Budgeting

Here’s Why Singaporeans Transferring Funds Overseas Through a Bank Are Just Wasting Money

Peter Lin 0 Comments

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Some days, it’s amazing to realise I truly am living in the future. Just the other day, I remitted some money to an overseas account through my internet banking account and it was all done within minutes!

So fast and efficient, I thought. Then, several days later, I received a bill. While I was prepared for the relatively high foreign exchange rates that banks are famous for, there were also extra charges that I didn’t realise I was paying. These included cable/telex charges, handling commission, and agent bank charges.

 

Hold on… aren’t all these charges already pre-determined? Why are they a surprise?

For the particular bank I was using, the cable/telex charges were fixed at $20, regardless of the amount of the overseas transfer. In my case, I was transferring US$600, which means this came up to an additional 2.5%. If you think that’s not a big percentage, don’t forget, Singaporeans were complaining when GST rose from 5% to 7% in 2007.

Handling commissions are 0.125% of the amount you’re transferring if I did it in person at the bank branch. While that seems like a decent amount, the minimum commission is $10. Fortunately, this particular bank allows overseas fund transfers via internet banking, and the commission is $5 for amounts below $5,000. This came up to an additional 0.6% of the amount I was transferring.

These are charged by the overseas bank as fees for receiving your money. It can also include charges from any intermediary bank that handles the fund transfer. In my case, the agent bank charges came up to just $12.15, or 1.5% of the amount I was transferring.

So, all in all, that came up to about 4.6% of the amount I was transferring. Now imagine if I was transferring larger amounts, like $12,000 for tuition fees at an overseas educational institution!

 

In fact, let’s not imagine… let’s take a look at just how much it would cost me to transfer $12,000 overseas

Let’s see how much each local bank would charge me.

DBS/POSB (via internet banking) UOB (via internet banking) OCBC (via internet banking)
Cable/Telex Charges $20 $20 $20
Handling Commission $10 (for amounts between $5,000 and $25,000) 1/16% (min. $10) = $10 1/8% (min. $10) = $15
Agent Bank Charges Where Applicable Where Applicable Where Applicable

What’s immediately clear is that doing an overseas fund transfer with a local bank, even with the convenience of internet banking, is going to cost you at least $30 or $35, depending on which bank you use. Even though that’s a relatively small amount compared to the $12,000 I’m transferring, it will add up if I’m doing multiple overseas transactions.

 

Now what if I told you, that there is a service out there that has no cable fees and no handling commission?

Introducing World First, a personalised money transfer service that doesn’t charge any fees for overseas fund transfers. Yep, we couldn’t believe it either. They even allow you to make your booking online or over the phone, at your convenience. The only catch? Your transfer amount needs to be at least S$2,000.

 

So… there’s an online service out there that saves me at least $30 per overseas fund transfer. So what?

Need more convincing? Fine. Not only do they not charge commission fees, World First also claims that they are able to offer you a better exchange rate than banks, because they take a smaller margin. To prove how big a margin banks are currently earning, here’s how the three local banks foreign exchange rates compare to the interbank rate at the time of this writing.

DBS/POSB UOB OCBC Interbank Rate
USD 1.3784 1.3800 1.3820 1.3690
EUR 1.5792 1.5795 1.5838 1.5621
GBP 1.9964 1.9986 1.9998 1.9796

The interbank rate is the rate that banks buy and sell currency to each other. Anything banks charge on top of that is called a spread, or the margin. World First takes a smaller margin than the banks and passes on the savings to you.

 

But that’s not all, World First can actually help you fix an exchange rate of your choice

Say the foreign exchange rate is really favourable right now, like it is for SGD and AUD. But you don’t actually need to transfer any money now. World First provides a service called forward contracts – this allows you to lock in a rate for up to 6 months. Here’s how it works:

A US-based World First client had to pay £2.53m for a house in London, but was concerned the US dollar would drop in value before she could complete the payment. Through World First, she fixed a rate of 1.6670 two months ahead of the payment, which meant the cost of her house was fixed at US$4,217,510. By the time she actually made the payment, the rate had worsened to 1.6933, so World First helped her save US$66,539.

 

It sounds too good to be true. Can we trust World First? Are they some fly-by-night company?

Sure, World First may not have been around since you were a kid unlike our local banks, but they’ve been around since 2004, with over 111,000 customers all over the world, and they process over 1,500 transactions daily. In Singapore, they are regulated by MAS and are required to hold a minimum paid up capital of S$1,000,000 to safeguard customers.

So needless to say, they’re pretty safe. In addition, World First uses a website called FeeFo that links actual transactions to customer feedback. As of today they have a 98% Customer approval rating, the highest of any companies in their sector. In fact, they pride themselves on their customer service and will answer the phone in 3 rings! Anyone who has had to suffer through the inane automated answering machine many banks use will know this isn’t a small matter.

Once you are registered with them, you’ll then be assigned a dedicated dealer to help you out with whatever you need, instead of going through the regular merry-go-round with banks.

 

So I guess it really doesn’t make sense to still use a bank for overseas funds transfers, huh?

The only time you should do an overseas fund transfer with a bank is if the amount is less than S$2,000. And that’s only because World First requires a minimum amount of S$2,000 (or equivalent) to transact. If you’re transferring more than that, it’s really a no-brainer which overseas fund transfer service you should use.

And with offices in locations that many Singaporeans frequent, such as Sydney, UK, US, and Hong Kong, your loved ones overseas won’t have a problem should the need arise for them to go to a physical office as well.

On top of that, World First is now offering a sign up promotion for MoneySmart users. For new customers who successfully register an account with World First between 21st March 2017 and 20th April 2017, and make the first transfer within 90 days from 20th April 2017, you’ll receive an S$80 Takashimaya voucher.

If you’re an existing customer, you can get a S$40 Takashimaya voucher if you make a transfer between 21st March 2017 and 20th April. Just quote “World First & MoneySmart Offer” to your dealer and you’ll receive your Takashimaya voucher at the end of that calendar month! Please note these are limited to one voucher per customer and normal terms and conditions apply

20170516 Worldfirst Banner-01

 

How much did your bank charge you for your last overseas fund transfer? Share your story with us.

This article was brought to you by World First Asia Pte Ltd.

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Peter Lin

I am the poster boy for reinventing one's self. I've been a broadcast journalist, technical writer, banking customer service officer and a Catholic friar. My life experiences have made me the most cynical idealist you'll ever meet, which is why I'm also the co-founder of a local pop culture website. I believe ignorance is not bliss, and that money is the root of all evil only if you allow it to be.

  • Jason

    This is an advert ya… I transfer larger amounts through the banks often for no charges and close up inter bank rates. You just need to have the correct account, and you need to call up the bank to ask them to give you the spot rate because you’re sending more than 10k.

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