Spend Smart. Get more bang for your remittance bucks

You’ve landed that plum overseas job. While it’s a wrench to leave your family behind, the higher amount of money that you can send home can make up for this to some extent. So which routes offer the best deal?

Some companies offering remittance services may not charge a fee for their services. Instead, they’ll make their money through a margin on the exchange rates they offer you.

This can put a bigger dent in the sum you send home than a fee. Scrutinise the exchange rate commissions these players charge to zero in on the best.

For example, let’s say you’re sending money from the UK to India. If you do it through SBI’s online remittance service, there is no fee. But the exchange rate margin charged by SBI was 0.61 per cent, implying that if you remitted a value equivalent to $500, you’d spend an additional $3.05 toward foreign exchange conversion charges.

Money transfer operator Remit2India also doesn’t charge a fee for remittances, but it levies a lower forex conversion margin of 0.35 per cent, which would entail a spend of $1.75 on a $500 transfer.

It is more economical to choose banks for your remittance needs in countries such as the UK and Singapore. Money transfer operators are a cheaper option when remitting from the US and Canada, going by a quick comparison of average remittance costs via the two routes. This apart, consider opening a bank account with the local branch of an Indian bank in a foreign country and at home, if possible.

Firstly, if it is permitted in the country you are residing in, you will be able to transact online at a cheaper rate than that offered by most money transfer providers or a foreign bank.

Online fund transfers are also cheaper than remitting money using telephone and other services. Secondly, many banks do not charge a fee for wire transfers of foreign currency to an Indian bank, though currency conversion charges may be levied. Service tax and education cess also apply. For example, if you use SBI’s Express Remit service, the remittance charges are nil, but the bank charges a flat currency conversion charge of ₹250.

In case the transfer is from a bank other than SBI, there is also an inter-bank money transfer charge of ₹6 for remittances up to 500 US or Canadian dollars or ₹100 in case of a transfer up to £500. This charge is waived off for remittances above 500 US or Canadian dollars or £500.

In Axis Bank, an e-transfer of ₹1 lakh will attract a flat fee of $2 in case of a transfer from the US and 4 Canadian dollars if the transfer is from Canada, inclusive of service tax. The bank also charges a commission, which varies between ₹25 and ₹300 depending on the type of account.

But note that if your work takes you to multiple countries, the fees and margin rates could vary greatly even with the same service provider.

If your home is located in a remote area, the size of the remittance service provider’s distribution or branch network also comes into play. In such a situation, you would be better off using the services of providers such as Western Union or Moneygram, which have tied up with India Post. Thanks to India Post's huge network, this might be more easily accessible than a specific bank’s branch for your folks to withdraw the amount.

Transfer times for money transfer operators are far lower than banks. With a money transfer operator, your beneficiary can access funds in even 10 minutes after you make payment. Banks usually take at least one day to disburse the funds.

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