Your requirements for an overseas money transfer may be simple, but choose the wrong provider and the process could be anything but.

Sending money abroad doesn’t have to be complicated, though, and if you watch out for these four common currency mistakes, you’ll be sparing yourself a headache.

Transfer fees

Some foreign exchange providers will charge a transaction fee on each and every transfer that you make with them. The amount may be small, but there is no reason to give up a chunk of your money to a bank or currency broker when sending money abroad.

Leading brokers such as Currencies Direct offer a fee-free service meaning that you get to keep all of the money you send abroad. This is important because those transaction fees can add up quickly if you have to send money abroad frequently, such as transferring a pension or wage payment.

Even if you are only making a one-off transfer, why give up some of your money when you don’t have to?

Poor exchange rates

When it comes to sending funds abroad, you could be losing money without even realising it. Going straight to your bank to transfer your funds, or picking the first provider you find, could actually see you losing funds simply because you didn’t get the best exchange rate on offer.

Foreign currency providers are able to offer different exchange rates because, while they all buy their currency from the private interbank market, they are free to add on whatever margin they like when they sell it on to you.

Reputable brokers like Currencies Direct specialise solely in sending money abroad; the vast amount of money that they transfer every single day means that they can keep their margins small and pass the savings on to their customers.

It is therefore important that you shop around for the best exchange rate, while also taking factors such as customer service and reputation into account.

Currency risk

The currency markets can be a volatile and unpredictable place, with exchange rates fluctuating by 5% or more in the space of a single month. Timing your transfer is therefore important; especially on large amounts where a difference of a few basis points in an exchange rate can mean you gain or miss out on thousands.

Luckily, currency brokers offer easy ways to limit the risk and help you to benefit from fluctuations in the market without you having to watch the rates during every waking hour.

If you are ready to make a transfer, but are in no rush, a stop loss order or limit order could help you to get more for your pounds.

A stop loss order sets a target rate slightly below the going market rate and automatically triggers a transfer should exchange rates fall below that level. This way you can hold out for a better rate without worrying about the market tumbling and leaving you worse off instead.

A limit order, on the other hand, sets a target rate higher than the going rate, at which you would like to transfer. Your money will be automatically converted if the market rises to this level, allowing you to capitalise on even a ‘blink-and-you-miss-it’ spike in exchange rates.

For transfers that are further away, consider a forward contract, which locks the going exchange rate in place for use up to a year into the future. This way you can know exactly how much money you will get and don’t have to worry about downturns in the market.

Surprise costs

At the beginning we talked about avoiding transfer fees, but there are some other fees you should be aware of – specifically, fees charged to you by your bank for receiving money.

People are often surprised to find that when the money lands in their destination account a small portion of it may be missing, and automatically assume that their foreign exchange provider must have levied a hidden transaction fee. But this is not the case: many banks charge a ‘landing fee’ to receive money into your account – this is nothing to do with the provider used to transfer the money and is charged and set entirely at the whim of your overseas bank.

If you are unsure whether your bank will charge a landing fee, it is best to ask them before you begin your transfer, otherwise you could be surprised when the money arrives.

Time is money – spend some hours researching and make a saving

With a little bit of research and careful planning you can avoid these major currency pitfalls when transferring funds abroad.

It doesn’t take long to shop around for the best provider and exchange rate, and while things like limit orders and forward contracts may sound complicated, a reputable broker will be able to talk you through them and set them up with ease.

All this means you get to enjoy all of your money – and likely more of it than you thought – when it arrives in your destination account.