Currency Exchange Info Library
Welcome to the Currency Exchange UK Information Centre! Here you can find useful information, back-to-basic guides and Frequently Asked Questions (FAQs) on all of the products found on our website.
CURRENCY EXCHANGE BROKERS
What are Currency Exchange Brokers?
Currency Exchange brokers are specialists in providing foreign currency to you, whether you are an individual who needs to make payments or transactions to an overseas account or a large corporation which needs to make regular payments abroad.
Because they are specialists who deal directly with the foreign exchange market, currency exchange brokers can offer excellent exchange rates and a much faster service than the regular high street bank.
What is the Interbank rate?
Currency exchange brokers deal with the same special 'interbank' or 'forex spot' rate as the regular bank – this is the rate that you see published daily on currency charts and offers a base rate to see where currencies lie, but is only actually accessed by large financial institutions who make masses of transactions on a daily basis.
While banks offer each other the interbank rate for currency dealings, they don't offer the same rate to regular customers. Instead, they take a percentage of this to cover their overheads and offer the customer a poorer rate as a result. So, what you see on the currency chart is not what you will actually receive if you go to the bank and carry out a foreign exchange transaction.
Currency exchange brokers can offer a rate much closer to the latest interbank rate because they have much less overheads to deal with – and are also constantly dealing directly on the market. In addition, they don't charge extras like commission fees or dealing fees.
When do I need a Currency Exchange Broker?
We use currency companies when we go on holiday or a business trip – they offer a cheap way to exchange pounds sterling for whatever local currency you need. So why do we need currency exchange brokers?
currency exchange brokers are for larger transactions – of around £5,000 and above – which you need to make from your UK account to a foreign currency account. Here are some reasons you might need to do that:
- Paying an overseas mortgage
- Large overseas purchases
- Paying large amounts to family, friends or business associates abroad
- Paying staff members based in another currency zone
What are the Fees?
Currency exchange brokers will be able to carry out the transaction for you at a very competitive exchange rate and won't charge a fee for doing so.
However, if you want to send just a few hundred pounds they might subject you to a one-off fee (around £10) so in those cases it might be worth using a money transfer service instead (see our section on Money Transfers).
As mentioned earlier, currency exchange brokers don't subject their customers to commission fees or other additional fees.
How does it Work?
Let us assume you need to send £10,000 to an overseas account – perhaps you are paying for a new antique purchase from a dealer in France. You have been given their bank details, so all you need to do now is find a good currency exchange broker.
Use our Comparison area to view a range of good brokers – check whether they have a minimum transfer amount for a fee-free service (though at £10,000 you are highly unlikely to be charged).
Apply via our page or go directly to their website and register for an online account – this will involve an easy set-up process. You will need to:
- Proof of ID (passport, driving license) and scan this over to them
- Proof of employment – they will either request to speak to a company representative or ask for a letter from your work
- Bank details
Once they have checked your details – this doesn't take long – they will tell you that you are ready to make your first transfer!
Making a Transfer
This is the easiest part: inform your broker that you want to make a foreign exchange transfer – you can do this by emailing him/her directly or giving them a call. They will ask you how much you want to transfer and to which currency. They will then quote you the latest GBP/EUR exchange rate – if you are happy with it, then you can give them the go ahead.
They will send you a short online application form to enter your recipient's bank details – send this back and they will confirm once again the transfer and rate. Once it's done, the money should arrive in around 3 to 5 business days.
Can I Fix an Exchange Rate?
If you are planning, say, an overseas mortgage payment for a house in Spain in six month's time, you might want to hedge the risk that the risk that the exchange rate moves against you when the day for the first payment arrives.
To do this, you can set up a special 'forward' contract with your broker, which fixes today's rate for a set period of time (up to two years). Speak to your broker about this option if you think it would be a safer bet than waiting until it's time to make mortgage payments.