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Receiving foreign credit

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staffordian
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Receiving foreign credit

#215055

Postby staffordian » April 14th, 2019, 9:14 pm

Before I check with my bank, I thought I'd tap the collective wisdom here...

I should be receiving an inheritance left by a relative who lived in South Africa.

What I'm unsure of is how UK banks deal with foreign currency.

Given the volatility of the exchange rate, is it possible for the bank to hold the deposit in my current account in ZAR should the rate be poor, then exchange it for Sterling at my request, or is it standard that the bank will convert it as soon as they receive it?

Thanks for any insight.

Staffordian

Alaric
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Re: Receiving foreign credit

#215058

Postby Alaric » April 14th, 2019, 9:33 pm

staffordian wrote:Given the volatility of the exchange rate, is it possible for the bank to hold the deposit in my current account in ZAR should the rate be poor, then exchange it for Sterling at my request, or is it standard that the bank will convert it as soon as they receive it?


The old fashioned way would be that the bank in South Africa sends you a piece of paper or even a cheque which you then get your bank to exchange for sterling at your leisure. But there are also automatic systems which convert the payment.

It would be reasonable to ask how the transfer is going to be done. Is there also an issue around exchange controls on the Rand?

gryffron
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Re: Receiving foreign credit

#215071

Postby gryffron » April 14th, 2019, 10:47 pm

You can't hold foreign currency in a standard UK bank account. They will convert the money as part of the transfer process. Not always at the absolute best market rates. And certainly not with any consideration to timing.

Foreign currency cheques can take a ridiculous amount of time to clear. I was quoted "up to 12 MONTHS" for a US cheque to clear to my UK bank. So you can forget optimising the timing for best rates. IMO foreign cheques are to be avoided at all costs.

More likely they will use an electronic international bank transfer. Which are quick and reliable, but not always the best exchange rates. I would generally expect they will just do it whenever it suits them, without a thought to currency movements.

Another option. Open a ZAR account with a UK bank (HSBC??) or even a ZA bank (many have branches in central London). Which then gives you the flexibility to transfer whenever you feel like it. Or even to spend the money there. But doing this may be more hassle than you want.

OR You might be able to use one of the many online currency broker sites to implement the transfer. Get the payer to send the money to them, and arrange for an at-best rate transfer. Especially if you are willing to wait. Again, Whether it is worth the effort is up to you.

Personally, I would just ask for an electronic bank transfer. Quick and safe.

Gryff

staffordian
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Re: Receiving foreign credit

#215097

Postby staffordian » April 15th, 2019, 9:23 am

Thank you both.

As for restrictions, I gather they are not simple, but not as onerous as they once were, and have been assured this should not be an issue.

I definitely don't want to mess about with cheques; I understand a transfer is the way it will work, and in the circumstances, I suspect opening a foreign currency account might be too much hassle. Since I heard about the inheritance, the sterling amount has fluctuated from plus £3k to minus £4k from the amount it would have been at the time, but generally has hovered around the same figure.

Probably best to just take my chances and count my blessings. It will all be money I didn't expect...

Staffordian

JuanDB
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Re: Receiving foreign credit

#215104

Postby JuanDB » April 15th, 2019, 9:45 am

The main issue with using your bank to do an “inline” currency conversion is the rate used. Generally bank rates are not at all competitive and as far as I can see rely on the consumer not checking the market rate to hide what can be exorbitant hidden fees.

I receive overseas income a few times per quarter and use two service providers. Currencies Direct and TransferWise. The former for high value conversions at best rates, the latter for low value where I often retain the original currency for spend when travelling etc.

The beauty of these services is threefold.

1, easy to open, takes 15 mins plus due diligence.
2, transparent rates, see exactly what the cost is vs market rate
3, separate the funds transfer from the exchange / disbursement leg. You can receive the funds held in an account you have access to and the new exchange at a convenient time.

Thanks,

Juan

stevensfo
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Re: Receiving foreign credit

#215146

Postby stevensfo » April 15th, 2019, 12:19 pm

I have both a Transferwise and Revolut account and they are both far better than normal banks. I calculated that on pounds to Euros, Revolut was giving me 3.5% more than my normal bank. I haven't tried Transferwise yet, but I hear it's even better than Revolut. Easy to open. Just install the apps onto your smartphone and have your Driving lIcence or passport handy for ID. Actually, Transferwise probably has the advantage here, since you can access it via the internet, whereas Revolut is app-only.

Steve

PinkDalek
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Re: Receiving foreign credit

#215154

Postby PinkDalek » April 15th, 2019, 12:40 pm

See also your words of warning re the lack of FSCS protection earlier this month:

viewtopic.php?p=212401#p212401

stevensfo
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Re: Receiving foreign credit

#215176

Postby stevensfo » April 15th, 2019, 1:55 pm

PinkDalek wrote:See also your words of warning re the lack of FSCS protection earlier this month:

viewtopic.php?p=212401#p212401



Yes, absolutely. They're great for converting between currencies but there's no 85,000 pound FSCS protection. I know that Revolut has a European Banking Licence, but at present is only a 'real' bank in Lithuania. Transferwise has been around longer and its 'Borderless account' seems to be popular with young English Language teachers working abroad, but even then, they tend to transfer some funds to their real account at home.

Steve

staffordian
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Re: Receiving foreign credit

#215202

Postby staffordian » April 15th, 2019, 3:33 pm

Thanks for the additional information.

I had a look at Currencies Direct and although it is FCA authorised, the FCA website is ambiguously on the subject of protection.

So all things considered, I think I'll take the safe(r) but probably more costly option of using my existing current account.

Staffordian

stevensfo
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Re: Receiving foreign credit

#215246

Postby stevensfo » April 15th, 2019, 6:04 pm

staffordian wrote:Thanks for the additional information.

I had a look at Currencies Direct and although it is FCA authorised, the FCA website is ambiguously on the subject of protection.

So all things considered, I think I'll take the safe(r) but probably more costly option of using my existing current account.

Staffordian


I think we got to the stage long ago when we wonder what exactly 'isn't' FCA authorised! :-)

Seriously though, unless it's a paltry amount, or you really don't care, just compare the various means of transfer.

But for peace of mind, then go with your main bank. Most of the main banks desperately need more funds for all the ongoing court cases.


Steve

staffordian
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Re: Receiving foreign credit

#215292

Postby staffordian » April 15th, 2019, 10:44 pm

stevensfo wrote:
staffordian wrote:Thanks for the additional information.

I had a look at Currencies Direct and although it is FCA authorised, the FCA website is ambiguously on the subject of protection.

So all things considered, I think I'll take the safe(r) but probably more costly option of using my existing current account.

Staffordian


I think we got to the stage long ago when we wonder what exactly 'isn't' FCA authorised! :-)

Seriously though, unless it's a paltry amount, or you really don't care, just compare the various means of transfer.

But for peace of mind, then go with your main bank. Most of the main banks desperately need more funds for all the ongoing court cases.


Steve


One problem I encountered was my bank's reluctance to explain what exchange rate they use. I just got a vague "it depends on the rate on the day", which is obviously no help. I need to be more insistent.

As for inferior rates, I guess it's a case of balancing the near certainty of an inferior rate against the outside chance of losing the lot.

We're not talking life changing amounts, but I will be a millionaire- at least in ZAR :)

gryffron
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Re: Receiving foreign credit

#215297

Postby gryffron » April 15th, 2019, 11:09 pm

staffordian wrote:As for inferior rates, I guess it's a case of balancing the near certainty of an inferior rate against the outside chance of losing the lot.

I agree. International transfers can and do go missing. But the banks generally find them - eventually. Over time the brokers will beat the banks by a few percent, but with a minisculely small (but not quite zero) chance of losing an entire batch.

IMO the brokers are great for people who do regular transfers. Averaged over a large number of transfers, you're certain to win. But for a one off transfer I personally would stick with the banks.

Gryff


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