If you live in Germany, or are thinking of moving here, sooner or later you will need to transfer money from your native country to a German bank account, or vice versa. You might be buying a house, have utility bills or tuition fees to pay, or a family to support back home. No matter what your reason is for transferring money to or from Germany, the same general guidance applies.
International money transfers to and from Germany
From time to time, every expat in Germany will have to transfer money to and from abroad. There are several different methods in Germany of transferring funds internationally - each with its own pros and cons. The best method for you will depend on the amount, type and timing of the transaction.
Online transfer services
Online transfer services offer international currency transfers and payments to both individuals and companies. They work by matching you with people sending money in the other direction, so that your money doesn’t even leave the country. This allows them to offer much more competitive rates than your average high street bank. These companies all offer competitive rates for online money transfers in Germany:
Bank transfer
When considering an international money transfer, most people immediately think of their bank. Most high street banks do offer foreign exchanges as a branch of their services, and allow you to transfer money worldwide using a SWIFT (Society for Worldwide Interbank Financial Telecommunication) code. Banks often charge a flat fee for international transfers, making them a good option if you're transferring large amounts of money. However, they often have higher exchange rates.
Cash remittance
A cash pickup service (the most famous is operated by Western Union) allows the receiver of a transfer to pick up cash from a physical location, as an alternative to having the money sent directly to their bank account. They are therefore often used by individuals who do not have access to formal banking services. You pay an agent in cash, and it is transferred to another agent somewhere in the world and converted into the local currency.
Mobile money
Mobile money is a technology that allows people to receive, store and spend money via their mobile phone. Mobile money is a popular alternative to cash and banks because it’s easy to use, secure and can be used anywhere in the world where there is a mobile phone signal. Plenty of mobile money providers offer the option for users to convert their money between multiple currencies.
Sending money to and from Germany via an online transfer
Sending funds via an online transfer is increasingly becoming the most popular option for transferring money abroad. Online money transfers are fast, low-cost, secure and easy, helping you to avoid the sometimes excessive fees charged the traditional institutions people usually do their banking with.
How can I send money abroad?
One of the best things about online money transfer services is how convenient they are. Instead of having to visit your bank in person, you can simply load up the website on your laptop, smartphone or tablet and wire the money in a few clicks.
How does sending or receiving money from abroad work?
Here’s how the process of sending money online works:
Open an account
Once you have decided which online transfer service you would like to use, you need to make an account on their website, providing a few details such as your name, date of birth and email address. Depending on the service you have chosen, you might have to verify your identity.
Choose amount and delivery option
You then need to give some details about the transaction you want to make. How much are you sending? Which currency is your money in, and which would you like to convert it into? Do you need a fast transfer or can you wait a few days?
Add recipient's details
You’ll need to also add details about your recipient, including their name and bank account number.
Pay
Once you have added all the required information, you pay the money to the transfer company. This can be done with a credit or debit card, as if you were online shopping, or via a regular bank transfer. You might need to enter a special reference number to make sure your money gets forwarded on to the right place.
Finish the transfer
Once the transfer company receives your funds, they will begin the process of transferring your money onto the final recipient. This might take a couple of days. You will receive a notification once the money has landed in your recipient’s bank account.
How long do international money transfers take?
The time it takes for money to be transferred internationally depends on the transfer service you choose. Bank to bank transfers usually take one to two working days, but it can be longer if you’re transferring money outside the EU. Cash transfer options like Western Union can take as little as 10 minutes, while online transfers are usually completed within a few hours (and sometimes as little as a few seconds), but can take up to a couple of days for larger sums of money.
Note the term “working days”. Most banks have a cut-off time in the early afternoon, after which transfers are not sent until the following day (or the following week, if you’re attempting to transfer money at the weekend). If you need your money quickly, it’s best to transfer early in the morning on a weekday.
Cost of sending money abroad
No matter which type of money transfer service you use, the final cost you pay is always determined by a combination of four factors:
- The transfer fee charged by the bank or transfer company
- The amount of money you are transferring
- The speed of the transfer
- The currencies involved and the exchange rate at the time of the transfer
Be sure when selecting a service, that you always check the total cost, which takes into account all of these factors. Some companies may seem like they charge really low fees, but often this means that their exchange rate is high, and so you end up paying more.
How do markups work?
Money transfer services make profits from foreign exchange by taking a markup off the mid-market rates. If the interbank exchange rate for euros to US dollars is 1,113, for example, and a certain service is offering 1,083, they are charging a markup of 0,03 dollars per euro - the equivalent of 2,69 percent, before service fees and additional commissions are even added.
How to get the best exchange rates
It therefore always pays to shop around for the best exchange rate. Just because a certain company charges lower fees does not mean that they will work out cheapest overall. You can use a comparison tool (see above) to see which companies would work out cheapest for the amount and type of money you want to transfer. To make true comparisons, look at the total amount the recipient will receive.
What you need to know about transferring foreign currency abroad
Here are some other tips for saving money when transferring money to and from Germany.
Send larger amounts
It almost always works out cheaper to send a large amount of money once, rather than smaller amounts several times.
Don’t pay for speed
If you don’t need your money to be transferred quickly, you can save money by choosing a longer period of time.
Watch out for minimum transfer amounts
Some companies specialise in transferring small amounts, while others don’t allow you to send under a minimum amount. Be sure to check the conditions of the company you’re interested in, to make sure you secure the best possible rate.
Consider transfer options
Some transfer brokers offer the option to lock in an optimal exchange rate now, and then transfer the money at a later stage. If you’re not in a rush to transfer your money, you can also plan so that it only gets sent when an optimal exchange rate is reached.
As well as simply allowing you to transfer your money between different countries and currencies, international exchange providers offer a number of different services. These include:
- Currency converters
- Currency charts
- Rate alerts
- Money transfer tips
- Glossaries of terms
- Real time comparisons
International payments for businesses
If you run your own business or are working in a self-employed capacity, you might need to send money to and from Germany. Instead of using your business bank account, you could go through a specialist foreign exchange provider to make overseas payments. As is the case for individuals, these services often offer more competitive rates for business transfers than high-street banks.
Other ways to send money abroad
Of course, you don't have to send your money via the internet. There are a number of more traditional services for transferring money internationally, including bank transfers and cash remittance services. You can also use mobile money services to convert between different currencies.