Guide to getting the lowest FX fees

Clare says

Interactive Brokers offers the lowest A foreign exchange (FX) fee is added to all trades involving foreign currencies. If you buy a stock that trades in US dollars, for example, and your home account is in GB pounds, you’ll need to pay an FX fee.FX fees of any UK trading platform – currently 0.002% (0.20 basis point) – with a minimum fee per order of USD 2.00.

Comparing that ultra-low rate with interactive investor’s and eToro’s 1.50% FX fees, and Hargreaves Lansdown’s 1.00%, highlights just how cheap it is.

However, to take advantage of IBKR’s rates, you’ll need to be able to navigate its highly sophisticated platforms. Many traders complain that it is too complex and only suitable for very confident, experienced traders, although IBKR is marketing its latest platform – IBKR desktop – for less experienced traders.

The IBKR Multi-Currency Account function also gives you the ability to trade in products and make deposits and withdrawals in different currencies, and has linked up with Wise, meaning you can exchange currency through Wise and then deposit it straight into your IBKR account in the currency you want to trade in. Read more about the possibly advantages of doing this in the guide at the bottom of this page.

Fees

• FX fees: 0.002%
• Some of the lowest available commissions on trades
• One free withdrawal per month. £7 per bank transfer and £1 for a BACs transfer after that.
• Inactivity fee: $10 per month after 24 months of inactivity

Use this platform if

• You are a confident trader, comfortable using advanced trading tools

Clare says:

Trading 212 is very cheap – certainly one of the cheapest trading platforms in the UK market. Where other providers usually compensate for zero commission and zero custody fees with high currency conversion fees, T212 hasn’t taken that approach and has gone with one of the lowest FX fee rates in the UK market too – just 0.15% of whatever value you’re converting.

Those Trading CFDs will need to pay a bit more, however – 0.50% – so T212 make a bit of money back here.

One of the other big draws of T212 is just how easy the platform is to use. It’s ideal for beginners, but with a decent spec of research tools, 5.2% interest on uninvested cash, 24/5 trading on US stocks, and those ultra-low fees, it’s become a platform serious traders can’t afford to ignore either.

Another big bonus if you’re trading international assets – you can have a multi-currency account with T212. You can hold and trade in several different currencies, meaning you won’t need to pay FX within the platform on those stocks that trade in a currency you hold. I’ll talk more about that strategy in the guide below.

Fees

• 0% commission
• No custody fee
• 0.15% FX fee on investments
• Tight spreads
• 5.2% interest on uninvested cash and A cash ISA is a type of individual savings account where you can earn tax-free interest on your saved cashcash ISAs

Use this if

• You’re new to trading or an intermediate level trader
• You want a user-friendly platform with some social features

Clare says:

Wise is a specialist money transfer service. Although they do offer some opportunities to invest directly from your Wise account, that’s not why I’m recommending it. By using Wise, you can take advantage of better currency exchange rates and lower FX fees than you may be able to get directly through your investment provider / trading platform.

You can exchange GBP into 40+ different currencies, and transfer to your investment / trading platform in whichever currency the assets you want to trade are natively traded in. For this approach to work, your investment / trading platform must facilitate multi-currency accounts, however. See my guide at the bottom of this page for details of how to make the strategy work.

Converting between currencies is made very easy with Wise. And it’s relatively cheap. Wise offers attractive exchange rates (the best I could find for popular currencies) and reasonably low FX fees, although not as low as Revolut’s in most cases. Converting £1,000 to EUR, Wise’s fees were 0.41% and they could guarantee it would be done within 2 hours. Revolut was cheaper (0.18% fees), and could do it instantly.

I’ve found Wise’s FX fees are generally around the 0.40% mark. That’s higher than you’d pay within the platform at Interactive Brokers or Trading 212. However, if you’re an interactive investor (ii) customer wanting to avoid FX fees of 1.50% then using either Wise or Revolut could save you a considerable amount (ii allows for multi-currency accounts).

Wise are great when it comes to transparency on fees, too, which I like. They make it easy to see what you’re going to be charged, how that breaks down, and how it compares with competitors – even when they’re not the cheapest.

Fees

• FX fees of between 0.40% – 0.50% on major currencies
• Among the best foreign exchange rates

Use this if

• You’re with a trading provider that allows multi-currency accounts but has higher FX fees than Wise
• You want to send money abroad
• You travel a lot and could benefit from keeping different currency in your banking account (although Wise is not a bank, its services cross-over with some of those provided by banks)

Clare says:

With Revolut, you can hold and exchange up to 36 different currencies, and use the Revolut debit card to spend currencies around the world. Currently, supported currencies are:

AED, AUD, BGN, CAD, CHF, CLP, COP, CZK, DKK, EGP, EUR, GBP, HKD, HUF, IDR, ILS, INR, ISK, JPY, KRW, KZT, MAD, MXN, NOK, NZD, PHP, PLN, QAR, RON, RSD, SAR, SEK, SGD, THB, TRY, USD, ZAR.

That’s slightly fewer than Wise but Revolut say they’ll be adding more.

There are five levels of Revolut account with different perks attached to each. With the only free account – a Standard account – you can exchange up to £1,000 per month, Monday to Friday, with no additional fees (although fair usage limits apply). If you upgrade to a Plus account, that rises to £3,000 per month. With a Premium, Metal or Ultra account, there are no limits on what you can exchange without paying additional fees. You’ll still need to pay a bit of a mark-up on the exchange rate, but overall, what you pay at Revolut will be less than other providers.

Fees

• Standard account is free
• Plus account: £3.99 p/month
• Premium account: £7.99 p/month
• Metal account: £14.99 p/month
• Ultra account: £45.99 p/month
• Between £200 p/m and £2,000 p/m withdrawals before being charged
• Premium account: 20% discount on FX fees
• Metal account: 40% discount on FX fees
• Ultra account: No FX fees charged

This is a controversial choice as eToro’s standard FX fee is an astronomical 1.50% so clearly I’m not recommending it for that. Nor am I recommending it for having a multi-currency account… as it doesn’t offer one. You don’t have a choice what currency you hold your account in, and it’s not even GBP – you’ll be forced to hold your money in USD, which means converting to and from GBP and paying FX fees every time you deposit from and withdraw into your British bank account, and paying FX on GBP assets!

So, why on earth am I including this provider? Because, for those with more than £250k, eToro actually becomes a smart choice. Unlike the other platforms, eToro eradicates FX fees altogether once your portfolio reaches £250k.

While eToro doesn’t offer the option of a multi-currency account, if your portfolio is over the threshold of £250k, it won’t matter if the whole point of having a multi-currency account for you is to avoid the FX fees that are otherwise due when you convert to and from GBP. If you wanted a multi-currency account because you bank in more than one country, it is still a problem, and you’ll need to weigh up whether you save more by trading within a multi-currency account with a different platform, or you save more with a combination of zero FX fees at eToro and low exchange rates at a money transfer specialist, or multi-currency bank account.

There is another way to get a discount on eToro’s FX fees, and that’s by signing up for eToro Money. It’s free and simple to do, there are plenty of perks of doing so, including no FX fees on deposits – in effect, halving your costs. Without this, you’ll be paying 1.50% when you deposit GBP and have to convert it into USD, and 1.50% when you withdraw from USD back in GBP.

Fees

• 0% commission on stocks
• No management fees on ready-made portfolios
• No-fee copy-trading
• Minimum deposit: $50 (Smart Portfolios min is $500)
• Very high 1.5% FX fees at top end
• FX fees reduced with size of portfolio and eradicated at £250k
• Pricey $5 withdrawal fees

Use this if

• You want a well-designed, easy-to-use trading platform, suitable for beginners
• You have a large portfolio – especially if over £250k
• You want to copy-trade
• You’re not bothered about having a multi-currency account