Common mistakes to avoid when transferring to India from USA
Transferring money to India from USA is easy, quick and cheap when everything goes well – but regretful when you make any mistakes. International money transfers are complex, messy and time consuming. You need to spend a lot of energy and time to fix any mistakes. Few mistakes are irreversible! So it is important to understand the common mistakes to avoid when transferring to India.
When Sruthi moved to USA for work with her family, her dependent parents were in India as well as loans to be paid back. She transferred money to India from USA to support the family and pay bills every month. She thought it’s all working well till one day when she found she could get a lot more in Indian Rupees by avoiding few common mistakes.
“I was too loyal to my bank and using their service to transfer money to India” she explained when asked her preferred way to transfer money. When she found another online money transfer services offering better exchange rates and she said “OMG! I lost around Rs. 2000 every month by not know about other online money transfer services“.
This only begins the list of common mistakes Indians make when they transfer hard earned money from USA. Here are few common mistakes to avoid
1. Using money transfer service offered by your bank
Almost all NRI services of Indian Banks and Wire Transfer services of American banks offers remittance features to NRIs in USA to transfer money to India. As NRIs interact with these banks for their banking needs, they find it easy to use the bank’s services to transfer money too.
Remittance services provided by Bank’s work very well and the only problem with them is their hefty charges. Most bank’s count on the ignore of NRIs and charge hefty fees. These fees are often collected in the form of wire transfer fee and/or cutting deep into the exchange rates offered to the customers.
So if you are using your bank’s services to remit money to India, think twice again and shop around by comparing money transfer services. You will likely find that you are loosing a lot of money by being loyal to your bank.
2. Opting express delivery when regular delivery offers better rates
Money transfer services offer a wide range of options like locked vs indicative exchange rates, express vs regular delivery, fee vs no-fee transfers, cash pickup vs bank deposits and cheque/draft delivery, etc. Among these several options, the delivery time plays an important role on exchange rate you would.
The express delivery option deposits money to receivers account in India within few hours while regular delivery services deposit in 2-5 business days. Many use express delivery options, but they often forget that they can get better exchange rates by choosing regular delivery. The exchange rates offered for express deliveries are often 20-40 paise less per dollar than the regular delivery.
We suggest you to plan your money transfer ahead of time and opt for regular delivery options when feasible. This will help you in getting most out of your money transfers.
3. Falling for zero dollar service fee
Do you like money transfer services that charge ZERO dollar fees? If you love them like several others then you are falling for the marketing tricks. There is no such thing as free lunch! Every money transfer service is a for profit business and they run the business to make money.
If someone is offering you a zero dollar service fee then they must be cutting into exchange rates. You can read more about zero dollar fee services here. Don’t fall for zero dollar fees, understand the final amount you would receive before transferring.
4. Transferring too often in small transactions
If you are transferring money to India every other week or once a month then it may not be the best strategy financially. When transferring too often in small transactions you end up paying a lot of fees and also get sub-par exchange rates. It is a good strategy to transfer 1000$ once with zero dollar service fee instead of two 500$ transactions that attracts around 9$ of fees.
Here are few things you can do to avoid small transactions
- If you need money to pay bills every month then plan ahead and transfer required money for several months at once
- When you need to transfer money to multiple bank accounts in India, first transfer all required money to one bank account and then distribute the money to rest of bank accounts using inter-bank transfers in India.
5. Not comparing money transfer services
Each money transfer services offer different exchange rates and charge different service fees. They have the autonomy to choose exchange rate, fees and they vary widely. If you are not comparing to find who is offering better rates then you may be losing a lot money!
Comparing money transfer services to find best exchange rates is very easy with services that curate all information at one place.
6. Using Credit/Debit Card to fund money transfers
If you are using credit/debit card to fund money transfer transactions to India then we feel very sorry for you. Please, please, please! Stop using credit/debit cards. Money transfer services charge insane amount of fees when you use credit/debit cards to transfer money.
For instance Transfast charges 30$ fee if you use credit/debit to transfer 1000$ to India while ZERO dollars for ACH transfers. We don’t see any reason why one must use a credit card for money transfers except when they are in cash crunch. Even if you are cash crunch, it may be a very bad idea to use credit card and lose more money!
Please try all possible ways to avoid using credit/debit cards.
7. Transferring large amount to a newly registered Indian bank account
On your first transaction to a newly registered recipient Indian bank account, always avoid transferring large amount. If any details of the recipient are not correct, you may end up regretting the transaction. Dealing with money transfers to wrong account is not trivial and you need to spend several hours with customer service to reverse the transactions.
When you register a new account, first transfer a small amount and verify it. Once you verified everything is good then start transferring large amounts.
Now that you understood the common mistakes to avoid when transferring money to India we hope you avoid them.
Did we miss any other common mistakes to avoid when transferring money to India? Please leave a comment and we will be glad to add them to the list.