire transfer online, rather than in person or on the phone, might save a few bucks.

It’s not just fees that make wire transfers through banks costly. Banks typically convert dollars to other currencies at an unfavorable foreign exchange rate, too.

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Nonbank providers typically offer a better deal. Money-transfer providers — such as Western Union, Wise (formerly TransferWise), Xoom (a PayPal service), MoneyGram and OFX — typically offer better exchange rates than banks do. Wise, for example, offers the same inexpensive rates big banks use among themselves.

These providers also often charge lower fees than banks. Factors such as the amount you’re sending and its destination determine where you’ll find the best deal.

As you compare money-transfer providers, consider delivery speed and method. Will the money arrive in minutes or days, in a bank account or at a cash pickup location? Providers vary in terms of network size, too. Some send money to hundreds of countries and territories, while others send money to a dozen or fewer. If you value simple, on-the-go money transfers, look for providers with handy websites and mobile apps. Note that all providers will likely want to verify your identity before allowing a transfer, which may cause problems for new immigrants waiting on documentation.

You’re entitled to know the costs. The Consumer Financial Protection Bureau requires banks, credit unions and other companies that qualify as “remittance transfer providers” — every provider mentioned above qualifies — to disclose certain information before transferring money.

According to the CFPB, a company must disclose the exchange rate, the fees and taxes it and others will charge throughout the process, the amount of money expected to be delivered, and the date that sum will be available. It must also disclose foreign taxes and fees that might be deducted from the transfer.

The money transferrer should inform you of your right to cancel transactions and the process for investigating errors and submitting complaints. Learn more about money transfers and your rights on the CFPB website.

Knowing the costs you may face when sending remittances, as well as your rights, will help ensure your money gets to its destination safely and inexpensively.

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