Millions of American households send billions of dollars abroad each year.Whether the funds are intended for family or friends, or to purchase international assets, it is often difficult to send large sums of money conveniently. Additionally, with so many options available, people need to consider the speed, support, and costs of the various methods that financial institutions offer to send and receive funds overseas. Here are five of the best and safest ways to accomplish this task.
1. Bank-to-bank transfers
Some banks allow people to withdraw money directly from a bank account and return it to a recipient’s bank account. These types of transactions can be arranged online, over the phone or in person at the delivery bank. They may have fees depending on the institution, and issuing and receiving bank account and routing numbers are required.
Key points to remember
- Speed, cost, and support are some of the factors to consider when sending money overseas.
- Banks can transfer money abroad, but lower exchange rates and higher fees can make them more expensive compared to alternatives.
- ACH, cash-to-cash, and wire transfers provide other options.
- Prepaid debit card recipients can use them to withdraw money or make purchases.
Some banks may offer special remittance programs to transfer slightly smaller amounts. However, in such cases it is important to look at the exchange rates because although a fee may not be charged, the institution could make money from the transaction fee differential.
2. Bank transfers
Additionally, it is possible to send large sums of money from one bank account to another through the use of a wire transfer. These types of transfers are initiated by a banking agent in the delivery bank who fills out the necessary forms. Wire transfers, for the most part, must be done in person. This type of service is also chargeable, but wire transfers offer protection against both banks involved, which is well worth it. For people residing in the United States, wire transfers must be completed by 5:00 p.m. EST for the money to arrive the same day.
3. Automated clearing house transactions
Similar to wire transfers and bank transfers, Automated Clearing House (ACH) transactions are electronic, but use a computerized clearing house that acts as an intermediary to process the exchange of transactions. The Federal Reserve Bank, for example, is the largest US ACH operator, processing 63% of all ACH business transactions in 2019. There are no fees for these types of transactions, but they do require the two banks to be linked to each other. To do this, both parties must follow the specific instructions to the bank.
4. Cash to cash transfers
If a person has a large amount of money in cash and needs to send it overseas, it is possible to use walk-in domestic money transfer centers to transfer that money to a transfer center in the country. international money. Institutions such as Western Union, MoneyGram, and Ria, are the classic players offering this type of service. In recent years, many FinTech companies have started providing international money transfers. Some prominent names in the industry are Wise, Payoneer, PayPal, and WorldRemit.
The cash is deposited in one of these money transfer centers. The national currency is converted into the currency of the destination country and can be picked up by the recipient at a participating money transfer center. In some countries, the money can be delivered to the recipient at a residential or business location.
5. Prepaid debit cards
Some services can send funds through a prepaid debit card. If this method is chosen to send a large amount of money, the sender can load a prepaid debit card with cash funds, and the recipient of the funds can withdraw them using the prepaid debit card. In some cases, the prepaid card can be used to make purchases like with a normal debit card. However, there is normally an activation fee or a monthly fee.
The bottom line
There are many ways to send large sums of money to friends and family abroad. While speed is often the primary goal, the costs and security of sending money overseas must also be considered. Bank, ACH, or cash-to-cash transfers can be cheaper alternatives to bank-to-bank transfers. Finally, prepaid debit card recipients can usually use the cards to withdraw funds or make purchases after paying an activation fee.