10 reasons not to use your bank for Currency Transfers

Money transfer South Africa
Money transfer South Africa

Cape Town is a city full of expats and international visitors. Clearly there is a lot of money coming in and going out of South Africa all the time.

And most people use their bank for the currency transfers.

But before using you bank you should give it a secong thought and learn here why it is better not to trust your bank, or at least not to make your bank wealthier with your money.

Read on and learn why it might be better to use a Currency Company.

  1. Banks charge transfer fees – currency companies buy in bulk and pass on their saving to their clients. They make their money on the buy sell spread, in other words the difference in price that they buy the currency at and the price they subsequently sell the currency to you for. Have you examined your bank charges lately? Do you understand them and why is it that South African banks see fit to charge us for withdrawing our own money from our own banks ATM’s? (when most of the world does not)
  2. Banks are inflexible – More often than not you are quoted a rate and that rate is it! Just try negotiating with them.
  3. Banks charge large spreads – numerous surveys and real life tales (as reported in the Cape Times on 12th September) demonstrate the extent of the “buy sell spread” that banks charge. In this case the client of Bank A received an inheritance of £50,000 from the UK, his sister received the same amount at more or less the same time, she dealt with bank B. In this instance he received in excess of R10,000 less than his sister. Similar surveys show the banks operate a buy sell spread of between 3% and 5% (and don’t forget the transfer fee on top of this).
  4. Knowledge – South Africa operates in a climate of exchange control. This means it is not a simple case of ringing your bank and obtaining an exchange rate. Tax clearances and reserve bank approval may be required for the transfer of money out of South Africa and for transfers in, the paper trail is vital for repatriation of funds introduced. All too often this information is hard to access, with banking staff, who seem not to have been trained on the intricacies of exchange control.
  5. Service – an old fashioned value but one most of us still hold dear to our hearts. Long queues, the inability to make a set appointment, a reactive approach, a struggle to get through to the right person on the phone and a can’t do attitude – sound familiar.
  6. Relationships – you may be among the favoured few with private banking and have access to an individual at the bank (generally you must be earning over R1.2 million a year for this service). But for most of us our contact with the bank rarely involves the same person. Dealing with an individual who gets to know you and your needs is important in building trust and obtaining the service levels and knowledge we need to access.
  7. The full story – for anyone who has ever had a foreign currency arrive at their bank in South Africa the below will sound all too familiar. Further to the story above in point 3, the client of Banks A’s outrage (at receiving some R10,000 less than his sister) was intensified after he subsequently discovered he could have waited for up to 30 days to effect the transfer if he had so wished. An option he would have liked to have known about. Good advice is about being told everything not just having your questions answered.
  8. Additional costs – as eluded to earlier on, for transfers of currency out of South Africa various approvals must be obtained. Inevitably this includes tax clearance for your annual investment allowance – do you think the banks will provide this for you at no additional costs?
  9. Ease of use – We live in a world of online access and speed, you found this on the internet did you not? Our expectations are to be able to access information quickly and efficiently. We are used to internet banking and cell phone banking, faxing instructions or even just a simple phone call – does this sound like your bank?
  10. Speed of transfer – often banks will take between 3 and 8 days to clear your transferred funds, currency companies at worst 3 working days. I wonder where your money goes to in between time.

Of course banks are sometimes competitive and some banks are better than others. Your bank may sometimes give you excellent service and great rates – but more often than not a currency company will out perform them in matters of service, knowledge and rates (fees).

And of course some currency companies are better than others, but this is really the point. Banks have for too long been the ‘non choice’ (the equivalent of the couch potato investor). It’s currency transfer service is used often because it is the known route, not the better route. Buying or selling a currency is no different in some respects from buying any product or service and the best advice still prevails – shop around!

Satisfy yourself that you are dealing with the best organisation for your currency needs, one that delivers on knowledge, service and rates, and importantly, is prepared to go that extra mile to show they appreciate your custom.

If you want to learn more about the topic please visit: http://www.money-transfers.co.za/

This post was written by a guest contributor: Stuart James is shareholder and managing member of Incompass Financial Services and Intergate Immigration Service. Born and breed in the UK he nowadays lives in Noordhoek. He and his team are helping people and companies in moving and relocating to South Africa. The Cape Town Active Blog says thank you for this post.


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