In this article, I want to tell you how you can avoid paying huge transfer & conversion fees when dealing with foreign currencies, by sharing my experience with the online service TransferWise. I really wanted to publish this article as I still see so many of my friends & relatives paying huge fees when traveling and making payements & transfers in foreign currencies. I'll tell you what is TransferWise, and how you can use its different features depending on your own situation.
What is TransferWise?
TransferWise is an online financial services platform that is specially in making it cheaper to transfer money across countries, when you need to exchange currencies. They then added some cool features like borderless accounts and a debit card, which is what I will cover in this article.
Historically however, TransferWise was simply a service to send money from one currency to another, using a clever system of partner banks for each currency, therefore avoiding the huge fees that are usually charged by traditional banks. Moreover, they always give you the best exchange rate that is currently applicable, compared to the terrible exchange rate given by traditional banks.
Here is for example how it looks like to send 1000 Euros to a recipient that uses Polish Zlotys:
As you can see, on this specific transfer you'd just pay about 5 Euros of fees. With my 'traditional' bank, I would have to pay a fixed fee of 20 Euros, plus the fee due to the very bad exchange rate given by the bank. Overall, I estimate the fee to be around 50 Euros for this transfer. That's 10 times more than the TransferWise fee.
That's really great if for example you earn money in a given currency (Euros for example) by live in a country that uses another currency, like Polish Zlotys. That's my case, and I use TransferWise every month to pay the rent. In 4 years of living here, I estimated that I saved about 2000 Euros of transfer fees just on monthly rent payments.
The really cool feature that TransferWise then introduced is called borderless accounts, and that's what I want to focus on in this article. It's basically a set of virtual accounts that you can open (for free) in your TransferWise account, and that you can use to virtually hold several currencies. That's how it looks like in your account:
The really cool thing is that for some currencies (like EUR, USD and GBP), you actually get a real, traditional bank account with an IBAN (for European accounts) or Routing Number/Account Number (for US accounts). This is awesome, because it allows you to create accounts in seconds, and start receiving money in various currencies, and all for free.
For example, I am receiving every month money from the Amazon Affiliate program, that only pays on a US bank account. For a long time I had to receive a check instead, resulting in huge fees from my bank. Then, I move to Payoneer to receive those payments, but it still resulted in big fees at each payment. I then started to use my bordeless US account from TransferWise, and I could receive payment from the US for free and then just convert that into whatever currency I want, right inside the TransferWise account. So if you are receiving any kind of money in another currency that what you usually use, or you just want a solid alternative to a traditional bank, I'd really recommend trying out TransferWise.
The TransferWise Debit Card
The latest feature that was introduced by TransferWise (and that was long awaited) is a debit card, that looks like this:
This card allows you to pay in any physical location (like shops, restaurants ...) and online stores, using the money present on your borderless account. That basically transforms your free borderless account into a complete online banking solution that could replace a traditional bank. Of course, all for free, and without any of the paperwork & time loss required when opening a traditional bank account. This is great for example if you are a digital nomad or a frequent traveller, allowing you to pay in any currency without huge fees that would happen with a traditional debit card.
As a conclusion, I'd really recommend giving a try to TransferWise, especially if you are an online entrepreneur, frequent traveller, or expat. It can really save you a ton of money when dealing with different currencies, and can also completely replace a traditional bank. I for sure will continue using it daily, both for receiving payments and for paying for expenses in several currencies, without paying any huge currency exchange fees. Of course if you have any questions about TransferWise feel free to ask them below!