Sending Money Abroad: How To Cut Back On Costs

bankwireStudents, or their devoted parents, are bound to send substantial amounts of money abroad if they (or their children) decide to study in a different country. A year at a UK university would cost £12,000 (or $17,5000) per year, and a year in Australia would cost even slightly more (AU$24,000 / US $17,500), and that’s for tuition and university fees alone, not including other expenses.

If you include living costs into the equation, the total annual cost would be approximately doubled, and would amount to anywhere between $20,000 and $50,000. That means that taking even a single semester abroad would cost thousands of dollars to fund. As stated before, these are significant amounts of money that has to be transferred between countries and currencies, and most people, students and parents alike, are inexperienced with the process.

Fees On Money Wires

As overseas education is an expensive business by itself, students often do whatever is in their power to reduce costs. They apply for scholarships, turn to public transportation, use free international call providers, and try to stick to a tight budget. What they seem to disregard or ignore is the incredible amount of money being spent on the process of move funds from their home country.

When sending money abroad, 3 or more types of fees incur. The first one is the simple upfront fee of about $30 per transfer in the U.S (eq. to that in other countries). The second one is the recipient bank’s fee which could amount to 1% of the total trade volume. The third one, which is the most significant one also, is the cost of exchanging money between currencies, which is usually 2.5% or more of the entire transfer. There are additional fees that vary according to country, bank, and account type.

Tuition fees of $20,000 could easily cost an additional grand just in bank fees, and a year at Harvard could cost an additional $5,000 just in bank fees, when it is paid for from abroad. That seems fairly illogical, as these fees are nowhere near proportional to the effort and risk that bank has to partake in order to execute them.

There are specialized services for those who are seeking for cheaper alternatives: commercial foreign exchange firms. The way they work is by “mediating” between banks – you send them the money, they exchange it for their much lower rates, and send it as a wire transfer to its new destination. With a transfer of $10,000 or more you can expect 1.5% or less in total transfer costs, and bigger transfers can induce a fee of 0.7% or less (it depends on the currencies exchanged, volumes, and timing). You can view a full breakdown here.

Some of the big names in the industry include Moneycorp, World First, Travelex, FairFX, HiFX, and of course Western Union’s money transfer platform (to to be confused with its remittances cash to cash transfers through branches).

Living Expenses

Living expenses is a different story. While money transfer companies could be the most cost-effective mean of transferring funds to a student abroad, students who only go abroad to study for a single semester would have difficulties with opening a local bank account.

The second alternative is with companies that issue pre-paid currency debit cards (some of the money transfer companies like FairFX or Moneycorp, also provide that service). These pre-paid cards can be loaded with one or more of several different currencies, are reloadable, the cost of currency exchange is lower, and there are no fees on withdrawing money or paying with them abroad. It’s extremely simple to reload this card with any type of currency – the parent just has to log to the online site, input his debit or credit card details, and the card is instantly loaded.


The exchange and transfer of money abroad is an important aspect that should not be overlooked by overseas students and their parents. It is possible to save thousands of dollars in fees by sidestepping from banks and looking into alternative providers.

Guest blogger…

Alon-RajicAuthor Bio: Alon Rajic is the Managing Director of Finofin LTD which owns and operates He loves to read and write about everything relating to business and finance.