A telegraphic transfer - which is also known as a telex transfer, and can be shortened to either just TT or T/T - is an umbrella term used to describe an electronic transfer of money from one bank account to another. Usually, these TT payments are made to a bank account based overseas, and often in a different currency. The exact terminology used varies from country to country - and depends on the transaction itself too. For example, you might also see these transfers described as remittances or wire transfers.
Whatever your bank calls them, telegraphic transfers usually come with pretty high fees. Costs can be added by the sender’s bank, and the recipient’s bank - but also by correspondent banks along the way if the money is moved using the SWIFT network. More on that later.
If your bank isn’t offering you a good deal on your TT payment, then it’s well worth checking out alternative providers such as TransferWise. You could find that your payment is cheaper - and often faster and easier to arrange - than using a TT bank payment from your regular bank.
Here’s all you need to know about telegraphic transfers - and how to limit or avoid the costs associated with them.
Let’s start at the beginning. You came here to read about how to avoid paying more than you have to for your telegraphic transfer.
Well, here’s the thing: the best way to avoid the costs of a TT bank payment might be to avoid your bank entirely.
Telex transfers arranged by your bank will usually be processed via the SWIFT network. This is a global network of banks which works together to make sure that international payments arrive at their destination. The process is safe - but it’s not quick, and it’s certainly not cheap.
That’s because all of the banks involved in processing your TT can add their own fees, and what’s often even worse is that banks and money transfer providers can give you a bad exchange rate to make extra profits. We will talk more about the fees and charges added to TT bank payments later.
TransferWise is different to your bank. Its smart new technology skips hefty international transfer fees by connecting local bank accounts all around the world. Your money still gets to its destination safely and quickly - but without the fees associated with TT payments made with the SWIFT system. In fact, you can save up to 8x by using TransferWise rather than your bank when you send your money abroad.
Check out how to make your first transfer with TransferWise. And give it a try.
Oh, and while you’re at it, check out TransferWise’s borderless multi-currency account - perfect if you need to make international payments often. You can manage and send dozens of currencies all from the same account, with free signup and no monthly fees. There’s just a small upfront transfer fee when you send money. And you can receive payments for free in the UK, the US, Australia, and Europe with your local bank account details.
One of the reasons TT payments can be costly is that there are several different fees to pay on a single transaction. These will vary a bit depending on exactly what currency you’re sending, and where. However, you’re likely to come across the following:
- A charge made by the bank arranging the transfer (sending bank fee)
- Fees taken by intermediary or correspondent banks, as your money moves overseas through the SWIFT network
- A currency spread or markup added onto the exchange rate
- Costs charged to the recipient by their bank
When someone sets up a TT payment, they’ll usually be charged by their own bank to do so. This could be a fixed cost, or a percentage of the amount transferred, depending on the bank and account type.
The details of the costs will vary, but the fee is usually charged up front, or removed from the amount being transferred before it’s converted into the currency of the recipient’s bank account.
Once the TT bank transfer is on the move, it’ll usually be processed via the SWIFT network. This is the global network of banks which was set up to move money internationally.
Although the SWIFT network is well established and safe, it’s not a quick option, and usually comes with high fees. Even worse, it’s not always possible to know exactly what the fees might be before the transaction is completed, because each bank that has a hand in moving your money can apply a fee. With up to 3 different correspondent banks working together on a single transaction, this can get pricey.
Alternative providers like Transferwise use a different approach to moving money internationally, to bypass these intermediary bank fees entirely.
Telegraphic transfers can also come with hidden fees - a common one being an exchange rate markup. This happens when banks take the real, mid-market rate, and add their own margin on top as a markup. Your transaction is processed with the marked-up exchange rate and can cost you an average of 4-6% more as a result.
Check the exchange rate your bank is offering you against the mid-market rate by simply googling your currency pairing, to see if you’re getting a fair deal. And if not, go elsewhere. Arrange your international money transfer with TransferWise, and you’ll always get the real mid-market rate - with no hidden fees.
Finally, the recipient might also have to pay a charge levied by their own bank, in order to receive a TT payment. These fees vary between account types, and banks - check out the details of your own bank account, in their terms and conditions, which should be available online.
Knowledge is power. And when it comes to TT bank payments, knowledge can also save you some money. Make sure you know about the process of telex transfers, and of course the costs applied to them, so you can make sure you’re getting the best deal possible.
Here are some handy articles to get you started:
- What is a telegraphic transfer?
- How do you make a telegraphic transfer?
- How long does a telegraphic transfer take?
- What are the telegraphic transfer buying/selling rates?
- What’s the difference between a telegraphic transfer and a wire transfer?
Telegraphic transfers can be a bit confusing - particularly because they are called so many different names by different banks and international transfer services. The process is actually relatively straightforward though - but that doesn’t mean it’s cheap. Avoid the worst of the fees associated with TT payments, by doing your research in advance. You could find you’re better off using an alternative provider like TransferWise, instead of sticking to your regular bank.
|This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.|
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