Exchange rate advice for expats in Portugal

How to protect against falling pound to euro exchange rates

Exchange rate advice for expats in Portugal

In recent times, we’ve seen a weakened pound against both the US dollar and euro. Many of us have been left asking why is the pound falling when it is the Eurozone that is in crisis?

The simple answer is that the Central Bank in Europe has managed to alleviate the panic around sovereign debt and the crisis in the banks.

Meanwhile, Britain has lost its much coveted triple A credit rating and the pound fell 7% against the euro and dollar in a very short space of time. The plummet of the pound is really a continuation of a trend that has been proceeding for around five years. If you look back to 2008, the pound could buy around 11% more euros and close to 25% more dollars than if you were doing an exchange today.

What can we do on a retail foreign exchange level?

We can’t change the exchange rate, but what we can do is ensure that we choose the right providers to get the best rates on a money transfer. This involves where and when to buy foreign currency. Often, the decision on where to buy can be mitigated against the cost of adverse currency fluctuations. When transferring large sums of money abroad, small differences in exchange rates can have a dramatic impact on the amount received in a beneficiary account.

Rule # 1 – Banks are expensive when transferring money abroad

 It’s important to understand the margins that different money transfer providers apply to the real exchange rate. Typically, banks apply margins of up to a whopping 5% off the mid-market exchange rate. This is extremely expensive and in real money terms, equates to a cost of £5,000 on every £100,000 being transferred.

Non-bank foreign exchange specialists like  tend to apply margins of around 1%. The difference between 1% to 5% can be pretty significant, the more you send.

Understand the charges

Many people get hooked into believing the marketing hype of zero percent commission deals. These fee-free transfers state in their headlines that nothing will be charged for transfers. This is a case of smoke and mirrors, as in reality commission and fees are not the major determinant of whether a transfer service is good or not. The exchange rate alone should be the determining factor between a ‘good’ or ‘bad’ money transfer deal.

Transfer fees

Transfer fees are the transparent charge that you see when you look to exchange money. Generally, these will be called charges, fees, or commissions, and may be a flat rate or tiered, based on the amount of money you are sending.

Exchange rate fees

The exchange rate offered is the true ‘litmus test’ in the currency exchange process.

As we’ve seen above, banks tend to charge between 3% and 5% on a transfer. If you are sending £100,000 for a property purchase, doing so via a bank transfer can hit you with a 5% margin, as opposed to sending via a currency specialist and attracting a 1% fee. This would mean a £4,000 difference.

Make sure you don’t get caught out and understand the true charges involved in your money transfer.

Currency fluctuation is inevitable

To conclude, the pound versus the US dollar, and the pound versus the euro are in constant flux. None of us have a crystal ball, nor should we get overly stressed about the fluctuating rates of exchange. Whilst we can’t influence the movement in exchange rates, consumers can take steps to ensure they use the most cost effective providers and transact at the best value exchange rates.

To compare international money transfer companies, visit 

Does this article help?

Do you have any comments, updates or questions on this topic? Ask them here: