TransferWise: Best FX Tool for Moving Overseas?

[BlackIcE84]

Hi all, I will be moving to London next year as my spouse will be going for further studies there. The GBP is now quite low (about 1.79~) and i'm thinking of taking advantage of this low rate and buying a chunk of GBP.

Should I use TransferWise for this purpose? In other words, I can use TransferWise to change GBP and store it in my TransferWise Account until August 2021 when I physically move to London, and thereafter move the money from TransferWise to a local UK bank account that I will open upon arrival. Are there better ways to accomplish this? Do you think TransferWise is safe enough for me to hold large sums (potentially 50k GBP).

As an aside, what do you make of GBP's prospects? It is low now, but Brexit is an overhang. I probably won't change all that I need - I intend to change maybe 30% - 50% of projected GBP needs now, and change more in future (somewhat akin to DCA for stocks).

 

[BlackIcE84]

 

[kram62]

I used transferwise in the past to convert and transfer a large amount of money from Europe to Singapore. At that time, this was the cheapest alternative I had found and it worked very well.

Now that I also opened a IBKR account for investment purposes, I'd probably use it for the cheap conversion cost, but it doesn't make sense to open a brokerage account (with minimum activity fee) if the sole purpose is a one time large transfer.

I don't know if there are better alternatives than transferwise for your use case, but I like that their conditions and fees are transparent. And they've been around for a while now, so I'd be still inclined to trust them.

Do check whether there are limits for account balance for personal accounts though. Do you own due diligence.

 

[deepblueli]

You can compare Revolut. Its FX rate is pretty competitive too. Its headquarter is in UK.

 

[BBCWatcher]

Interactive Brokers is going to cost about US$96 all-in for Singapore dollar cost averaging into British pounds over the next year (the first 3 months are actual commissions only) if that’s what you want to do. How much do you want to convert? Take US$96, divide by the amount you want to convert (expressed in U.S. dollars), and that’ll be the percentage cost at IB. If the denominator is non-trivial then this should be the least expensive option. And you may even be able to park the pounds in something that earns a little interest.

 

[kram62]

Interactive Brokers is going to cost about US$96 all-in for Singapore dollar cost averaging into British pounds over the next year (the first 3 months are actual commissions only) if that's what you want to do. How much do you want to convert? Take US$96, divide by the amount you want to convert (expressed in U.S. dollars), and that'll be the percentage cost at IB. If the denominator is non-trivial then this should be the least expensive option. And you may even be able to park the pounds in something that earns a little interest.

As mentioned in my previous post, this only makes sense if the OP intends to use an IB account for its own investments too.

Otherwise, for a one off currency conversion (even considering the potential conversion "DCA"), this may not be the simplest and most cost effective way to do it (unless you suggest the OP closes the account after the conversion is done to stop incurring min activity fee?).

But yeah if an IB account is already there, it can serve as a pretty competitive money changer

 

[CrashWire]

Should I use TransferWise for this purpose? In other words, I can use TransferWise to change GBP and store it in my TransferWise Account until August 2021 when I physically move to London, and thereafter move the money from TransferWise to a local UK bank account that I will open upon arrival.

You can only store $5k max in both TransferWise and Revolut thanks to the Payment Services Act, so might as well do both.

 

[BlackIcE84]

You can only store $5k max in both TransferWise and Revolut thanks to the Payment Services Act, so might as well do both.

Oh 5k max? Shucks I didn't know this. I am thinking at least 50k gbp

 

[BlackIcE84]

As mentioned in my previous post, this only makes sense if the OP intends to use an IB account for its own investments too.

Otherwise, for a one off currency conversion (even considering the potential conversion "DCA"), this may not be the simplest and most cost effective way to do it (unless you suggest the OP closes the account after the conversion is done to stop incurring min activity fee?).

But yeah if an IB account is already there, it can serve as a pretty competitive money changer

Thanks. Very helpful. I don't have an IBKR acct - I use tiger and scb. But if I can hold more in IBKR compared to TransferWise (supposedly 5k cap), I might just do it

 

[celtosaxon]

Thanks. Very helpful. I don't have an IBKR acct - I use tiger and scb. But if I can hold more in IBKR compared to TransferWise (supposedly 5k cap), I might just do it

In that case, consider moving your scb and tiger over to IBKR which is going to give you much lower commissions. If you cross $100k balance, the minimum $10 monthly commission goes away and you’ll be enjoying as little as $1/trade, along with paper thin currency spreads.

 

[RedsYWNA]

Revolut is the clear winner here, no contest esp if its DCA. Since Revolut has a monthly FX cap of S$9,000 per month.

Its my fav FX tool, with some prices comparable to IBKR but without the USD 2 conversion

 

[BlackIcE84]

In that case, consider moving your scb and tiger over to IBKR which is going to give you much lower commissions. If you cross $100k balance, the minimum $10 monthly commission goes away and you’ll be enjoying as little as $1/trade, along with paper thin currency spreads.

yeah you're right. unfortunately there has been a lot of inertia on my part. most of my holdings are with SCB from years ago, and SCB charges $50~ per counter to transfer. I need to judge whether it is worth it, because i'm the type who doesn't trade frequently (i make lump sum purchases once every few months).

my tiger account is just an experimental one with no meaningful holdings inside

 

[RedsYWNA]

Revolut is the clear winner here, no contest esp if its DCA. Since Revolut has a monthly FX cap of S$9,000 per month.

Its my fav FX tool, with some prices comparable to IBKR but without the USD 2 conversion

Think I wasnt clear enough just now. Besides the above, you need to use the DBS multiplier account as a holding account for GBP.

Then monthly DCA from Revolut into DBS multiplier - GBP.

 

[BBCWatcher]

As mentioned in my previous post, this only makes sense if the OP intends to use an IB account for its own investments too.

Otherwise, for a one off currency conversion (even considering the potential conversion "DCA"), this may not be the simplest and most cost effective way to do it (unless you suggest the OP closes the account after the conversion is done to stop incurring min activity fee?).

Well why not? The total cost is about US$96 all-in for 12 months at Interactive Brokers: US$6 for 3 months of monthly currency buys, then the US$10 per month minimum thereafter. For buying 50,000 British pounds (BlackIcE84's minimum planned purchase), that's about 0.147% total cost above the very best conversion rate you're ever going to get since this is direct access to the forex market. For perspective, BlackRock charges about a third more (0.20%) per year to manage IWDA, the popular global stock index fund, and that's a very reasonable fee.

Of course Interactive Brokers should be on the short list for this use case! Even if you close the account after 12 months, so what?

But yeah if an IB account is already there, it can serve as a pretty competitive money changer

It doesn't matter whether you have an IB account or not. They're offering US$96 total cost for this use case (0.147% or less), and then you can close the account. Fine! If there's a better offer, great, but probably not, assuming BlackIcE84 actually needs to buy 50,000+ British pounds.

Note that we haven't even gotten to the part where BlackIcE84 places these British pounds into something safe that earns a tiny bit of interest over the course of the year. That might be possible at Interactive Brokers.

 

[celtosaxon]

I’d suggest checking with IB, they may cover some or all of the conversion charges to get your SCB moved over. When I moved from E*Trade to TDA SG years ago they reimbursed something, maybe up to $100?

Alternatively, if you have some free cash flow, you could fund IB first, then buy each counter while simultaneously selling that same counter at SCB, transfer the cash proceeds from SCB to IB and repeat until all of the counters are duplicated. Assuming this method actually saves you anything, it probably depend how many and how much we are talking about. You may even want to clean house - if there is an opportunity to consolidate into better/fewer ETFs at IB.

yeah you're right. unfortunately there has been a lot of inertia on my part. most of my holdings are with SCB from years ago, and SCB charges $50~ per counter to transfer. I need to judge whether it is worth it, because i'm the type who doesn't trade frequently (i make lump sum purchases once every few months).

my tiger account is just an experimental one with no meaningful holdings inside

 

[cfleee]

Oh 5k max? Shucks I didn't know this. I am thinking at least 50k gbp

Yeah, unfortunately the new Payment Services Act limits are SGD 5k-equivalent held overnight, and SGD 30k-equivalent in transfers per year. Unless MAS revises it up at some point, but I wouldn't hold my breath waiting for that.

Well why not? The total cost is about US$96 all-in for 12 months at Interactive Brokers: US$6 for 3 months of monthly currency buys, then the US$10 per month minimum thereafter. For buying 50,000 British pounds (BlackIcE84's minimum planned purchase), that's about 0.147% total cost above the very best conversion rate you're ever going to get since this is direct access to the forex market. For perspective, BlackRock charges about a third more (0.20%) per year to manage IWDA, the popular global stock index fund, and that's a very reasonable fee.

Of course Interactive Brokers should be on the short list for this use case! Even if you close the account after 12 months, so what?

Even if in the scenario where OP already has a GBP account somewhere to send to so that they can do the lump sum now and 'DCA' over the next year, Transferwise's SGD -> GBP conversion route is 0.44% right now or about SGD 197 per GBP 25k. IBKR looks attractive alright even without knowing whether their SCB holdings are large enough to hit the USD 100k IBKR floor early, and without looking at Transferwise's exchange rate spread.

 

[BlackIcE84]

hi everyone, thanks for the helpful info so far. Just an update, and a request for further advice.

1. I have already opened an IBKR account and have transferred some stock holdings to it. I have played around with its features and system, and it seems fairly easy enough to do currency conversion from SGD -> GBP (or any other currency).

2. My question now has to do with withdrawal / transfers out of GBP from IBKR to a GBP-denominated bank account. I currently do not have a UK-based GBP account, but I do have a DBS Bank "My Account" which is a multi-currency acct that supports GBP. I read IBKR's rules on withdrawals to foreign accounts, and am concerned that there is a risk that withdrawals would result in anti-money laundering restrictions - see here under "funds transfer restrictions." Essentially, if a country has an "elevated anti-money laundering risk", there will be restrictions imposed on withdrawals. I do not believe Singapore is on the list, but we don't know what will happen in future. Please correct me if my understanding of the AML restrictions is incorrect.

3. I would be grateful for your views on the following 2 Options (that i can conceive of) for doing withdrawals/transfers out:

a. Option 1: Withdraw to DBS My Account for now and hold it there. When I eventually move to the UK and open a UK-based account, use the My Account free DBS Remit ($0.00 remittance fees) to transfer the GBP therein to my UK Account.

The Pros of this approach are that I do not need to have a UK-based GBP account, and I do not have to worry about IBKR imposing AML restrictions on it. The cons are that there are some (small) fees involved - each inflow to the DBS My Account costs $10, plus there are also uncertainties whether I can withdraw from IBKR to a multi-currency account (the DBS agent i spoke with over the phone was unsure).

In short, Option 1 looks like this: IBKR (Convert SGD to GBP) -> GBP to DBS My Account GBP wallet ($10 per inflow) -> In August 2021 DBS $0.00 remit to UK-based GBP account.


b. Option 2: Keep converted GBP held in IBKR (is this safe?) and then transfer it out only when I manage to create/open a UK-based GBP account some time in August 2021.

The Pros of this approach are that I do not have to do multiple transfers like Option 1. But the risks are that IBKR may impose AML restrictions, albeit this is a low risk. I do not want to be stuck in a situation where i am physically already in the UK, and then I encounter significant hurdles to withdrawing my money for use.


4. Grateful for your views. Just a final question: The withdrawal for GBP from IBKR seems very complex, with IBKR requesting for very many details of the bank account I am using. I tried searching simply for "DBS" but it turned out so many results of different DBS branches, each with a different code. How do I get the exact particulars of the DBS 'My Account' GBP Wallet that i want to withdraw to? I gather i must email/ask DBS directly?


Thank you!

 

[BlackIcE84]

Bounce...

 

[cfleee]

2. My question now has to do with withdrawal / transfers out of GBP from IBKR to a GBP-denominated bank account. I currently do not have a UK-based GBP account, but I do have a DBS Bank "My Account" which is a multi-currency acct that supports GBP. I read IBKR's rules on withdrawals to foreign accounts, and am concerned that there is a risk that withdrawals would result in anti-money laundering restrictions - see here under "funds transfer restrictions." Essentially, if a country has an "elevated anti-money laundering risk", there will be restrictions imposed on withdrawals. I do not believe Singapore is on the list, but we don't know what will happen in future. Please correct me if my understanding of the AML restrictions is incorrect.

Let's read the Funds Transfer Restrictions article that you're referring to very carefully.
Hypothetically, if the UK really is "a country designated as having elevated AML risk", and you are now residing in the UK, then while you can't withdraw to an account in another elevated-AML-risk country you can withdraw to an account in the same country (the UK).
Also, you can only "withdraw funds to an account from which that client received a first-party deposit", which is something you can handle by making a deposit to IBKR from your UK bank account once you open it.

In practice I think you are quite unlikely to have issues due to this - once you move, do the appropriate paperwork to inform IBKR that you are now residing in the UK, perhaps prove that you own your new bank account in the UK, and you should be all set.

Also you can consider the current FATF blacklist and greylist, it's really rather unlikely to be an issue... https://en.wikipedia.org/wiki/FATF_blacklist#Current_FATF_lists

 

[santiagon]

I have similar issue with IBKR and their withdrawal restrictions. My IBKR account base currency is SGD and i have SG bank accounts. I also have bank accounts in US and Turkey. I have no problem with deposits and withdrawals from US and SG bank accounts and it works very well.
However, after this AML rules kicked in last year, they disabled my TRY withdrawal option to Turkish bank account which is under same name so everything is matching.
Interestingly, i tried also to make TRY deposit from my Turkish bank to apply same logic as mentioned in above comment to prove that account received first-party deposits from same client, and it worked and no problem in depositing in TRY from Turkish bank. So, they are welcoming any money deposits into their system.
However, they dont still let me to create withdrawal instruction for TRY after all this. I have read all AML rules in IBKR and shared with their CSO to ask for giving permission, but they just keep repeating same words on the screen from AML info page.
Please let me know if you have found any way to overcome this for any other currency withdrawal.
Thanks in advance.