Sending Money from US Banks to South Korea: 4-5% Lower FX Rate Seems to be the Margin Banks Charge

[bluegill_04]

Some time ago I posted a query re ways of minimizing FX loss when sending funds from US-based banks (Bank of America) to foreign banks (South Korea in my case).

https://www.reddit.com/r/ExpatFinance/comments/10xkwuc

It seems there is no way to get around the below-market FX rate which really amounts to a fee. The USD-KRW rate started going up again (1USD = KRW1,319 last checked) so was getting ready to transfer funds, e.g., 7 million KRW to my local bank. That would have cost me $5,560.5, which is the 1,259 exchange rate.

https://preview.redd.it/8n66iwce2vk...bp&s=1ca9bf84988c39468235f2d556a9d10ab811f88b

That's 4.6% lower than the market. Now I understand it depends on how you define the market: I would assume these moneycenter banks do their FX operation live, so the real time rate approximates the market rate (1,319). I used a 2-day moving average, etc. and it still comes out to 4-5% below. There is no other "fee" charged by the local bank when this amount gets transferred (at least there wasn't the last time I did it).

Now there is another issue which I raised in my prior post: is it better to send the fund already converted (i.e., USD converted into KRW by Bank of Am) as above or send it as USD and let the local bank convert it? I was under impression you can save money having local banks convert USD into KRW since they are less "predatory." But that option isn't really available -- it always gets translated as shown below where I tried to send $5,000 and it gets translated at the same rate. What BofA means by sending USD to a foreign bank is just treating $5,000 as the starting point -- that's how you end up with an odd lot KRW amount since it gets converted at the same below-market rate.

https://preview.redd.it/n8aoo13r2vk...bp&s=89459376b1b818491b83153ca481c8b1367d25a4

Now I realize why my Korean friends told me the best way is to just "carry USD" through the airport (up to $10k) and do the conversion at a Korean bank with the largest FX operation. Any better way?

 

[stephcooper46]

@bluegill_04 My suggestion is to use Wise they generally have very competitive rates and is very easy to transfer between currencies and banks. I just looked it up and $5560 USD will get you 7,225,445 KRW.

 

[bluegill_04]

@stephcooper46

Wise

Thanks, I'm signing up for that right now to see if that will work. Yeah, they work with real time exchange rate, not the BS rate that gives banks fat profits. They're safe and trustworthy, right?

 

[stephcooper46]

@bluegill_04 Yeah exactly I’ve been using it for years and zero issues. It’s how I do all of my transfers I get paid in USD but pay bills in GBP so it’s by far the best I’ve seen.

 

[ola2019]

@bluegill_04 In past I have used xendpay to send upwards of $30,000. The rates are very good, especially when you are under their limit (10k I think). Pretty reliable and fast. I have also dealt with their customer support and they do respond.

disclosure - it is a referral link but I like them and recommend them either way.

 

[bluegill_04]

@ola2019 Thanks, They look similar to Wise. I'll look at them also.

 

[dan222]

@bluegill_04 this is an application where a crypto network could circumvent the transfer fees. something like Loopring Layer 2 of the ETH network. Low to no fee transfers