With modern banking practises speeding up the transfer of money between accounts, branches and even countries, it is possible to send money across the world in the blink of an eye. The reasons to send money are many and various, from lending money to a friend or family member, sending gifts or debt repayments, and even sending money abroad to help someone out of a temporary difficulty, for example, following the loss of their travellers’ cheques whilst on holiday.
There are, loosely speaking, three ways to transfer money to another person: bank transfer, using your online banking service and credit card.
Bank transfers appear to be the ‘best’ way to send money to another person, using the secure processes and procedures that banks have in place for just such events. However, using the bank’s transfer process can sometimes be a lengthy process (taking a few days, which is undesirable when someone is desperately awaiting the funds) and is often subject to various charges and fees. These charges can include an unfavourable exchange rate, a commission charge of a certain percentage and a service fee to cover the administration work associated with the transfer.
Using your own bank’s online service is a way to effect the transfer while remaining in control of the process. While many banks do need a little time to ‘approve’ new payment beneficiaries, this is a one-off process and can be taken care of ahead of time. For example, if you are sure that you will need to send your daughter (away on holiday or at university) some money, you can set her up as a recipient on your bank account long before you actually need to send her the funds. In this way, when she does need the money, you can simply pop in the amount and hit ‘send’ and the funds will be on their way, often arriving in as short a time as a few minutes (although the official advice is always to allow up to two hours!)
With both bank transfers and online payments, many banks waive some or all of the fees if both parties are members of the same bank. Bear this in mind when choosing bank accounts for yourself and family members as opting for the same bank can save you all money in the long run!
A credit card system is a useful, long-term system to send funds to someone far away, or in another country. Essentially, the recipient has possession of the card and uses it to make purchases, while you pay the bill for them. You can operate the card as a second card on your main credit card account, or you can take out a single card account and allow them to have sole possession of it. Once again, you will need to check out the exchange rate at which foreign transactions will be charged, and allowing the account to build up may result in your incurring interest charges, but this is a good system for helping out a child who has just moved out of home, ensuring that they have access to emergency funds when needed.
How to Choose:
– Will the payments be a one-off, very frequent, or occasional? For one-off payments, you can opt for a bank transfer, otherwise you may want to think about using a credit card or your online banking features.
– Is the recipient in a foreign country? Always check how much the exchange rate is and what fees you will be subject to.