When we travelled full-time we would access our money using our debit or credit cards. I can hear people out there saying “Credit cards? Why would you do that??”. There’s advantages to using credit cards if you use them wisely as I’ll discuss below.
When we started living in Spain last year and opened a Spanish bank account, we had other options. One of them was transferring money directly from our Canadian bank to our Spanish bank. There were advantages to this as well but I always felt that we were getting screwed on the exchange rate.
A few months back a reader told us about Transferwise (now just called “Wise”) and how it was the cheapest way to transfer money between currencies. I said I’d look into it but I got busy with other things and kind of forgot about it until 2 weeks ago. That’s when someone from Wise wrote me and asked me if we used Wise and if we were interested in becoming an affiliate partner with them.
I told the Wise representative that I don’t recommend companies unless we use them ourselves and that I’d have to try it out for myself before I became an affiliate partner. So last week I chose a date and did 3 transfers using 3 methods in order to compare what was the best (and cheapest) way to access our cash internationally.
The results below with our analysis.
(Note: I’m using a consistent amount of $2500 CAD – approx. $2000 US – to compare. Through 11 months of living in Spain it’s the amount we’ve found ourselves transferring monthly to take care of local expenses)
1. Credit Card
Amount to transfer $2500 CAD
Exchange rate: .6507
Gross amount 1,626.75 Euros
Less bank charges – 25.00 Euros*
Net Euros cashed 1,601.75
*due to withdrawal limits, that’s 5 transfers at 5 Euros each
Advantages/disadvantages to using credit cards
Advantage -The exchange rate on most credit cards is better than that used by banks (I use Visa)
Disadvantages – you’re limited to a certain daily limit based on your bank (for us $500 CAD) and you’ll be charged a transaction fee by the local ATM (in our case 5 Euros per transaction). You’re also withdrawing cash – no good if you have to pay rent locally using a domestic transfer unless you then want to take that cash and go and deposit it at your local bank. We actually did that during our year of living in Croatia. But it’s inconvenient and it’s those transaction fees that kill you (subject to the bank you’re withdrawing from)
Note – As I say, using credit cards was our preferred method when travelling full-time and living in Croatia. We were always careful though of crediting our credit card the amount of our transfer on the same day (by online banking) so that we wouldn’t incur interest charges.
2. Bank Transfer
Amount to transfer $2500 CAD
Exchange rate: .6487
Gross amount 1,621.75 Euros
Less transfer fee
(6 CAD *.6487) – 3.89 Euros
Net Euros received 1,617.86
Advantages/disadvantages to a Bank Transfer
Advantage – Our Canadian bank has a daily transfer limit of $2500 and a transfer fee of $6 CAD per transaction. The money takes 2 days to reach our Spanish bank. Very useful because we can then use our Spanish account to pay our rent and our local Debit card to withdraw Euros (for no fee).
Disadvantage – the exchange rate.
Analysis – Basically, the 2 methods above come out pretty close. Bank Transfers are more convenient but the exchange rate is less attractive. Credit cards offer slightly better exchange rates but that’s wiped away by ATM fees.
3. Transfer with Wise
Amount to transfer $2500 CAD
Fees: -13.70 CAD
Net 2,486.30 CAD
Exchange rate: .67064
Net Euros 1,667.41
Above are the results of our 1st transfer with Wise. The fees are actually higher than fees on a bank transfer but the big difference is the exchange rate. The reason is that Wise uses mid-market rates set by the market, not padded rates like the banks. So they don’t make their money on the exchange rate, they make money on the commission.
Analysis – Transfering using Wise (vs the bank) we saved 49.55 Euros, the equivalent of $74 CAD on a $2500 CAD transfer. $74/2500 = 2.96 % saving.
So there’s no doubt that Wise is the best and cheapest way to access your money overseas.
But how safe is Wise? I’ll admit that it’s something that made me hesitant to use them. I never like using a 3rd party company and will always prefer sending money between 2 banks that I’m a customer of.
Wise is listed on the London Stock Exchange and valued at 11 Billion US. It was started up by the same people who started up Skype and has investors such as Richard Branson and Fidelity Investments. So they’re not a fly-by-night company.
Efficiency. It depends on the currency, but they say that it takes 1 working day to receive a transfer. In our case it took 7 hours. I made the transfer on the Wise website in the early afternoon and received the Euro equivalent in my Spanish account by that evening. On top of everything, their dashboard is very user friendly so you can track the payment and even cancel it if you change your mind.
Note: on my 2nd transfer the transaction was instantaneous. My Spanish account was credited right away (I assume because they had all the info from the 1st payment…)
Going forward, we’ll be using Wise for all our international transfers.
If you’re interested in signing up, have a look here: Wise website
It’s really easy. You sign up and they send you a confirmation email. You’re done.
Sending a transfer is also really easy.
You should first set yourself up under “Recipients”. All I had to do was enter my name and my Spanish Iban number.
Once done, I clicked “send money”. From there just follow the steps, including choosing yourself as recipient.
Anyway, I’m also now a Wise customer and affiliate and if you sign up and transfer money I get a one-time commission for bringing you on board (please use the link above). As I said – I wouldn’t recommend anything I wouldn’t use myself. We’ve already saved money/time using Wise so I 100% recommend it.
What’s your experience transferring money overseas?