Not all UK bank transfers are free; find out when you'll likely be charged...
Bank transfers have long formed the backbone of personal and business banking, offering a reliable and uncomplicated way of moving money. However, not all of these transfers are free, and being aware of any associated fees can help you make smarter financial decisions.
From domestic transactions to international remittances, the charges can vary greatly depending on the type and size of the transfer. Here, I explain some of the most common bank transfer payments and whether they incur any fee.
Domestic Payments Are Usually Free
In most cases, domestic transfers generally don't bear a charge for individual customers. This means you can often send money from your UK account to other UK recipients at no charge. Just setup a transaction as normal and it will be confirmed to be free if eligible.
You don’t need to use the same institution to benefit from this either. For example, it doesn’t matter if you bank with NatWest and the recipient is with Barclays; the bank transfer will still be free if you are eligible.
In most cases, the money will be sent in real-time thanks to the Faster Payments Service. This means the money will be received almost immediately after it’s sent. For splitting the restaurant bill or paying the rent, it's considered the go-to option.
Do Businesses Charge for Bank Transfers?
For UK businesses and services, this may be slightly different. That’s because some companies charge service fees when facilitating payments through bank transfers. This is often done to help cover the cost of using a third party to process large volumes of these payments, especially if this option is widely used.
However, bank transfers in general are one of the cheapest ways to send money within the UK, even for businesses. So many organisations these days do not add additional charges to consumers when paying this way, unlike with other payment options.
A good example is with online gambling. According to banktransfercasino.co.uk, the leading resource for depositing at UK casinos with bank transfer, it’s rare to find sites that charge a fee for these payments. This means casino players always have the full amount ready to play with, whereas other methods may shave a small percentage off as their cut.
Online shopping is usually the same. Many merchants allow customers to pay just by logging into their online banking account, either via an app or their computer. There are no extra costs attached so you only pay the amount you expected to when checking out.
As paying via bank transfer is really picking up with UK consumers, I expect fee-free payments to companies and businesses to be rolled out pretty much everywhere, so you never have to worry about hidden extras.
Are There Fees for Large Amounts?
If you’re transferring a substantial sum, typically £10,000 or more, then you might encounter additional fees. Large amounts within the UK are often processed through the CHAPS (Clearing House Automated Payment System) network. This is designed to handle high-value transactions but it comes with a cost.
According to gocardless.com, an expert resource on all types of banking payments in the UK, the fees for CHAPS transactions usually range between £25 and £30 but this depends on the bank you’re using. These fees cover the secure and expedited handling of the transaction, making CHAPS particularly useful for time-sensitive payments, such as property purchases or major business settlements.
For everyday transfers, most people avoid CHAPS charges by simply using other networks such as Faster Payments, which are free and adequate for sums below the daily transfer limit set by most banks.
International Transfer Fees Vary
When it comes to sending money abroad, the fees greatly vary depending on the destination and the bank used. Traditional banks in the UK often charge a considerable fee to send money internationally, adding administrative costs and exchange-rate margins. These fees come in the form of either a flat rate, a percentage of the amount of money transferred, or a combination of both.
In addition to the upfront transfer fee, there are often hidden costs around currency conversion. Most banks have a markup on the exchange rate, so international transfers are often a lot more expensive than they first appear.
It's for this reason that many individuals and businesses look for alternatives, including myself. One of the best options is to use Wise, formerly called TransferWise, as it offers low, transparent fees and real exchange rates. You can find out more in my guide on sending money abroad.
Conclusion
Bank transfers within the UK provide a convenient and widely accessible method for sending and receiving cash. In most cases, no fees will be charged as the vast majority of transfers are done domestically between two UK accounts and with nominal amounts. However, keep in mind that charges can be added in cases of high-value payments, international transactions, or occasionally business.
The more informed you are about these fees, the smarter financial decisions you can make. This will allow you to cut unnecessary expenses, keeping more money in your pocket and away from banks and other financial institutions unnecessarily.