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I would like my younger brother to start studying in a school here, and this requires frequent international money transfers:

  1. The primary source (sponsor) would be family funds that would be wired from India/China/UAE (home) to my bank account in the US every month or two
  2. Every now and then, depending on my savings, I would send some money home

I am member of various Credit Unions that all offer free incoming international money transfers.

However, the CUs offer no SWIFT codes and my family refuses to risk the money transfer. Since I have no idea how this would actually work out, I do not "force" them to put in my CU's ABA number in the forms.

My guess is that the international money transfer to a CU would have to go through a domestic US bank that would tack on their fee anyways before transferring the money to the CU? (This part is a vague guess in my part and none of the CUs mention which bank this would be, giving me the impression that the international/sending bank would make their own choice?)

Instead I use bank accounts, and the transfers are faster than domestic ACH transfers: at-most a week, but typically a day! However, the cumulative fees amount to around 2% - 3% of the transferred amounts, and that's a significant amount of money in fees over a year.

Is there a way I could minimize these money transfer fees?

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There are several ways to minimize the international wire transfer fees:

  1. Transfer less frequently and larger amounts. The fees are usually flat, so transferring larger amounts lowers the fee percentage. 3% is a lot. In big banks, receiving is usually ~$15. If you transfer $1000 at a time, its 1.5%, if you transfer $10000 - it's much less, accordingly.

  2. If you have the time - have them send you checks (in US dollars) instead of wire transferring. It will be on hold for some time (up to a couple of weeks maybe), but will be totally free for you.

  3. I know that many banks have either free send and/or receive. I know that ETrade provides this service for free. My credit union provides if for free based on the relationship level, I have a mortgage with them now, so I don't pay any fees at all, including for wire transfer.

  4. Consider other options, like Western Union. Those may cost more for the sender (not necessarily though), but will be free for the receiver. You can get the money in cash, or checks, which you can just deposit on your regular bank account. For smaller amounts, it should be much cheaper than wire transfer, for example - sending $500 to India costs $10, while wire transfer is $30.

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  • Great answers from you as expected! 1. Batching is the obvious option but not possible now. I cannot wait for them to send me $10k after a year and they cannot afford sending $10k now. 2. This sounds like a good idea. Indian banks do not allow one to write a check in currencies other than India rupees though, but I will find out if they can take out a DD. However, how I insure the DD against loss by say FedEx in transit? 3. I am interested in knowing how international wire transfers happen through CUs: maybe a new question for that specifically? Does ETrade provide a SWIFT code? 4. WU is good
    – f1StudentInUS
    Jan 21, 2012 at 2:14
  • @f1StudentInUS Re the checks - they probably will sell a bank draft (i.e.: a cashier's check issued by an Indian bank). Re the CU/ETrade - I have no idea how they transfer it. I transferred from ETrade to my bank abroad, and they didn't have a problem sending it out, and no-one in the middle touched it. Sending to them will require some cooperation from your Indian bank - since they're not part of SWIFT, the Indian bank will have to send to its own branch in the US (or a bank it works with) and from there send a domestic wire transfer. That might cost to the sender, but not to you.
    – littleadv
    Jan 21, 2012 at 6:32
  • @f1StudentInUS Checks are made out to you, so in case they're lost - just report it to the bank, have it cancelled and issue a new one. Usually, FedEx don't loose envelopes. That's their main business, after all. But sh!t happens, you should ask the bank what the procedures exactly in such a case. The thing you'll loose most is the time, not the money.
    – littleadv
    Jan 21, 2012 at 6:34
  • I ran the numbers. FedEx charges $40 to courier a check with tracking. Mailing a DD (or cash) looks like a grey area. In either case, it looks like ETrade and the like is the way to go. Perhaps I should now ask a new question focused on that? ;-)
    – f1StudentInUS
    Jan 22, 2012 at 20:19
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If you're really price-sensitive, consider carrying cash in your wallet whenever your brother (or you) comes home to your own country. Besides saving money, this should teach your younger brother to plan well and manage his living costs or otherwise he'll starve.

Let's say that a month's living cost is $1500 which includes housing, food, transportation, and the occasional splurging[1].

If your brother's school is in a per-semester basis, chances are he'll visit your home country at about twice a year. That will be $1500 * 6 months = $9000. You can still carry that amount of money in your wallet (that's 90 sheets in $100 bills, which should fit in larger wallets) provided that you're careful.

If you or your brother don't go home regularly at least once a year, the 3% transfer fee isn't that big. Let's say that the total amount that you transfer is $18K (for a year's living cost, $1500 * 12 months), the fee for that will be $540 ($18000 * 0.03), which I'll bet is far less than a return airfare from the US to India/China/UAE.

[1] I'm living on my own in Singapore right now, and my monthly expenses rarely exceeds S$1500/month, so I'm assuming that in the states that would be USD 1500. You can get a projection for that number yourself.

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    You don't have to carry the actual cash. You can carry travelers checks, for example, which can be deposited to any US bank account, but are much safer (can be recovered if lost, require signature to cash, etc).
    – littleadv
    Jan 22, 2012 at 10:37
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The other option apart from the above which I feel is quite good is "Travel Card" [also called Forex Card] issued in USD. These cards are like prepaid debit cards. They are available from almost quite a few Indian Banks like HDFC / ICICI / UTI. The limit for students is around 100 K USD per year. http://www.hdfcbank.com/personal/cards/prepaid_cards/forexplus_card/pre_forex_elg.htm

The card can be reloaded by any amount [i think the minimum is USD 100] by visiting the Branch or certain Forex agents. There loading fee is INR 75. The Fx is typical Card Rate prevailing on the day.

In US this card can be used as a credit card for almost everything [I have used this without any hassel]. Avoid using the card for blocking anything [at Hotel for room booking, or initial block at car rentals]. Although its mentioned that there is a withdrawl fees, i was never charged anything for withdrawls.

The card comes with an internet based login to monitor account balance and transactions.

Any unused funds can be withdrawn in India. The payment will be make in INR.

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I have recently started using Transferwise to transfer money between the U.K. and The Netherlands.

Transferwise has lower fees than other companies. They use a pseudo-peer-to-peer money transfer system. When person A transfers £ to €, and person B transfers € to £, they effectively cancel these two agains teach other, which significantly lowers exchange fees for both A and B.

I am not affiliated with Transferwise other than as a customer.

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  • Not sure about UK / NL, but transferwise has higher fees than comparable services like US Forex or XE Trade for US / NL. I find their practices deceptive since they introduce a fee for the transfer at the final step after showing a "low" rate whereas US Forex is up front about whether there will be a fee or not and XE trade does not charge fees.
    – Eric
    May 26, 2016 at 14:52
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    @Eric I don't find Transferwise deceptive; it's the only transfer service I've used that tells me how much money arrives in the destination account before I make the payment. I have found “no fee” services like Post Office International Payments deceptive, because the fee is hidden in the exchange rate they use, which in turn depends on the amount of money transferred.
    – gerrit
    May 27, 2016 at 9:04
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There is a startup targeted specifically to serve you for the situation you describe: - http://peertransfer.com

There are other methods. CurrencyFair is one service that might help: - http://currencyfair.com

And, there is bitcoin. Because it is new yet, there aren't very liquid markets where bitcoins are exchanged for Rupees or Yuan at decent rates at the present. Once you receive bitcoins transferred to you however, those funds are easily transferred to your B Of A account (using Dwolla to send via ACH to your bank). - https://en.bitcoin.it/wiki/Buying_bitcoins

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  • what does etrade, frostbank etc do wrong that allows peertransfer.com to gain an audience?
    – f1StudentInUS
    Jan 22, 2012 at 2:11
  • -1 for bitcoins. @f1StudentInUS - peertransfer is for transferring tuition to the universities, not between private parties. Conventional banks (which etrade and frostbank after all are) are for private banking of the kind you're looking for. currencyfair is something to look at, the concept is interesting.
    – littleadv
    Jan 22, 2012 at 10:32
  • @littleadv: I would request you to encourage Stepthen. His answer is very creative and offers some very interesting options which might not be a good choice for me ATM, but who knows how the banking industry could change with time (ha ha)
    – f1StudentInUS
    Jan 22, 2012 at 20:08
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    @f1StudentInUS the answers here are not only for you. I will downvote any answer that suggests bitcoins as something a normal person should be using. Bitcoin is for gamblers, it is not and cannot be considered as a currency, and is definitely not a good suggestion for your question (basically, instead exchanging currency once, Stephen suggests exchanging twice, one of them being a shady, unregulated, and possibly illegal commodity).
    – littleadv
    Jan 22, 2012 at 20:51
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    From what I have heard and read, your opinion of Bitcoin is very valid. It seems there a quite a few banks that offer free wires "given" certain conditions. I am listing them down and would be putting them up as a question soon.
    – f1StudentInUS
    Jan 23, 2012 at 6:53

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