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 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 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
Posted April 28th, 2010 by Charles Purdy
Stop Banks from Cashing in on Your Overseas Transfers – Part Four
By Charles Purdy, Smart Currency Exchange Many British ex-pats overseas send or receive money to or from the UK and in the process they unintentionally lose money. In some cases, losses can be up to tens of thousands! This is part 4 of a special 4-part series that has been written to outline how the Continue Reading…
Topic: Banks, Euro exchange rates, Smart Currency Exchange, US Dollar exchange rates, banking, best currency rates, buy currency, buying, overseas bank account, save money, selling
Posted April 21st, 2010 by Charles Purdy
Stop Banks from Cashing in on Your Overseas Transfers – Part Three
By Charles Purdy, Smart Currency Exchange Many British ex-pats overseas send or receive money to or from the UK and in the process they unintentionally lose money. In some cases, losses can be up to tens of thousands! This is part 3 of a special 4-part series that has been written to outline how the Continue Reading…
Topic: Currency exchange, Euro exchange rates, Smart Currency Exchange, US Dollar exchange rates, banking, best currency rates, buy currency, overseas bank account, save money
Posted April 14th, 2010 by Charles Purdy
Stop Banks from Cashing in on Your Overseas Transfers
Stop Banks from Cashing in on Your Overseas Transfers – Part Two By Charles Purdy, Smart Currency Exchange Many British ex-pats overseas send or receive money to or from the UK and in the process they unintentionally lose money. In some cases, losses can be up to tens of thousands! This is part 2 of Continue Reading…
Topic: Currency exchange, Euro exchange rates, Smart Currency Exchange, US Dollar exchange rates, avoid charges, banking, best currency rates, buy currency, overseas bank account, pension, save money
Posted April 8th, 2010 by Charles Purdy
Stop Banks From Cashing In On Your Overseas Transfers
Stop Banks from Cashing in on Your Overseas Transfers – Part 1 Many British ex-pats send or receive money to or from the UK and in the process they unintentionally lose money. In some cases, loses can be up to tens of thousands! This special 4-part series has been written to outline how the bank-to-bank Continue Reading…
Topic: Currency exchange, Euro exchange rates, US Dollar exchange rates, avoid charges, banking, best currency rates, overseas bank account
Posted February 24th, 2010 by Charles Purdy
Stop the Value of your Pension from Decreasing!
Many Brits abroad unknowingly lose money when receiving their monthly pension payment. Often a pension is paid in sterling at a UK (or off-shore) bank, exchanged to Euros and then sent to the pension holder’s overseas bank account. Alternatively, pensions are paid into a Sterling account in their overseas bank account and then exchanged into Continue Reading…
Topic: Currency exchange, avoid charges, banking, overseas bank account, pension
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