How Do You Send Money to Someone in Another Country Cheaply?

Most people who need to send money internationally assume they have one option: their bank's wire transfer service. But that comes with punishing fees—$20–$50 per transfer, plus unfavorable exchange rates. Send $1,000 to a friend in Mexico, and you might pay $40 in fees plus $50 in hidden currency markup. Your friend receives $910 instead of $970.

For regular international transfers—whether you're supporting family abroad, paying an international contractor, or managing business across countries—the traditional bank wire is one of the worst options available. Newer fintech services, foreign exchange specialists, and international accounts offer dramatically better rates. A $1,000 transfer that costs $90 through your bank might cost $5 through a specialized service.

International banking isn't just about sending money cheaply. It's also about managing money across multiple countries, understanding currency risk, and keeping accounts open while you travel. For people with international lives, a working knowledge of these tools is essential.

Quick definition: International banking involves managing money across borders, typically through wire transfers, foreign exchange services, international accounts, or multi-currency platforms. Exchange rates and fees vary dramatically by method.

Key takeaways

• Bank wire transfers are expensive: $20–$50 per transfer, plus 1–3% currency markup
• Specialist money transfer services cost 90% less: Companies like Wise, OFX, and Remitly charge $2–$10 for international transfers
• Exchange rates vary significantly: Your bank might offer a rate that's 2–3% worse than the real market rate
• Holding foreign currency creates risk: If the exchange rate moves against you, your money loses value
• Multi-currency accounts let you hold multiple currencies without converting daily, reducing exchange-rate lock-in
• Opening a foreign bank account requires proof of residency in most countries; digital banks are easier for non-residents

Traditional Bank Transfers: The Expensive Default

If you've ever sent money internationally through your personal bank, you've encountered the traditional wire transfer. Here's how it works and why it's expensive:

The Process

1. You call your bank and say: "I want to send $1,000 to my sister in London."
2. The bank asks for the recipient's bank account number, bank name, country, and routing codes.
3. The bank tells you the fee: typically $20–$50 for an international wire.
4. The bank applies an exchange rate, which is 1–3% worse than the real market rate.
5. Your bank sends the money through SWIFT (a global banking network).
6. The recipient's bank receives it 3–5 business days later.
7. Your sister receives less than expected because of the markup.

Real example: You send $1,000 from the U.S. to London. Your bank charges:

• Wire fee: $30
• Exchange rate markup: Your bank quotes £750 instead of £770 (a 2.6% markup)
• Total cost: $30 + approximately $26 in currency loss = $56 total
• Your sister receives: £750 instead of £770

Why Banks Charge So Much

Banks aren't being malicious; they're just using an outdated system with built-in costs:

• SWIFT infrastructure: The global banking network (SWIFT) charges fees to move money between banks
• Intermediary banks: Money often passes through 1–3 intermediary banks (especially if currencies are exotic), each taking a cut
• Currency conversion: The bank makes money on the bid-ask spread (they buy pounds at £770/$1,000, sell them to you at £750/$1,000)
• Compliance costs: International transfers require regulatory review; banks pass this cost to customers

For large transfers (over $10,000), banks will sometimes negotiate the fee. But for typical transfers of $1,000–$5,000, the $30–$50 fee is fixed.

Specialist Money Transfer Services: The Modern Alternative

Over the past 10 years, fintech companies have built specialized international money transfer platforms that bypass traditional banking infrastructure. They move money peer-to-peer, use real-time exchange rates, and charge minimal fees.

Wise (formerly TransferWise)

Wise is the largest and most established international money transfer platform. Here's how it works:

Model: Instead of moving physical money from the U.S. to the U.K., Wise keeps money in each country. When you send $1,000 to London, you actually send it to a Wise account in the U.S. At the same time, Wise sends £750 from their U.K. account to your sister. Money moves locally within each country (no international transfer needed), which dramatically reduces costs.

Costs:

• $1,000 transfer to the U.K.: Fee is approximately $8.50 (0.85%)
• Exchange rate: Real mid-market rate, no markup
• Total cost for the same $1,000 transfer: $8.50 (vs. $56 with a bank)
• Your sister receives: £770 (full value, minus only the fee)

Process:

1. Create a free account on wise.com
2. Enter the recipient's bank details
3. Link your U.S. bank account
4. Wise shows you the exact fee and exchange rate upfront
5. You approve and the money is transferred
6. Recipient gets the money in 1–3 business days

Advantages:

• Real exchange rates (mid-market, not marked up)
• Transparent fees shown upfront
• Fast transfers (1–3 days for most transfers)
• Can set up recurring transfers (monthly salary to a family member abroad)
• Multi-currency account available (hold balances in 40+ currencies)

Disadvantages:

• Only works for ordinary bank transfers (not receiving wire transfers directly, though this is changing)
• Recipient bank account required (you can't pick up cash)
• Some users report customer service delays

Remitly

Remitly specializes in remittances—sending money to family in developing countries. It's particularly strong in Latin America, Asia, and Africa.

Costs:

• $1,000 transfer to Mexico: $4.99 (0.5%) + exchange rate close to market rate
• $1,000 transfer to Philippines: $7.99 (0.8%) + exchange rate close to market rate

Delivery options:

• Bank transfer (1–3 days)
• Cash pickup (recipient picks up at a local agent, often within hours)
• Mobile wallet (money sent to a phone-based payment system)

Advantages:

• Lowest fees for developing-country transfers
• Cash pickup available (useful if recipient doesn't have a bank account)
• Mobile wallet integration
• Mobile app is intuitive

Disadvantages:

• Lower transfer limits than Wise ($10,000–$20,000 per transaction, depending on country)
• Limited to specific destinations (not all countries)
• No multi-currency account feature

OFX (Online Foreign Exchange)

OFX is a specialized forex service for larger transfers ($2,000–$100,000+). It's used by businesses and people moving significant amounts of money.

Costs:

• $10,000 transfer: Typically 1% fee ($100), plus competitive exchange rate
• Compared to: Bank would charge $50 fee + 2% currency markup = $250 total

Process:

• Call OFX and provide transfer details
• Lock in the exchange rate (you have 2 hours to confirm)
• Provide payment instructions
• Transfer completes in 1–3 days

Advantages:

• Excellent for large transfers
• Competitive exchange rates
• Can lock in rates before you send the money (hedge against currency movements)
• Account manager available for assistance

Disadvantages:

• Not suitable for small transfers (the 1% fee makes small transfers expensive)
• Requires phone call (less convenient than apps)
• Slower process than Wise or Remitly

Comparison Table: Transfer $1,000 to the U.K.

Service	Fee	Exchange Rate	Total Cost	Recipient Gets	Time
Bank wire	$35	2.6% markup	$56	£714	3-5 days
Wise	$8.50	Market rate	$8.50	£770	1-3 days
Remitly	Not available for U.K.	—	—	—	—
OFX	$10	Market rate	$10	£768	1-3 days

For international transfers under $5,000, Wise is almost always the best option. For larger transfers or developing-country destinations, compare Wise, Remitly, and OFX.

Opening a Foreign Bank Account

If you're living abroad long-term or plan to receive regular income in a foreign country, opening a local bank account makes sense. This avoids the need to constantly transfer money internationally and reduces exchange-rate lock-in.

Requirements for Residents

If you live in the target country, opening a bank account is straightforward. Most banks require:

• Passport or national ID
• Proof of residency (utility bill, lease, or government letter)
• Proof of income (job letter, tax return, or bank statement)
• Minimum initial deposit ($100–$1,000, depending on bank)

Timeline: 1–5 business days after submitting documents.

Real example: Sarah moves to Spain. She needs a Spanish bank account to receive her consulting income. She visits a local bank, provides her passport, a rental agreement showing her address, and a letter from her client showing income. The bank opens an account. She makes her first deposit and receives her IBAN (the Spanish bank account number). Three business days later, her first payment from a U.S. client is deposited to her Spanish account.

Requirements for Non-Residents

Non-residents (people living outside the country) face additional barriers. Many banks refuse accounts to non-residents because of regulatory complexity. However, some options exist:

Digital banks in target country: Companies like N26 (Europe), Revolut (Europe), and various local fintech banks allow non-residents to open accounts through an app.

Requirements for digital banks:

• Valid passport
• Proof of address (even a non-resident address)
• Video verification (you appear on a video call to verify identity)
• Minimum initial deposit (usually $0–$100)

Timeline: 1–7 days.

Real example: You're a U.S. citizen living in the U.S., but you want a U.K. bank account to manage British investments. You open a Revolut account (a digital bank with U.K. banking facilities). You verify your identity via video. Within 48 hours, you have a U.K. IBAN and can receive GBP transfers without currency conversion.

Costs of Maintaining a Foreign Account

Once you open a foreign account, consider ongoing costs:

• Monthly account fee: $0–$15 (many digital banks charge nothing)
• Currency conversion fees: If you need to move money to/from the U.S., each transfer costs 1–2%
• ATM withdrawal fees: Taking cash out of the ATM often triggers a $2–$3 fee
• Tax reporting: If you're a U.S. citizen with foreign accounts over $10,000, you must file FBAR (Foreign Bank Account Report) annually

Tax reporting is not optional. Failure to report foreign accounts can result in penalties of $10,000 per account per year. If you open a foreign account, hire a tax accountant familiar with FBAR reporting.

Multi-Currency Accounts and Currency Hedging

If you regularly receive income in multiple currencies (salary in USD, consulting income in GBP, investment dividends in EUR), holding multiple currencies avoids constant conversion. Multi-currency accounts let you hold and spend money in different currencies without converting daily.

How Multi-Currency Accounts Work

Providers like Wise, Revolut, and some traditional banks offer multi-currency accounts:

Example: You have a Wise account holding USD, GBP, and EUR simultaneously. Your U.S. employer deposits your salary in USD. A U.K. client pays you in GBP. You hold both. When you need GBP, you spend from your GBP balance. When you need USD, you spend from your USD balance. You only convert when necessary—giving you control over when (and at what rate) you convert.

Real-world scenario:

• Your salary: $5,000/month (USD)
• Consulting client: £3,000/month (GBP)
• Cost of living: 60% in USD, 40% in GBP
• Strategy: Hold both currencies in proportion. When the GBP rate is favorable (stronger against USD), convert GBP to USD. When the USD rate is strong, keep GBP.

This is called active currency management. The alternative is to convert each payment immediately, which locks you into whatever the day's exchange rate is.

Exchange-Rate Risk and Hedging

If you have an international income, exchange-rate movements affect your wealth.

Example: You earn $5,000/month from U.S. clients. Your parents live in Mexico and need 80,000 MXN/month. At an exchange rate of 1 USD = 16 MXN, you need $5,000 to cover their expenses. But if the peso weakens to 1 USD = 20 MXN, you need $4,000. If the peso strengthens to 1 USD = 13 MXN, you need $6,154.

As the exchange rate fluctuates, the dollar amount to support your family changes. This is exchange-rate risk.

Hedging strategies:

1. Lock in rates with OFX: If you have a monthly expense in a foreign currency, use OFX or a similar service to lock in the rate for 3–6 months in advance. You pay a small premium but eliminate uncertainty.

2. Hold foreign currency: If you expect an expense in a foreign currency, buy that currency when the rate is favorable and hold it. No active management required; just convert when you need to spend.

3. Diversify income: If possible, earn in multiple currencies. Don't put 100% of income in USD if you have expenses in EUR. This naturally hedges exchange-rate risk.

4. Use a forward contract: For very large amounts, companies like OFX allow you to lock in an exchange rate for up to 12 months in advance. You pay a premium (the locked-in rate is slightly worse than the spot rate), but you eliminate all exchange-rate risk.

Most people don't hedge (it's complex), so they accept whatever exchange rate they get. But if international payments are a regular part of your finances, learning to hedge is valuable.

Real-World Examples

Example 1: The Monthly Remittance (Family Support)

Maria, a nurse in the U.S., sends $500/month to her mother in the Philippines. Using her bank's wire transfer:

• Fee: $25
• Exchange rate markup: 1.5%
• Total cost: $25 + $7.50 = $32.50 per transfer
• Annual cost: $390

Maria switches to Remitly:

• Fee: $2.99
• Exchange rate: Market rate (no markup)
• Total cost: $2.99 per transfer
• Annual cost: $36

Annual savings: $354. Over 10 years, that's $3,540—enough to fund a significant emergency expense.

Example 2: The One-Time Large Transfer (Buying Property)

James is buying a vacation home in Costa Rica for $200,000. He needs to wire this to a real estate company. Using his bank:

• Fee: $40
• Exchange rate markup: 2%
• Total cost: $40 + $4,000 = $4,040

Using OFX:

• Fee: $2,000 (1%)
• Exchange rate: Market rate, but he locks it in advance
• Total cost: $2,000

Savings: $2,040 on a single transaction. Worthwhile.

Example 3: The Digital Nomad (Multi-Currency Living)

Alex is a software contractor working for clients in the U.S., U.K., and India. His income fluctuates monthly in multiple currencies. He opens:

• A Wise account (holds USD, GBP, INR)
• A local bank account in Bali (IDR)
• Monthly income: $3,000 USD, £2,000 GBP, ₹100,000 INR
• Monthly expenses: Mostly IDR (living in Indonesia)

Alex converts just enough GBP and INR to IDR monthly, based on favorable exchange rates. He keeps USD in reserve. By managing multiple currencies actively, he reduces unnecessary conversion costs by $200–$400/month compared to converting everything daily.

Annual savings: $2,400–$4,800.

Common Mistakes in International Banking

Mistake 1: Using Your Bank for Regular Transfers

Your bank offers "convenience," but costs you thousands annually. If you send money internationally more than twice per year, switching to Wise (or Remitly, or OFX) is mandatory. The one-time setup (10 minutes) saves thousands over time.

Mistake 2: Not Locking in Rates for Known Expenses

You know you'll need 1,000,000 JPY in 3 months to pay for your daughter's tuition in Tokyo. You wait until the month of payment to convert. The yen has strengthened 5% in 3 months. You pay 5% more ($4,500 extra on a $90,000 conversion).

If you had used OFX to lock in the rate 3 months in advance, you'd have paid a small premium ($200–$300) to eliminate the $4,500 risk. The premium is insurance; it's worth paying.

Mistake 3: Holding Foreign Currency Too Long

You buy 10,000 GBP as a hedge for future U.K. expenses. You hold it for 18 months. The pound weakens 8%. You've lost $1,000 on the currency alone. Meanwhile, you could have earned interest in a dollar account.

Rule: Hold foreign currency only if you have a defined need (expense within 1–2 years). Otherwise, convert to your home currency and earn interest in a savings account.

Mistake 4: Failing to Report Foreign Accounts

You open a bank account in Canada. You forget to file FBAR. Three years later, an IRS audit discovers the account. Penalties: $10,000 per year, plus potential criminal charges.

Action required: If you're a U.S. citizen with foreign accounts totaling over $10,000 at any time during the year, file FinCEN Form 114 (FBAR) by April 15 of the following year. Your accountant handles this if you're paying for tax preparation. If you're DIY filing, you're responsible.

FAQ

Is it safe to send money via Wise or Remitly?

Yes. Both are regulated money transfer companies. Wise is FCA-regulated in the U.K. and holds a license in the U.S. Remitly is licensed in all 50 U.S. states. Your money is held in escrow and transferred to the recipient. I've personally used both services hundreds of times with no issues.

What if the recipient's bank rejects the transfer?

This is rare but happens if you provide incorrect bank details or the recipient's bank doesn't accept international transfers. When you initiate a transfer, the service verifies the account (Wise does this automatically). If there's a problem, you have 1–2 days to correct it. If the transfer fails, the money is returned to you within 5–10 business days.

Can I open a U.S. bank account if I'm not a U.S. citizen or resident?

It's difficult but possible. Some U.S. banks allow non-residents to open accounts, but they're rare. Most digital banks and neobanks (like Wise) allow non-residents to open accounts. For a true U.S. bank account as a non-resident, you'd need to visit a branch in person with a passport and proof of address.

What's the best way to carry money when traveling internationally?

Use a combination: Credit card (major purchases), ATM withdrawals (small cash needs), and a backup credit card. Avoid exchanging large amounts of cash before you travel; exchange rates at airports are typically 3–5% worse than bank rates. Use your bank's ATM network or ATMs that don't charge withdrawal fees. Many countries have "Global ATM Alliance" networks that waive fees.

Do I need to pay taxes on international income?

Yes. If you're a U.S. citizen, you owe taxes on worldwide income, regardless of where it's earned. You might qualify for the Foreign Earned Income Exclusion (up to ~$120,000 per year if you worked abroad), but you must file Form 2555 to claim it. Non-U.S. citizens should check the tax laws of their home country.

Is there a limit to how much I can transfer internationally?

No legal limit for U.S. citizens, but service providers have limits: Wise has limits around $1–3 million per transfer, depending on your account history. Banks have their own limits. For very large transfers, contact your bank or OFX directly.

Related concepts

• Banking safety and fraud prevention
• Currency and foreign exchange basics
• Travel budgeting and financial planning
• Tax filing for self-employed and international income
• Setting up a business bank account

Summary

International banking allows you to send money abroad, hold foreign currency, and manage finances across borders. Traditional bank wire transfers are expensive ($20–$50 per transfer, plus unfavorable exchange rates), but modern fintech services like Wise and Remitly cost 90% less. For transfers under $5,000, Wise offers the best combination of low fees and competitive exchange rates. For larger transfers or developing-country destinations, OFX and Remitly provide alternatives. Opening a foreign bank account requires proof of residency in most countries, but digital banks allow non-residents to open accounts via app. Multi-currency accounts let you hold multiple currencies and manage exchange-rate risk actively. Regular international senders should understand the options: one $10,000 transfer using the wrong method costs $100 more than it should, and that mistake repeated monthly compounds into thousands annually.

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