Saving Big on Tranfer Fees When Transferring Dollars and Nairas Internationally

Sending money across borders between the US and Nigeria can get very expensive unless you know how to optimize the exchange. Transfer fees, poor rates, and bank markups can quickly erode your hard-earned funds.

Fortunately, with the right strategies and some insider knowledge, you can significantly reduce fees and maximize your money when transferring dollars and nairas globally.

This comprehensive guide covers proven tips to slash costs when moving money between the United States and Nigeria. Follow this advice to keep more cash in your pocket.

Understand the Typical Transfer Fees Involved

The first step is understanding the common fees involved when transferring dollars and nairas cross-border:

i. Exchange Rate Markup

Banks and transfer companies paid the real mid-market rate to build in revenue. This reduces the amount of currency you receive.

ii. Tranfer Fee

A fixed fee based on the transfer amount. Usually $0-$50 for small transfers, but can be 1-3% for larger transactions.

iii. Receiving Fee

Some banks charge the recipient an incoming wire fee.

iv. Other Service Fees

Additional charges for payment processing, tracing transfers, etc.

V. Cross Border Charges

When intermediary correspondent banks facilitate the transaction across jurisdictions.

Vi. International Card Fees

Fees for using debit/credit cards internationally for purchases or ATM withdrawals.

These fees quickly pile up. But you can minimize them with the right approach.

Time Transfers Around Market Movements

Exchange rates fluctuate minute-to-minute based on trading activity and market developments. Savvy transfer timing when rates spike in your favor provides savings.

• For sending dollars to naira, transfer when the dollar strengthens against the naira.
• For converting naira to dollars, transfer when the naira appreciates vs. the greenback.

Tools like XE Currency Charts allow you to monitor exchange rate movements for opportune transfer windows. Just don’t wait too long trying to perfectly time peaks.

Compare Quotes Across Multiple Providers

Fees and exchange rates can vary widely across different platforms. Getting quotes from multiple providers ensures you get the best deal:

• – Banks – Big banks offer poor rates but more services. Online banks provide better pricing.
• – Money transfer operators – Services like Western Union charge flat fees but rates are average.
• – Fintech apps – Remitly, Wise, etc. Newer online-focused apps may offer better pricing.
• – Forex brokerages – Specialist currency brokers provide wholesale exchange rates for large transfers.

Shop rates takes little effort. But could save you hundreds in fees long term.

Negotiate Lower Bank and Payment Fees

For ongoing transfers or exchanges above $10,000, don’t be afraid to negotiate fees directly with banks and financial institutions.

Ask about:

• – Reducing transaction fees or setting up a flat monthly fee
• – Discounts for bundling multiple services
• – Relationship-based fee reductions for long term customers
• – Waiving wire transfer charges or other service fees

Even saving 1% off transfer fees on large dollar amounts adds up tremendously over time.

Minimize Intermediary Bank Involvement

Using intermediary correspondent banks to facilitate cross border payments increases fees. When possible:

• -Transfer in major currencies like USD, EUR, and GBP that don’t require e-exchange.
• Use banks with direct country presence where funds are being sent.
• If an exchange is needed, use payment providers with direct currency accounts abroad.
• Open multi-currency accounts to avoid third-party exchanges.

This reduces additional charges and markup by third parties in the transfer chain.

Leverage Fintech Apps and Online Banks

New fintech apps and online-only banks aim to disrupt traditional remittances with reduced fees facilitated via technology:

• Wise offers transparent wholesale exchange rates.
• WorldRemit eliminates fees for the n first 3 transfers.
• PayPal provides competitive currency conversion and sending fees.
• Revolut converts currency at cost with no markup or hidden fees.
• Online banks can offer lower wiring costs for account transfers.

The caveat is smaller transfer limits with these digital-first platforms. But great for regular smaller remittances.

Take Advantage of Promotions and Free Transfers Fees

Keep an eye out for promotions and discounted offers:

• Many new fintech apps offer free transfers for your first few remittances.
• Banks periodically run promotions waiving transfer fees for certain corridors.
• Providers offer discounted fees as a signup promotion bonus.
• Seasonal sales around holidays may discount transfer costs.

Signing up through an offer of free/discounted transfers for new users provides short-term savings. Just make sure to compare the actual exchange rate spread they apply.

Get a Multi-Currency Account

Opening a multi-currency account that supports both dollars and nairas allows you to efficiently hold both currencies in one place. Benefits include:

• Avoiding fees and spread for exchanges between dollar and naira accounts.
• Free inter-account transfers and payments.
• Often better exchange rates on currency trades compared to banks.Low-cost wires/transfers from overall account balance regardless of currency.

Do research to find reputable banks or fintech apps supporting multi-currency wallets on favorable terms.

Use Cards with No International Tranfer Fees

When traveling or shopping internationally, using credit or debit cards with no foreign transaction fees saves 3% instantly. Leading fee-free card options include:

– Capital One credit cards

– Most Amex cards like the Blue Cash Everyday

– Chase Sapphire Reserve and Preferred

– Discover It Miles

– Some banking apps have fee-free debit cards like Charles Schwab

Make sure to also check that the card doesn’t load the base exchange rate. Fee calculations get complex fast with international charges.

Get an International Money Transfer Specialist

For high-volume dollar/naira transfers, working directly with an international money transfer specialist can provide personalized services and preferential rates.

Specialist firms have access to mid-market exchange rates and deep banking relationships that provide significant cost savings. They also offer customized transfers, contract exchange rates, risk management, and consolidation services.

Be sure to verify regulatory licenses and client references first when selecting a specialist. But this level of service is ideal for frequent institutional transfers.

Automate Transfers For Convenience

If you make regular remittances between the US and Nigeria, look into automating transfers on fixed schedules. Benefits include:

• Set and forget recurring transfers.
• Locks in favorable rates if timed right.
• Some platforms offer discounts for scheduled payments.
• Avoid missing transfer deadlines.

Just make sure to review periodically that rates and fees remain competitive, and the schedule timing still aligns with your cash flow needs.

The more you streamline the international transfer process, the more you reduce potential human errors that can be costly.

Keep an Eye on Exchange Rate Movements

Staying informed on currency market news, economic developments, and exchange rate trends can help you plan transfers around favorable movements.

Bookmark currency sites like Oanda and XE Currency Charts to monitor historical market price action. Consider setting rate alerts for key levels so you’re notified of big swings.

Understanding currency drivers provides insights into when dollar or naira strength is upcoming. This allows you to time wire transfers for maximum impact.

Use Payment Rails With Lower Fees

International wire transfers over SWIFT can be expensive. When allowed, route payments through lower-cost rails like:

• – ACH – Lower cost network for US domestic bank transfers
• – SEPA – Links European bank accounts with minimal fees
• – IMPS – Instant domestic Indian bank-to-bank transfers
• – UK FPS – Fast UK payments between accounts
• – Nigeria’s NIP and RTGS for domestic naira payments

Leveraging regional payment networks often provide significant savings over SWIFT while still being fast and trackable. Just verify both providers use the same channel.

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Go in Person For Cash Exchanges

When physically traveling and needing to convert physical banknotes, avoid airport currency exchange booths that offer terrible rates and sky-high fees.

Instead, find reputable standalone exchange bureaus in-country using comparison sites like FXcompared.com. Rates will still be inferior to online money transfers, but much better than exchange kiosks targeting tourists.

Be wise and shop around when converting physical cash across jurisdictions. Don’t take the easy but expensive airport kiosk route.

Conclusion

So there you have it – with the fees involved, every dollar and naira counts when transferring money internationally. Do your homework, shop rates across platforms, negotiate discounts, and keep costs low by following the tips above.

You work hard for your money. Make it go the full distance by minimizing transfer fees between the US and Nigeria!