Timing and knowledge of exchange rates are crucial to a sound remittance transaction.
The UAE’s large expat population enjoys a stable and hassle-free life in this country. Since most of them are in the UAE for better job prospects, they are beholden to spend a better part of their salaries back home to their dependent families.
Today, all banks and financial institutions in the UAE are helping expats transfer money to their home countries by way of Internet banking or money transfer centres. However, transferring money involves a lot of factors and costs. Expats who regularly transfer money abroad are aware of the term ‘transaction fees’. But these are not the only charges tacked to each remittance process.
What is the money transfer process?
One can transfer money from the UAE to most other countries in the world. Money is electronically sent overseas to various countries from the UAE. With banks offering bank to bank money transfer option, the process has become simpler and less expensive. The transfer happens via NEFT or RTGS and the money may be remitted within minutes or within 24 hours.
On the list of popular remittance destinations are such countries as India, Philippines, US, UK and Pakistan, as also some Middle East countries.
Knowing the charges
Those remitting money abroad need to know the kind of fees and charges that banks and money transfer centres levy per transaction. First, there is the transaction fee, which the bank charges for processing the remittance request. Second, there are the exchange rate margins; these are dependent on the prevailing exchange rates of the two participating currencies at that time. Third, there is an inter-bank processing charge. Some banks also collect a back-end fee – this is collected by the bank that processes the remittance in the expat’s home country.
For purposes of understanding, it is important to note that the two significant components of money transfer abroad are ‘transfer fee’ and ‘exchange rate’.
When remitting money abroad, ask the bank for the full list of charges and fees, and whether there will be a back-end fee charged to the person you are transferring money to. Once you make a note of all the charges levied, you will get a clear picture of how much money you actually spend with every remittance. This will help you plan your monthly budget better.