Millions of overseas Filipino workers (OFWs) earn a living from different parts of the world. Their income is mostly spent on supporting their families in the Philippines, and then some are kept for their savings, while the rest is for their living expenses.
As expected the amount allocated for these regular expenses can vary from one country to another because of several factors including the changes in the global economy, the cost of living in the host country, and the individual’s current situation and circumstances they will use the money for.
Save Money on Your Remittances Through These 7 OFW Tips
For these reasons, it’s important to be smart when it comes to spending one’s finances. As much as possible, if you can save any amount through any method you can use or the choices you make, then it’ll only mean good things for you and your family. In this guide, we will share several practical tips on how you can save money on your remittances.
Tip #1 Find a good exchange rate.
There’s no doubt that exchange rates are an important factor when choosing a remittance center or money transfer services. This is because you want to get the highest possible value for the exchange (of course). With this in mind, do note that the foreign exchange market is constantly in motion and that rates constantly change on a regular basis.
That said, it’s best to shop around and compare your options when sending an international money transfer. Also, it’s important to determine the mid-market rate for your currency because this is the midpoint between worldwide supply and demand for that currency. Also to give you an idea, the rate banks and transfer services use when they trade among themselves tends to differ. That said, knowing the mid-market rate for your currency can help you make better decisions when it comes to choosing which exchange rate to use.
To help you with this, be sure to watch out for the exchange rates featured in a broker’s (or several brokers’) website and choose a good exchange rate before deciding to remit your money overseas.
Tip #2 Determine the best time to send money.
As mentioned, exchange rates vary every day. For this reason, it’s highly advised that you make money transfers on a weekday (i.e., Monday to Friday) instead of the weekend. The reason for this is “live” exchange rates are active on weekdays, whereas weekends feature an approximate rate, which tends to be higher. Also, it’s better to plan ahead the time as when it’s most convenient for you and relatively quieter for remittance centers to make a transaction. Aim to send your remittances in the middle of the month because the majority of remittances are transacted either during the last five days of the month and the first ten days of the next.
Tip #3 Use an exchange fee calculator
Many remittance centers and money exchange services offer an “exchange fee calculator” online. These calculators factor in the current exchange rate in the system they use, and at the same time, they already subtract applicable fees and charges, thereby allowing you to get an idea on how much money will be received by your loved ones in a particular date of transaction.
Another pro tip: Do not remit your money through banks as much as possible. It may seem counterintuitive given the fact that we use banks to store money, but banks almost never offer the best exchange rates. If convenience isn’t much of an issue for you, you can see this for yourself.
Tip #4 Look beyond the exchange rate
Earlier, we’ve pointed out that exchange rates is an essential factor when choosing a money transfer service. However, this is not the only thing that you need to consider. There are other things that you ought to look into, as well, such as transfer fees and charges.
Depending on the service provider, the transfer fee can be a fixed amount or a certain percentage of the money to be remitted. So aside from looking at the exchange rates, be sure to compare transfer fees as well before choosing a service provider.
Tip #5 Be wary of “mark-ups”.
We’ve already mentioned the mid-marker rate earlier. But if you still haven’t grasped what that is, this is basically the “interbank rate” which banks and money transfer services follow when they trade among themselves. To make a profit off people’s transactions, banks and money transfer services apply a “markup”.
For this reason, not only is it practical but it also makes sense for you to know the mid-market rate, which is usually posted on websites such as Yahoo Finance, Google Finance, and other channels, among others.
Tip #6 Take note of any back-end fees.
You will notice that there are additional fees such as service and/or transfer fees when you send your remittances from your host country. This may also apply to the country you are sending the money to. Back-end fees are basically an additional charge once your recipient collects that amount you remitted. Typically, this cost will be a fraction of the transfer fee; still, it’s best to take note of such charges, so you can compare it with other money transfer houses or remittance centers.
Tip #7 Make sure to read the fine print.
There’s no guarantee that the transfer will always turn out smoothly and as expected. For this reason, it’s smart to always check and read the terms and conditions in the fine print so you would know what to do in case you might need to make a refund or opt for other methods with regard to your transaction.
For many OFWs, sending remittances will be part of your normal life. So while you’re at it, make sure that your method in doing so offers you the best terms in terms of maximizing your remittances and saving as much money from added fees, where possible. By keeping the above-listed tips in mind, you can ensure that your money will be received by your loved ones, in the most convenient manner possible with the most benefit on your part.