People who send money back home come from every income bracket, education level and industry. Some of these “remittance” senders are working lower-paying jobs and struggling to earn enough money to both survive in their adopted country and still have some left over to send to their family. Some are enjoying more prosperous careers away from home while others with an entrepreneurial spirit have started their own businesses.
Regardless of circumstance, all have one thing in common. They are working hard to ensure the best for their families and the last thing they should have to worry about is whether or not their money transfer company is charging fees that are fair. There are a number of variables that can affect fees, including rules and regulations in effect in the recipient’s country, the disbursement currency, speed of service, the type of funding source (bank account, credit or debit card) and the amount sent.
To ensure that you aren’t paying too much in up-front fees, we suggest that you find a money transfer company that offers a low flat rate or fixed fees for how and when you send. Be sure to check their website for rates to your home country – and know what that rate gets you.
As an example of one common scenario, let’s say you are sending $2,500 to Mexico or the Philippines directly from your checking account and your mother is picking up the money in local currency. Try to find a provider that charges a flat fee in the neighborhood of $5 for each transaction. Keep in mind that money sent from debit or credit cards and pickups in anything other than the local currency (such as U.S. dollars) usually results in higher fees, so you need to keep those factors in mind.
Also be sure that any prospective money transfer company can provide perfect clarity on the receiving amount, so there are no surprises after you have sent your money back home. All money transfer companies charge a set fee for a set sending amount, no matter where you live. Be sure to understand what those fees are and how guaranteed exchange rates work.
If you are sending money to a country in Latin America, one report worth checking out for a comparison of average fees charged by well-known money transfer companies in the region is available from the Inter-American Dialogue, pages 11-12.