Money: Ask Questions Before You Send Money Back Home
Before you send money to family or others "back home" in another country, do some research to make sure the transfer does not cost you, or the person you are sending money to, more than it has to.
A money transfer to a person or people in another country is called a remittance. The costs to make a remittance can be high for both the sender and receiver. In addition to the currency exchange, there can be fees to carry out the transfer, taxes, plus charges to the receiver when collecting the money.
Most people sending remittances use private companies called money transfer organizations, which are not federally regulated. These services can be found at post offices, grocery stores, pharmacies, cheque-cashing outlets, travel agents and currency exchanges.
By law, federally regulated financial institutions such as banks and trust companies must disclose all fees that they charge, including those for remittances. However, these regulations do not apply in other countries.
The Financial Consumer Agency of Canada (FCAC) advises anyone who wants to send money overseas to ask the following questions:
- Is there a financial institution that operates in both Canada and the recipient country? A bank, for example, with branches in both countries may be the least expensive method to transfer money
- Does the money transfer company you are considering have a good reputation? Ask the Canadian Council of Better Business Bureaus about it—or ask relatives, friends or members of the community about their experience.
- What options are there? Depending on the service and the country the money is going to, you may be able to use email, telephone or online services. Sending a cheque or a prepaid card may also be possible.
- How much will the transaction cost you? Some businesses charge a set fee to send any amount of money, while others charge a percentage of the remittance. Fees can vary widely, so be sure to shop around to get the best deal.
- How much will the recipient get? The recipient may have to pay a fee or a tax to get the money.
How long will it take for the money to arrive?
- Is the amount the recipient will get guaranteed?
- Is there a way to verify that the money has been received? What can you do if something goes wrong?
- How and where can the recipient get the money? A prepaid card may not be a good choice if the recipient country does not have automated bank machines or stores with debit card transfer terminals.
- Does the money transfer organization offer discounts for multiple or regular transfers?
FCAC provides objective information about remittances and other financial products and services available in Canada. Visit our website, fcac.gc.ca, to learn more about bank accounts, building a credit history, budgeting or applying for a loan. There is also information about your options, rights and responsibilities in dealing with financial institutions, and other resources and material to help you develop your financial knowledge and skills.
With educational materials and interactive tools, the Financial Consumer Agency of Canada (FCAC) provides objective information about financial products and services to help Canadians increase their financial knowledge and confidence in managing their personal finances. FCAC informs consumers about their rights and responsibilities when dealing with banks and federally regulated trust, loan and insurance companies. FCAC also makes sure that federally regulated financial institutions, payment card network operators and external complaints bodies comply with legislation and industry commitments intended to protect consumers.
All these resources and information can be found online at fcac.gc.ca. You can also follow @FCACan on Twitter and on YouTube.