Posted December 16th, 2010 by Charles Purdy
An option the banks won’t tell you about – a forward contract
It is often thought that the only way to buy currency is by paying for it in full, at the rate given by your high street bank on the day that you go in to buy it. Most buyers have no idea that they have any currency options – they simply buy the currency, let’s say euros, as and when it is required…and, on top of that, they usually wait until the last minute.
This is what the banks love you to do, as you are then ‘forced’ into buying at the rate the bank offers on the day. Others buy their currency requirements as soon as they know the amount needed, even if they don’t need to use the currency for the foreseeable future. By doing this they avoid the cost of the euros increasing – and at least with this method it does mean that they know their exact costs.
However, there is a far more effective alternative – one that the banks fail to tell you about.
That alternative is to secure your currency requirements in advance using what is known as a forward contract. And the interesting thing is that you will not be required to pay for your currency in full until such time as you need to pay the total amount over.
To give you an example, let’s say you need €100,000 in three months time and you don’t want to risk the sterling cost increasing. This can easily happen due to constant changes in the exchange rate. This is just the sort of thing you want to guard against – three months can see a truly frightening difference in currency rates.
The good news is that you can agree an exchange rate for those euros now – and all you would need is a deposit of up to 10% of the sterling purchase cost. This will ensure that your currency is secured at that day’s rate and that you don’t need to pay the full amount for the euros immediately.
It also means that you can keep 90% of your funds in a sterling account, hopefully earning interest, plus you will know EXACTLY how much money you will need when it comes to pay for the euros in three months time. By doing it this way, there are no more nasty surprises – like an extra £5-10,000 added to what you had expected to pay because of a change in the exchange rate!
It may sound complicated, but is really simplicity itself and the joy of an approach like this is that it removes all the uncertainty and the associated stress and strain. I’m sure you will agree it’s much better to know upfront exactly what your costs are going to be – it’s one less thing to worry about!
Topic: Articles, Banks, Charles Purdy, Currency exchange, Euro exchange rates, International Currency Exchange, Smart Currency Exchange, avoid charges, banking, banking system, best currency rates, buy currency, currency market, currency rates, foreign money exchange, getting money to your destination, international payment, overseas bank account, save money
Posted December 9th, 2010 by Charles Purdy
Time for a break?
The pound has made gains against the euro over recent weeks, making the average last-minute trip to the Eurozone some 7% cheaper for British travellers than it would have been last month. Anyone depressed by the cold and the snow can jet off south to sunnier climes for less as a result. David Comber Continue Reading…
Topic: Banks, Charles Purdy, Currency exchange, Euros, avoid charges, banking system, best currency rates, currency market, currency rates, euro zone, exchange rates
Posted December 2nd, 2010 by Charles Purdy
Can you afford to lose £4,000?
The economic crisis is certainly causing problems for people all over the world, yet in the world of international money transfers there are actions that can be taken to safeguard your money – especially if different currencies are required. International payments include payments between countries for property, the movement of pension payments, transferring savings or Continue Reading…
Topic: Articles, Banks, Charles Purdy, Currency exchange, avoid charges, banking, banking system, best currency rates, buy currency, currency rates
Posted November 25th, 2010 by Charles Purdy
The Hidden Cost of Overseas Cosmetic Surgery
Deciding to go under the knife is one hurdle and the second is coming to grips with the cost. Having cosmetic surgery isn’t a procedure that many people take lightly – not only do you want to be assured that you’ll received the desired outcome, but you also want to get value for the money spent. Stating Continue Reading…
Topic: Articles, Charles Purdy, Currency exchange, Euro exchange rates, International Currency Exchange, Smart Currency Exchange, Sterling, US Dollar exchange rates, avoid charges, best currency rates, currency market, currency rates, exchange rates, foreign money exchange, getting money to your destination, overseas, regular payments
Posted November 17th, 2010 by Charles Purdy
Making regular international payments – who offers the best deal?
(Read an article written by ’The Overseas Guides Company’ that demonstrates which currency company truly offers the best deal on international payments) Having read an interesting article in the “A Place in the Sun” magazine dated October 1st 2010 it left me with a question about currency company charges. The article laid out exactly how currency Continue Reading…
Topic: Articles, Banks, Charles Purdy, Currency exchange, Cyprus, Euro exchange rates, Euros, Smart Currency Exchange, Sterling, US Dollar exchange rates, advertising, avoid charges, bank of england, banking, banking system, before the euro, best currency rates, buy currency, buying, case study, currency market, currency rates, euro zone, exchange rates, first world currency, foreign currency, overseas, overseas bank account, pounds, property abroad, property sales, rates, regular paymens, uk economy
Posted November 10th, 2010 by Charles Purdy
How you can protect yourself from increased currency costs
Goodness, what a difference a few months make! For the first half of this year sterling was moving ahead against most currencies as the coalition government took their first steps to stabilise the UK economy. Then suddenly…all change. What exactly happened? The possibility of further quantitative easing is what happened. Investors hate the thought Continue Reading…
Topic: Articles
Posted November 4th, 2010 by Charles Purdy
A quick top-up to your overseas bank account could cost a bundle
As the world gets smaller and smaller, people seem to spread wider and wider. With low-cost travel, inexpensive holiday pads and the desire to enjoy the sun year round, it’s not uncommon for Brits to have bank accounts in more than one country; an account in the UK and perhaps another in Europe, Australia or Continue Reading…
Topic: Articles
Posted October 27th, 2010 by Charles Purdy
Do you know the Top Ten Tips to Making Overseas Payments?
Whether you’re sending currency overseas for a property purchase, pension/savings transfer or to buy or sell goods there are specific things you can do to save money and avoid losses. Listed below are the top ten tips to moving funds abroad: Use a currency exchange specialist to make large lump sum transfers (e.g. property payments) Continue Reading…
Topic: Articles
Posted October 20th, 2010 by Charles Purdy
Security of funds
Each day millions of pounds flow through our client accounts and the security of these funds is paramount. From the first day that Smart Currency started business in 2005, the funds of the business have been kept separate from the funds that belong to the client. This means that, in a worse case scenario, Continue Reading…
Topic: Articles
Posted October 13th, 2010 by Charles Purdy
Insuring yourself against Currency Movements
What does insurance give you? It should ensure that you are left no worse off after an event – for example a fire or a theft – than before. It should remove the stress and strain of having to worry both before and after a traumatic event and you should be able to relax in Continue Reading…
Topic: Banks, Currency exchange, Euro exchange rates, Europe, International Currency Exchange, Smart Currency Exchange, avoid charges, bank of england, banking, banking system, before the euro, best currency rates, buy currency, currency market, currency rates, euro zone, exchange rates, foreign money exchange, international payment, overseas bank account, property abroad
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