It's true that making an international bank transfer might seem convenient.
You already have a bank account, so why not just visit a branch, log in or call customer support and make a transfer?
Here are the three main reasons:
Cost: banks are usually the most expensive way of sending money abroad. There are cheaper ways that could save you thousands of pounds. Is your bank offering you a fee-free transfer? Don't be mistaken - the largest cost often comes from poor exchange rates offered by banks. More on that later.
Speed: depending on where you're transferring to, banks can be slower than some of the specialist money transfer companies.
Service & expertise: there's more to making a currency transfer than just hitting 'send'. Unlike banks, currency brokers can give you tailored advice, helping you manage currency risks and plan your next moves.
Banks vs money transfer companies
Money transfer company | Bank | |
|---|---|---|
Cost | The cheapest deals on the market | Relatively high - could cost thousands of pounds more |
Speed | Fast - often same day to two working days | Often slower than a specialist |
Ease of use | Excellent, completely designed with international transfers in mind | Average, not focused on international transfers |
Customer service | Dedicated customer service, across phone, email and live chat | General customer service |
FX risk features | Yes, multiple providers offer forward contracts, limit orders, stop loss, and currency strategy advice | Not available |
Multi-currency card | Yes, offered by multiple providers | Not available |
Security | Excellent: UK licensed services | Excellent: UK-licensed services |
UK bank foreign exchange costs
Let's look into some of the most popular UK banks and how they handle international transfers.
Summary
While most banks we researched offered a transparent view of their fees, they didn't make the information particularly easy to find!
Some limit access to FX pricing to only be accessed by existing customers. We didn't have access to these banks (Santander, Barclays and Metro Bank). We'll update this page when we are able to source accurate data for these banks.
For the others, rates tend to be high, and vary substantially.
In the best case scenario, if you're transferring over £500,000 to euro with NatWest, we found their quote to be quite competitive at 0.58% markup. However this rises to 2.54% for a £25,000 transfer.
Some UK banks advertise a fixed margin on their websites, meaning the rate doesn't improve for large transfers.
Halifax and Co-operative Bank have high fixed margins, from 3.55% to 4%, while Nationwide's flat rate markup is a little more reasonable at 2.2%.
Bank | Fee structure | Exchange rate markup (GBP to EUR example) |
|---|---|---|
Santander | Unknown | Available to customers |
HSBC | Sliding scale | 1.01% to 3.51% |
Halifax | Fixed margin | 3.55% |
Lloyds Bank | Sliding scale | 2.1% to 3.56% |
Barclays | Unknown | Available in your online account |
NatWest | Sliding scale | 0.58% to 2.54% |
Nationwide | Fixed margin | 2.2% |
Co-operative Bank | Fixed margin | 4% |
TSB | Fixed margine | 3.2% to 3.65% depending on currency |
Metro Bank | Unknown | App gives indicative rate, confirmed once transfer is processed |
Note: fees research conducted on 25th July 2024
Santander
Santander does not provide guidance on its foreign exchange markups on its website. Instead, it says "please contact us for indicative rates on the currency you wish to exchange."
This is not particularly helpful or transparent, which is a shame. This only creates friction and hassle for users who are trying to plan and budget for international payments.
We will update this section when we have more data on Santander's exchange rate markup.
HSBC
With access to an HSBC customer account, we ran a number of quotes for GBP to EUR.
The exchange rate quoted varied for different transaction amounts. For smaller transactions, the fee was 3.51%, which is pretty high.
This reduced to 1.01% when we checked transfers of over £1million.
Of all UK banks, HSBC is known for being one of the most friendly to international use cases. However these rates are not particularly impressive, and there are savings to be had by using a specialist instead.
Halifax
We respect Halifax for being very straightforward and up front with their foreign exchange markup. The downside, is that the markup itself is a high, flat rate of 3.55%.
If you bank with Halifax and need to make an international transfer, I recommend considering some of the alternatives we discuss on this page!
Lloyds Bank
Lloyds Bank also runs on a sliding FX margin scale, similar to HSBC.
Their rate tables are also similar.
They investigated all the options on the market, and ended up choosing to use a specialist FX broker.
The benefits of using a specialist instead of a bank included:
£11,000 saving on the purchase of a £500,000 property, due to more competitive exchange rates
Expert FX planning and advice from their account manager, who specialises in helping people who are buying homes abroad
The ability to lock in rates for the future
Access to a money transfer app to manage their account 24/7
Barclays
Access to Barclays exchange rates is limited to account holders.
As we don't currently have access, we weren't able to assess rates. The Barclays website gives no indication of their FX markup - it's notably absent from almost all their international payment pages.
We will update this section when we have more data on Barclays' exchange rate markup.
NatWest
Our research found that NatWest offered the cheapest rates of any other bank on this list: 0.58%. The caveat? To access this rate, you would have needed to send over £500,000.
That's because NatWest's international exchange rate margins are also tiered: decreasing at levels of £25k, £50k, £100k, £250k and £500k.
Nationwide
The international offering from Nationwide keeps things simple with a fixed 2.2% markup on currency transfers.
This rate is not the worst on this page for low transfers, but for medium to large transfers, it isn't competitive.
Let's be honest though, none of the banks here can really compete with a money transfer company when it comes to pricing and overall value for money.
Co-operative Bank
Unfortunately, Co-operative Bank's international service takes the prize for the highest exchange rate markup on mylist.
Their flat rate of 4% stands alone as the most expensive FX fee at UK banks that we've seen. Ouch!
TSB
TSB quotes flat rate exchange rate markups that vary per currency.
For example, USD and CAD are subject to 3.2% margin fee, rising to 3.5% for PLN and up to 3.65 for the likes of CZK.
Metro Bank
Worryingly, Metro Bank suggests that you won't actually know which exchange rate you're getting until the money has left.
They claim to offer an 'indicative rate' in the app, but then state that 'the final exchange rate will be applied when the money leaves your account.'
We will update this section when we have more data on Metro Bank's exchange rate markup.
International transaction fees
Flat fees are incurred as well as FX margins. These are usually lower, from a few pounds to £20 per transfer.
These fees become insignificant for large transfers, but for smaller international payments, they can eat into your funds a fair bit.
I recommend you consider a multi-currency account if you're moving less than £1,000 at a time on a frequent basis.
Avoiding direct bank transfers is just the first step.
Now, it's time to search the best deals from across the market.
Receiving international payments via bank transfer
When it comes to banks, receiving is almost as bad as sending.
Many providers charge the same high exchange rate mark-up for incoming currency transfers. A few, including nationwide, offer a more palatable reduced rate for receiving funds.
The big concern with receiving money is you often aren't in control of the transaction.
If a third party sends $100k to your Halifax account, the conversion is going to be done according to Halifax's rates and terms.
That's why it's important to arrange international receipts in advance, by either opening a multi-currency account or ensuring the sender uses a money transfer specialist.
