If you are heading off on holiday overseas, you may be very familiar with the hunt for the best currency exchange rates, with the amounts offered varying rather surprisingly between brokers.
However, if you need to use foreign currency on a rather more regular basis, or perhaps need to transfer a much larger sum, as well as procuring the best rates there are many other factors to take into account.
Here are some things to take into consideration when you choose a broker.
Undoubtedly one of the first factors to consider is how much you will get in exchange for sterling. Everyone wants to get the best deal and the broker you use should reflect current market rates.
The foreign exchange industry is very competitive and rates change rapidly in response to world events. However, if you are offered a good rate you may wish to secure it for a date in the future, even though there is the chance that the market could swing more in your favour. But knowing what rate you have can help with financial planning, especially for large purchases such as a foreign property. Therefore, finding a broker with the capacity to offer forward contracts can be a real assett.
It is also worth bearing in mind that the exchange rates you are offered may vary depending on the amount of currency you want to purchase. For this reason it is sometimes possible to get a better rate by ringing your chosen broker rather than simply using an online quoting system.
- You may be used to using the local bureau de change for your holiday money but finding a broker is essential if you plan on either regular or large transactions.
Handing over large sums of money can be risky if you are not entirely comfortable with the security of the company. When it comes to transferring funds overseas, the risk amplifies significantly.
Unfortunately in the past there have been instances of companies who have used their client’s funds for risky investments, some of which have collapsed as a result.
Companies based in the UK can obtain a seal of approval from the Financial Services Authority to be recognised as a trusted Authorised Payment Institution. The criteria to be awarded this status are very strict; not only are staff subjected to a full background check, the company must have stringent procedures in places and hold all client’s money in a separate account, thus ensuring a full and immediate refund if they went out of business for any reason.
Any broker used for foreign exchange transactions should hold Authorised Payment Institution status. If you are in doubt you can check this on the FSA website.
Using the services of a broker normally involves charges but you won’t want all your money eaten up by fees. It is therefore essential to make sure you pick a broker with a transparent fee structure so you know exactly how much you will be paying for the service.
Some brokers offer a sliding scale, with lower charges for larger transactions. Others offer discounts for regular transactions so depending on how you plan on using the broker’s services may depend on which one provides the most value for money.
You should also check what’s included within the service. If you are hoping to use the service to speculate on the foreign exchange market for investment purposes, it may be preferable to find a broker which offers guidance. Some brokers offer an advice service, including newsletters and even dedicated account managers which can help provide you with the edge in the market.
Finding the right broker is a very important step to get right, Currency Index Rickmansworth are certainly worthy of consideration. Making a wrong decision could cost you a lot of money, delay transactions or even put your cash in jeopardy. Hopefully the above points help to provide an insight into some of the most important factors to take into consideration.
Image Credits: Bruno Boutot and Images_of_Money.