NPR: Why's It So Expensive To Transfer My Money?

[wise_rita]

Interesting article from NPR about how archaic the international banking system is, still, in this day and age.

I transfer money between where I need to on the currency trading website xe.com.  It doesn't cost a dime on either end, so I imagine I wind up paying for it in the exchange rate, but psychologically it's a good fit for me!

www.npr.org/blogs/parallels/2014/01/16/263105199/ln-a-global-economy-whys-it-so-expensive-to-transfer-my-money?utm_content=socialflow&utm_campaign=nprfacebook&utm_source=npr&utm_medium=facebook

When relocating to a new country, it's important to establish routines and traditions. My ritual here in London is spending an hour on the phone with the bank every day.



It's a strange thing about 2014 — we've got one collective foot planted squarely in the 21st century, while the other is stuck in back in the 19-something-or-others.



My email, Facebook, and Twitter accounts don't care whether I'm in Dublin or Dubai. I can jog along the Seine in Paris to the same music on Spotify that I listen to when I'm running along the Willamette River in Portland.



On WhatsApp, I send text messages to my friends every day at no cost, no matter where in the world I am. Skype is a snap. But banking is something else altogether. (Phone calls go in the same category as banking, but that's for another blog post.)



This is a universal experience, from what I can gather. Anyone living abroad wrestles with the arcane formulas and fees that go into converting an American salary to a British (or Brazilian, or Burmese) bank account.



Two weeks in London, and I've already found that American expats trade banking horror stories like crusty sailors comparing sharkbite scars.



My story, briefly, is this: In order to avoid a $35 Bank of America fee every time I move my paycheck to the United Kingdom, I devised a hopscotch as follows: Dollars leave Bank of America to an international transfer company. That company hands off the money to a Lloyds Bank International account. Lloyds International plops it into an account with UK Lloyds. Hardly simple, but at least the plan comes with no fees. Guaranteed.



The first transfer took three days longer than planned, and arrived with $600 less than the amount that left the U.S.



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Bank of America and Lloyds had changed the money from dollars, to pounds, to dollars again, all at unfavorable exchange rates. Lloyds pointed the finger at Bank of America. Bank of America pointed the finger at Lloyds.



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When I started tweeting about my experience here in London, @matthewwells replied, "Welcome to the shady world of international transfer."



@betbrod called my (ahem) "Twitter meltdown...heartbreaking and probably all too familiar if you've ever moved abroad."



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It all feels strangely anachronistic in this global economy. My NPR colleagues at Planet Money recently executed an eye-popping journalistic project, tracking the life of a T-shirt through the global marketplace from cotton to completion.



They crowd-sourced the funding and sent a shirt to anyone who donated enough money. The global machine in action, right? Well, almost.



The other day I was interviewing a man named Laurie Young on a street in London for this story on British telephone boxes. He enthusiastically told me about purchasing a Planet Money T-shirt online. But when it showed up at his door, it came with an import tax bill for 30 pounds. That's more than $45.



The Euro was supposed to solve this problem for most Europeans, at least. But Britain never joined the currency club. And now the U.K. is talking about pulling out of the European Union altogether. It seems there's not much hope for banking to join the modern age during my London tenure.



As for me, I'm $600 poorer but not necessarily $600 wiser. I'm about to have dinner with some American expats. I'm going to ask them to show me their banking scars. And then try to learn their tricks on how to avoid sky-high fees.



If you have any tips, let me know.

[Deleted]

Move to Bitcoin?

Hahaha. Kind of joking. DH invested in Bitcoin recently. I am an old foggey on this one and not a believer.

We use Oanda. Great rates but we pay a wire transfer fee. We only transfer £5000+ at a time so it's still a better deal than wire transfer through our bank.

[Deleted]

Are there any repercussions or things I'm not thinking of if I just carry cash from the UK to the US with me? And then depositing it in my US account?

I assume I'd need to call my US bank to make sure that they can handle a large deposit of foreign currency and I need to carry less than what the US govt allows in cash (it's $10,000/person, right?)

Is that a terrible idea?

[wise_rita]

Jan 17, 2014 9:13:29 GMT -5 @uwhuskygirl said:

Are there any repercussions or things I'm not thinking of if I just carry cash from the UK to the US with me? And then depositing it in my US account?

I assume I'd need to call my US bank to make sure that they can handle a large deposit of foreign currency and I need to carry less than what the US govt allows in cash (it's $10,000/person, right?)

Is that a terrible idea?

As long as your bank in the US can do this it's probably the easiest/best way to go.

@publius haven't you said before this is how you move money?

[wise_rita]

Maybe I made that up then. Someone carries cash, and that's OK as long as you declare it (I think) and it's no more than $10,000 USD.

Though I did see one of those border protection shows where the authorities wouldn't let the money be carried out of the country because they suspected it would be going to illegal things abroad. I have no idea what leg they had to stand on for that, but the idiot said his $10k was going to buy a 10+ year old crappy car. It wasn't a US show, but lesson learned: Don't be dodgy with your explanation to "What will this money be used for?"!

[lolo]

We used PayPal. I don't know if it was the best option, but it was cheaper than the other options we tried.

UK bank --> uk PayPal--> us PayPal --> us bank.

I need to figure out a new way though since I just found out I'm getting a tax refund in the UK.

[Deleted]

We are lucky. DH's company will reimburse the cost of one transfer a month from a U.S. bank to Chinese bank, which is about $40 with Chase. We also have a guaranteed exchange rate (that is adjusted every 6 months) through DH's company - so they will reimburse us the difference between the guaranteed rate and the rate we actually get from the banks. We can do most of it online, the hassle is on the Chinese end, where we have to go to the bank, take a number, and wait for 15 minutes to hours to go to a teller to accept the transfer. Only foreigners have to accept transfers using an actual teller, local people can do it at the ATM. We can't do joint bank accounts so DH has to do all of the in person banking stuff, which means it generally has to happen on weekends.

We just got back from trying to accept a transfer. We arrived at the bank at 3:30 in the afternoon and got our number. At 4:15 they had only gotten through 17 numbers, and they were still 29 numbers away from ours. We are meeting someone at 4:30 so we had to leave and we'll have to go back and accept the transfer some other time.

[wise_rita]

Jan 19, 2014 3:29:42 GMT -5 @juliash said:

We are lucky. DH's company will reimburse the cost of one transfer a month from a U.S. bank to Chinese bank, which is about $40 with Chase. We also have a guaranteed exchange rate (that is adjusted every 6 months) through DH's company

That's awesome!  What a sweet expat perk.

But man, what a PITA in practice.

[Deleted]

Jan 19, 2014 5:12:52 GMT -5 wise_rita said:

Jan 19, 2014 3:29:42 GMT -5 @juliash said:

We are lucky. DH's company will reimburse the cost of one transfer a month from a U.S. bank to Chinese bank, which is about $40 with Chase. We also have a guaranteed exchange rate (that is adjusted every 6 months) through DH's company

That's awesome!  What a sweet expat perk.

But man, what a PITA in practice.

It is. We're pretty frugal, and we're already very conscious of how often we transfer money because we never want to hit the $10,000 in an account abroad and because we never want to do more than one transfer a month. Having to pay $40 plus lose a lot to exchange rates every time we needed to transfer would make DH and I very very unhappy people, so I'm glad that is one thing about living abroad that we can be less stressed about. 

I know some people though who just don't care and transfer money whenever and don't seem to care about the fees. DH even has coworkers who don't bother asking for the reimbursement for transfer fees and exchange rates, which just makes my jaw drop. It takes about 5 minutes to fill out the form online to ask for the money back. But I guess they're just lucky to feel more relaxed about money than us?

[GilliC]

Jan 19, 2014 6:28:53 GMT -5 @publius said:

Jan 18, 2014 7:38:23 GMT -5 wise_rita said:

Maybe I made that up then. Someone carries cash, and that's OK as long as you declare it (I think) and it's no more than $10,000 USD.

Though I did see one of those border protection shows where the authorities wouldn't let the money be carried out of the country because they suspected it would be going to illegal things abroad. I have no idea what leg they had to stand on for that, but the idiot said his $10k was going to buy a 10+ year old crappy car. It wasn't a US show, but lesson learned: Don't be dodgy with your explanation to "What will this money be used for?"!

You can take more than $10k into/out of the country in cash but you have to declare it or it could be seized.

Any idea what they do when you declare it? Can they refuse to let you bring it into the country?

We emptied our account in China into USD before we left, because moving money in/out of China was a complete PitA. Since the bank could issue dollars, and we only had about a $1K in the account, it was the simplest option.

Since a lot banks here can also issue USD, I always wondered about carrying a big chunk of cash if I needed to transfer some back to the US.

[wise_rita]

Jan 20, 2014 9:30:33 GMT -5 GilliC said:

Jan 19, 2014 6:28:53 GMT -5 @publius said:

You can take more than $10k into/out of the country in cash but you have to declare it or it could be seized.

Any idea what they do when you declare it? Can they refuse to let you bring it into the country?
Doesn't the blue declaration form ask if you're carrying OVER $10k?

If you've got below that then you shouldn't need to declare it at all.

That border show I watched had sniffer dogs who could detect cash. Dogs: They're not just for packages of coke wrapped around torsos anymore!

[GilliC]

Jan 20, 2014 9:55:52 GMT -5 wise_rita said:

Jan 20, 2014 9:30:33 GMT -5 GilliC said:

Any idea what they do when you declare it? Can they refuse to let you bring it into the country?

Doesn't the blue declaration form ask if you're carrying OVER $10k?

If you've got below that then you shouldn't need to declare it at all.

That border show I watched had sniffer dogs who could detect cash. Dogs: They're not just for packages of coke wrapped around torsos anymore!

I meant, what would happen if you carried over $10K. e.g. What happens if I sell my apartment in Oslo, take the money in cash, and fly to NYC for a shopping spree?

And don't forget, this is Norway:
Dogs: They're not just for packages of snakes wrapped around torsos anymore!

[wise_rita]

Jan 20, 2014 10:01:28 GMT -5 GilliC said:

Jan 20, 2014 9:55:52 GMT -5 wise_rita said:

Doesn't the blue declaration form ask if you're carrying OVER $10k?

If you've got below that then you shouldn't need to declare it at all.

That border show I watched had sniffer dogs who could detect cash. Dogs: They're not just for packages of coke wrapped around torsos anymore!

I meant, what would happen if you carried over $10K. e.g. What happens if I sell my apartment in Oslo, take the money in cash, and fly to NYC for a shopping spree?

I don't know... Tax you on it, maybe?

Maybe violate your civil liberties to see where that money came from, because terrorism.