The real cost of sending money abroad is not just the transfer fee, it is the fee plus the markup hidden in the exchange rate. High street banks tend to be the most expensive route, while specialist online providers usually offer rates close to the true market rate. This guide explains how to see the true cost, compare providers fairly, and send money safely from the UK.
Where the cost really hides
Every international transfer has two costs. The first is the visible transfer fee. The second, and often the larger one, is the exchange-rate markup: the gap between the rate you are given and the real market rate. A transfer advertised as fee-free can still be expensive if the exchange rate is poor. Always judge a transfer by the total amount that lands in the recipient account, not by the fee alone.
The mid-market rate
The mid-market rate is the real exchange rate, the midpoint between the buy and sell prices you see on financial news. It is the fairest benchmark. Some specialist providers, such as Wise, use the mid-market rate and charge a clear separate fee, so you can see exactly what you pay. Many banks instead build their profit into a worse rate, which is harder to spot.
Why banks are usually the expensive option
Sending money through a traditional high street bank is convenient but often the priciest choice, because the cost is buried in the exchange rate. Dedicated foreign-exchange platforms and money transfer services typically offer stronger rates and lower total costs, especially on larger amounts or regular payments.
How to compare providers fairly
- Enter the exact amount you want to send.
- Compare the amount received in the destination currency across two or three providers.
- Check the exchange rate against the mid-market rate for that day.
- Factor in delivery speed, since the cheapest option is sometimes slower.
- Fund the transfer by bank transfer where possible, as paying by card often adds a fee.
Keeping your money safe
Only use providers authorised by the Financial Conduct Authority (FCA). Authorised firms must safeguard customer money, and you can check any provider on the FCA register. Some newer providers also hold a banking licence, which can bring protection under the Financial Services Compensation Scheme. If a rate looks far better than everyone else and the provider is not FCA authorised, treat it as a warning sign.
Practical tips for newcomers
- Multi-currency accounts let you hold and convert money yourself, useful if you are paid in one currency and spend in another.
- For regular payments, such as supporting family, set a rate alert or a recurring transfer to avoid poor spur-of-the-moment rates.
- Large one-off transfers, for example moving savings after relocating, are worth comparing carefully because a small rate difference is amplified.
- Keep records of transfers for tax purposes, particularly if you may be liable to UK tax on foreign income.
Frequently asked questions
Is it cheaper to send money with my bank or a transfer service?
A specialist transfer service is usually cheaper because it offers a rate closer to the mid-market rate. Banks tend to hide a larger markup in the exchange rate.
What is the mid-market rate?
It is the real exchange rate, the midpoint between the buy and sell prices. Compare any provider rate against it to see how much markup you are paying.
How do I know a provider is safe?
Check that it is authorised on the Financial Conduct Authority register. Authorised firms must protect customer funds, and some are also covered by the Financial Services Compensation Scheme.
Does sending money abroad affect my UK tax?
Moving your own money is not usually taxable, but income earned abroad can be. If in doubt, see our guide on double taxation relief for newcomers or check with HMRC.
For the full setup, from bank accounts to tax, see the UK money guide for newcomers.
