Monday, May 9, 2011

How to transfer money to a US bank account cheaply from UK and Europe

Emigrating to the USA from a foreign country throws up many unexpected problems.  One of them, I found, is what to do with all my bank savings, more specifically how to transfer money to a US bank account cheaply from UK and Europe, without having large chunks of it taken off you in banking fees or by ridiculously low exchange rates.  I was living in the UK at the time and I cannot vouch that my experience of tackling this problem will be the same for everyone in the world, but I suspect it will be pretty similar for many people.  Anyway, here is a list of some of the problems I had and how I decided to resolve them, or get around them and in the end looking at using foreign exchange sites.


Should I open a US Bank account before I send money to USA?

I did not have a US bank account at the time I wanted to transfer money.  I did consider opening a US bank account, but I decided in the end to wait until I arrived in the US to do that.  As I found out later, opening a US bank account as a non US citizen can be a total pain, so it was probably a good thing that I didn’t even attempt it.  Instead I opted to transfer money to a bank account that my wife (fiancee at the time) had.  This definitely simplified things, although I would still have to go through the trouble of opening a US bank account later when I began living here (I will post more about that later), it made it easier for me to send money to USA at the time.


The Options if you want to transfer money to a bank account in the USA

There are a whole range of methods of transferring money around.  In this article, however, I am talking specifically about transferring my savings, that’s to say that I am aiming this at people who want to transfer money to a bank account from UK and Europe and the amount of money is in the thousands, rather than hundreds.  I have visited the US a number of times and just got my bank to change some pounds into dollars that I have later used for spending on the trip and I haven’t been too concerned if the bank has taken some money off me in charges and through lower exchange rates.

You can’t carry large amounts of cash into the USA, even if you wanted to, as it is illegal, I believe.  What you need in order to transfer money to a US bank account is a service that will both convert your money to dollars and deliver it the US bank account of your choice and do it as cheaply as possible for you.


Option 1

The first main option is to just use your own bank to send money to the USA.  I had used my own bank before, when I sent my wife some money to pay for the I-129 petition fees.  My bank were able to transfer money relatively quickly (within 5 days) and it was easy to do over the internet, I had discovered – the only problem was that it was pretty expensive when you worked out all the costs and the costs became bigger and bigger, the more money was being transferred, I realized, due to the low exchange rate being offered.


Option 2

I did some research on the internet and came up with a second option.  This was to use a Foreign Exchange site to do the transfer.  They specialize in foreign exchanges of currency and offer way better rates than the everyday banks, or ‘high street banks’, as we call them in the UK.  They normally have minimum rates that they will consider transferring (£300 - £500 is fairly typical) but if you have more than that, like me, then you are okay.  I looked up some of the companied and compared rates, either by getting quotes over the internet directly from the companies, or by using price comparison websites, of which there were quite a few for foreign exchange sites.  I also read about other people’s experiences via the internet.

In the end I narrowed the field down to two companies, XE.com and HIFX.com.  I must admit that one reason why I went with these companies was just that that they were big and popular.  I was nervous about transferring thousands of pounds to a company that my only contact with was filling out forms on the internet and I felt a little safer with a big company!


The actual transfer to a US bank account

In the end I went with XE.com.  I can’t say that they are the best.  They are one of many Foreign Exchange sites out there.  All I can say is that I have used them twice without there being any trouble with the money transfers.  The same thing would probably have happened if I had used HIFX or one of the other Foreign Exchange sites.  Anyway, the money transfer arrived in my wife’s (fiancee at the time) account five days later.  I saved about a hundred pounds doing it this way, which makes it worth the hassle in my opinion.

14 comments:

  1. can a immigration lawyer in the uk ask me to send money to open a bank account before i receive my passport, have to send money via western unionmoney to open a bank account before i receive my passport, have to send money via western union

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  2. I'm sorry, Anon, but I can't answer that question. I know nothing about the background, or context of your query and even if I did, I am not any sort of legal expert, just a guy who writes about his experience of going through the K1 fiance visa process.

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  3. Your blog is bloody brilliant mate we just got petition approved so I am pulling docs together.

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  4. Hello,
    Do you happen to know if anything can be taxed when transferring money from your overseas account to a newly created US account? We need to open up a US bank account for my wife who recently got her green card so she can transfer over money from her account overseas to an account created in the US. Both accounts are under her name. Just wanted to know if it raises any flags with the IRS.

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  5. @Anon - It's an interesting question, but I have no idea, sorry - I barely understood the British tax system, now I am having to learn the IRS rules since I moved here. Sorry, I can't help you.

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  6. One thing I will add - If you have to file a tax return, don't forget to file an FBAR with the department of treasury. Do a google search for FBAR. Get hold of form TD F 90-22.1 and disclose all your UK banking details. It's a pain but a requirement, and the penalties are severe - $10,000 if you fail to file.

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  7. I know its a bit of a pain for a lot of people but, in order to greatly simplify money tranfers from the UK to the USA I opened an account with HSBC in the UK(BEFORE I started my new life in the US)which made transferring money via the 'Global banking' facility, or whatever they call it now, an absolute doddle. I have an HSBC account in the UK AND one in the US. Not sure about the fees for regular HSBC customers but luckily for me,a lump sum from a Navy pension allowed me to qualify for the 'Premier Customer' status, which doesn't charge the fees for global transfers, no ATM charges wherever you are, no credit card charges etc. etc. Very quick, very easy to do and FREE transfers using HSBC accounts both sides of the pond. Could be an option if you have a large amount from say, a house sale, to get you above the qualifying threshold of 50000 pounds to become a Premier customer. Which actually applies both sides of the Atlantic. Once you get your funds across, an option is to drop the Premier account for something else if you start spending your money and start dropping below the qualifying amount of 50000 you need in the account to keep it going as a Premier one.The exchange rate was pretty damn good as well...with no fees! I sound like I work for HSBC don't I? Nope, just happily retired and living the dream in Florida and just about to transfer a bloody great lump of money from my house sale...for free.

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  8. PayPal is easy and it works but they take a big cut of your money!

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  9. I used Paypal once to move money from the US to the UK, but the second time I tried they wouldn't let me. Apparently there is a lifetime limit and I had exceeded it. I needed a UK credit card attached to my UK Paypal account and I didn't have one. So I applied for one, but without a UK source of income, it was denied.

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  10. Valuable post who need to transfer money abroad. We are also related to financial services fx compared

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  11. To check the current currency exchange rate of Bank of Cyprus, please visit this link

    Money transfer comparison

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  12. You have made some good points there. it’s a good idea to compare money.

    ReplyDelete
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