Sending Remittances at Low Costs: A Complete Guide

Sending money back home can be a lifeline for many people, especially when you’re working abroad or supporting family in another country. However, one of the most frustrating parts of sending remittances is dealing with high fees and hidden charges. Whether you’re an expat, a migrant worker, or someone helping out loved ones, finding low-cost methods to send money can make a huge difference in how much your recipient actually receives. In this guide, we’ll explore how to send remittances at low costs, compare various services, and provide tips to ensure you’re getting the best deal possible.

Why High Remittance Fees Are a Problem

Let’s face it—remittance fees can feel like a slap in the face. You work hard to earn your money, but once you send it abroad, a big chunk of it goes straight to the transfer provider. On average, the global cost of sending money is about 6.5% of the amount you send, according to the World Bank. This can be even higher depending on the method you use. In other words, if you’re sending $1,000 to a family member abroad, you could be losing $65 or more to fees!

For families who rely on every dollar they receive, these extra costs can add up quickly. Fortunately, there are ways to minimize or even eliminate these fees, giving your loved ones more of the money you intend to send.

Best Ways to Send Money with Low Fees

1. Online Money Transfer Services

Online money transfer services have revolutionized the way people send money abroad. They typically offer lower fees than traditional bank transfers, and many provide competitive exchange rates. Some of the most popular services include:

• Wise (formerly TransferWise): Known for its transparency, Wise offers low-cost transfers by using the mid-market exchange rate and charging a small fee based on the amount and destination. It’s great for sending money between different currencies without getting hit by hidden costs.
• Revolut: Revolut is an excellent option for expats and travelers. It offers international money transfers with zero fees (up to a certain limit) and very competitive exchange rates. For larger amounts, the fees are still much lower than traditional banks.
• PayPal/Xoom: While PayPal isn’t always the cheapest, its sister service Xoom offers competitive rates for international transfers. It’s also fast—sometimes transfers are completed within minutes, depending on the country.

Why It’s Good for You:

• Low fees: Online services are often much cheaper than banks.
• Convenient: You can send money from your smartphone or computer anytime, anywhere.
• Transparency: Many services, like Wise, show you exactly how much your recipient will receive and the fees involved.

Considerations:

• Transfer limits: Some services have limits on how much you can send per transfer or per month, especially if you’re using a basic account.
• Not all countries are supported: While most online services are widely available, some regions might have limited coverage.

Example:

If you’re sending money from the U.S. to Mexico, using Wise could save you up to 80% in fees compared to a traditional bank transfer, and your recipient will get the full amount, minus a small, clear fee.

2. Cash Transfer Services (Western Union, MoneyGram)

While cash transfer services are more traditional, they still offer some advantages, particularly when you need to send money to places where bank accounts are less common. Western Union and MoneyGram are two of the largest providers of cash transfers worldwide.

Benefits:

• Global Reach: You can send money to nearly any country, and recipients can pick up cash at thousands of locations.
• Speed: Cash transfers can be instant or take just a few hours.
• No Bank Account Needed: For recipients who don’t have a bank account, cash transfers can be a lifeline.

Considerations:

• Fees: Cash transfer services can be more expensive than online transfers, especially for smaller amounts. The fees may vary based on the country, payment method, and delivery option (e.g., cash pickup vs. bank deposit).
• Exchange Rates: These services often offer poor exchange rates, which can significantly eat into the amount your recipient receives.

Example:

Western Union can be useful if you’re sending cash to someone who needs immediate access to the funds, but if you have the time to wait a day or two, online services like Wise might be a cheaper and more efficient option.

3. Bank Transfers

Bank transfers are the traditional way of sending money, but they tend to come with high fees, particularly for international transfers. Banks often charge both a fixed fee and a percentage of the amount being transferred, and the exchange rate they offer is typically not in your favor.

However, many banks have started to partner with international payment networks to offer lower-cost options, like SWIFT GPI (Global Payments Innovation), or they may offer competitive rates for transfers between certain countries.

Benefits:

• Security: Bank transfers are generally secure and trusted by both senders and recipients.
• Convenience: If you already have a bank account, sending money abroad can be as simple as making an online payment.

Considerations:

• High Fees: Banks often charge higher fees for international transfers than other options.
• Slow Processing: Bank transfers can take anywhere from 1-5 business days, depending on the countries involved.

Example:

If you need to send money from the U.S. to Europe, using a bank transfer might cost you $30-$50, and the exchange rate won’t be as favorable as the one offered by online services like Revolut.

4. Cryptocurrency Transfers

For those who are tech-savvy and want to avoid high fees, sending remittances via cryptocurrency (such as Bitcoin or stablecoins) can be a game-changer. Using cryptocurrency can eliminate traditional banking fees and offer instant transfers.

Benefits:

• Low Fees: Cryptocurrency transfers often come with significantly lower fees compared to banks or remittance services.
• Speed: Transactions can be processed almost instantly, especially with stablecoins.
• No Intermediaries: You can send money directly to someone without needing a bank or third-party service.

Considerations:

• Volatility: Cryptocurrencies can be volatile. If you’re sending Bitcoin, for example, the value can change rapidly between the time you send it and when your recipient receives it.
• Learning Curve: Not everyone is familiar with how cryptocurrencies work, so there may be some barriers to entry for both senders and recipients.

Example:

Sending money via stablecoins (such as USDC or USDT) can be much cheaper and faster than traditional bank transfers, but you’ll need both you and your recipient to understand how to use digital wallets and exchanges.

Tips for Minimizing Costs When Sending Remittances

1. Compare Fees and Exchange Rates: Before making a transfer, take a few minutes to compare the fees and exchange rates across different services. Even a small difference in rates can make a big impact over time.
2. Send Larger Amounts Less Frequently: Some services charge a flat fee per transaction. If you can, try to send larger amounts less frequently to reduce the impact of these fixed fees.
3. Use Payment Methods with Low Fees: Some transfer methods, such as bank-to-bank transfers or online payments, may come with lower fees than others like credit cards or cash payments.
4. Plan Ahead: If you know you’ll be sending money regularly, consider setting up a recurring transfer to take advantage of better rates and fees.

Conclusion

Sending remittances doesn’t have to be expensive. With the right tools and a little planning, you can significantly reduce the fees you pay and ensure that your loved ones get more of the money you send. Whether you choose a low-fee online transfer service, a traditional cash transfer, or even cryptocurrency, the options available today make it easier than ever to send money across borders at a low cost.

Remember to do your research, compare options, and always be mindful of hidden fees and unfavorable exchange rates. By following these tips, you’ll be able to send your money efficiently and cost-effectively, helping you and your recipient avoid unnecessary financial stress.