The trend of Indian students going abroad has been increasing in recent years. Simultaneously, so has transferring large amounts of money abroad by students, for paying their university fees and maintenance expenses.
As per data from the RBI, US $8.4 billion was sent abroad from India in FY22 for overseas education and maintenance. Unfortunately, international transfers are often expensive with high margins on the exchange rate and steep service fees. So how can students reduce the cost of sending funds overseas?
The problem with transferring money abroad
There are a few things to be aware of when transferring money abroad — the most important being the exchange rate. The foreign exchange rate is the rate at which one currency can be exchanged for another and it fluctuates every minute. All banks will charge a margin on top of the actual exchange rate for an international transfer.
For example, if the exchange rate of 1 US $ is Rs 80, banks may charge anywhere between Rs 2 -3 extra per dollar. This extra margin is usually in the range of 3-5 per cent meaning for every $100 you convert, you will lose $3-$5. In addition to the loss sustained when converting currency, there is also the bank service fee to consider. This can be around Rs 1500 – Rs 3500. Finally, there may also be an intermediary bank fee charged by the in-between bank routing the transaction between the sending and the receiving bank. This can be between $10-30. All of these charges add up, and can really eat into your funds when transferring large sums of money abroad.
Popular money transfer options available
Banks: Most major banks in India offer international money transfer services. However, they may charge high fees and offer poor exchange rates.
Money transfer companies: Several companies allow you to transfer money abroad quickly and easily. However, they may also charge high fees and offer poor exchange rates.
Online platforms: Some online platforms allow you to transfer money abroad at competitive exchange rates and low fees.
The best ways to save on fees
The cost of sending money abroad can be expensive, ranging from hidden fees to high currency conversion rates. However, there are a few ways students can save on these fees.
To start with, students should compare the costs of different money transfer options. Compare exchange rates and fees from different providers, such as banks, money transfer companies, and online platforms. Use them to compare rates and find the best money transfer option. You can even book the transfer online through these platforms, if you like the rate.
Another way to save money on transfers abroad is by looking out for promotions. Usually, online platforms give offers or discount codes. Take advantage of them to get a good deal.
If you are doing the transfer through your own bank or a money transfer company near you, a good way to save on fees is to request a quote from them. This will give you an estimate of how much it will cost to send a specific amount of money. If the quote is higher than you would like, you can try negotiating with the provider or looking for another option. Not many customers know that negotiating exchange rates is possible.
(The writer is the CEO of ExTravelMoney.com)
Read More: Study Abroad: How Indian students can save on transferring huge amounts abroad