- Looking to do an international transfer money to the UK?
- Discover cheaper ways to do currency transfers USD to GBP than most US banks.
- Learn what to look for when choosing the best way to transfer money.
Are you looking for the best way to send money to the UK from the US? You have several options for processing the transaction, each with its own pros and cons. This article gives you a brief guide to sending money to third parties in the United Kingdom from America.
In this guide
Common reasons for money transfer from the US to the UK
Trade between these two giant economies makes for one of the biggest currency pairs in the world and there are a multitude of reasons people and businesses transfer money to the UK, including:
- Settling supplier accounts with e-commerce partners.
- Sending money to family or friends.
- Paying for goods or services in the UK.
- Covering university or college tuition.
- Paying for emigration costs and services.
- Paying for property in the UK.
- Contributing to a marriage.
- Sending a charitable donation.
Why banks are not the best option
Bank wires are the expensive option due to the high commissions and transaction fees involved with sending money internationally.
Banks also offer the longest transaction times, with your recipient having to wait up to five working days and sometimes more to receive their money.
New specialist money transfer companies have slicker processes, lower fees and faster transaction times, making them a much better option, especially if transferring larger amounts.
Is it safe to use a money transfer company?
If you select one of the retail money exchanges listed on the Finty, you're getting a service you can trust. All our recommendations have solid industry reputations, are regulated in both the US and UK and they offer competitive pricing structures that are far lower than the banks.
USD / GBR exchange rates
When sending money to the UK from the USA, you'll pay a premium above the "spot" rate for the currency pair. This premium is also known as the "margin rate" for the exchange of USD to GBP.
Typically, banks have higher rates, with retail money exchanges providing a more affordable option.
When selecting your transfer partner, evaluate the margin rate and the transaction costs to get the best deal. Rates may also vary between retail exchanges, so shop around before processing your transaction.
What are the fees?
When sending money through a bank or money transfer company, you'll have to pay margin fees and transaction fees. Ask for a quote to see how much it'll cost. Here's what you can expect to pay for the service.
What is a typical fee?
The margin rate is the base fee for changing currency. Along with the margin rate, banks and retail money transfer exchanges also charge transaction fees.
Typically, the bank charges anywhere from $25 to $65 for transactions, depending on the transfer amount. The recipient may also be charged a fee of between $15 to $30, depending on the amount received.
Can they be avoided?
Yes, you can avoid the relatively higher fees involved with currency exchange through banks and retail outlets by using crypto and e-wallets. E-wallets charge between 2.5% to 4.5% for a transaction fee while crypto is considerably less expensive.
Although crypto allows you to transfer money outside of the traditional financial system, the recipient may face tax implications if they cash out on their end for GBP.
Minimum and maximum transfer amounts
Money transfer companies do not usually place a caps on transaction amounts. However, some specialize on smaller amounts.
If you're sending money through your bank, you typically have no maximum limit unless you're sending hundreds of thousands of dollars.
Alternative ways to send money to the UK
If you're sending money from the US to the UK using alternative instruments, you have a few options for cheaper fees than the banks and commercial retail exchanges/senders.
E-wallets are a popular option, as are crypto transfers. PayPal and Venmo are two popular options for sending money outside of traditional channels. Crypto might be confusing to people who have limited to no experience using wallets and private keys.
Business vs. personal considerations
Sending money to a business in the UK requires a bank to track the identities of all parties involved in the transaction. Similarly, sending money to a private person through a retail exchange requires both the sender and recipient to produce their IDs or passports and leave their cellphone numbers for reference. Both options must follow KYC laws. The same applies to e-wallets like PayPal, which requires the account holders on both ends to verify their identity and KYC information before sending amounts over $100.
How can I fund my money transfer?
You can fund your USD money transfer using cash, credit card, debit card, or wire transfer. The retail exchange or bank will convert the dollars into pounds sterling for easy collection by the recipient.
How fast can my money transfer be sent to the UK?
If you're using the bank, expect transaction times to be anywhere from three to five working days. Retail money transfer companies like Western Union are faster, reflecting in one to three days, and crypto or e-wallet payments take anywhere from minutes to a few hours,
What are the money collection options?
If your recipient is collecting from a retailer like Western Union, they can pick up their money from any partner location. Most providers have dozens of branches in cities across the UK.
Are there any tax considerations?
When you send money outside of the US, it is subject to the annual gift tax allowance. The IRS provides Americans with a $15,000 gifting allowance per year, with $30,000 being the limit for couples. Speak to your accountant about any tax implications before exceeding this amount.