TransferWise vs Schwab for EUR to USD recurring transfers

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Topic Author
sociableorg
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Joined: Sun Aug 02, 2015 3:08 pm

TransferWise vs Schwab for EUR to USD recurring transfers

Post by sociableorg »

Hi Bogleheads - I am trying to find the least cost (fees + exchange rate) transfer service for transferring money from EUR to USD. I had done some research a few years back (thread below) and found Schwab to be quite competitive. When I do a search on the forums here, it looks like TransferWise and IB are the top recommendations for money transfers now. Is anyone still using Schwab for transfers? I did a transfer with Schwab a few weeks ago and had asked them for a detailed breakdown of fees - have yet to hear back from them.

Any experiences with Transferwise from US citizens living in the EU? Thanks!

viewtopic.php?f=22&t=170794
Skiandswim
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by Skiandswim »

I have used both services. In the past year, I found Transferwise to be more competitive with rates and fees than Schwab. I typically select the lowest cost option and have to wait 3-4 days for transfer to execute. ( I execute transfers on on Monday or Tuesday to avoid the delay over a weekend.)

For the reverse USD to EUR, I have used Schwab at an ATM and then deposit into my local account. Schwab rate is very competitive from an ATM and fees are reimbursed.
QuantOfAsia
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by QuantOfAsia »

I've found interactive brokers to be better for FX rates and transfers than TransferWise, in my experience.
Topic Author
sociableorg
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by sociableorg »

Thanks! With IB I assume you have to sign up for a brokerage account? Do they offer just a forex transfer service? I am trying to avoid opening a new bank/brokerage account if possible (more accounts to track, trying to reduce digital footprint etc).
Topic Author
sociableorg
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by sociableorg »

Thanks for the reply. I will look into Transferwise. I am not looking to bank with Transferwise - I see they have the borderless account option where they let you park EURO or GBP before converting to USD. Do you recommend any specific option with Transferwise for simple
EUR<->USD transfers?
imperia
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by imperia »

I suggest Revolut
jjface
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by jjface »

Trasnferwise is pretty inexpensive and works well. Easy to use.

Interactive brokers is cheaper but is a bit more involved. Try out a small transfer and you should be fine after getting the hang of it. If you want it easier go with transferwise.
fujiters
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by fujiters »

QuantOfAsia wrote: Wed Aug 26, 2020 9:20 pm I've found interactive brokers to be better for FX rates and transfers than TransferWise, in my experience.
+1.

I don't understand the reluctance to open an account with IBKR (especially now that they have the IBKR Lite account, which removes fees for having less than $100k there). Wouldn't you also have another account to track by using TW too?

But you're really only incurring an additional ~0.5% cost by using TW over IBKR. If you're not dealing with large amounts it may be worth it to you to just accept the slightly higher cost for TW's ease of use.
“The purpose of the margin of safety is to render the forecast unnecessary.” -Benjamin Graham
occambogle
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by occambogle »

fujiters wrote: Thu Aug 27, 2020 1:33 am I don't understand the reluctance to open an account with IBKR (especially now that they have the IBKR Lite account, which removes fees for having less than $100k there). Wouldn't you also have another account to track by using TW too?
OP is a US citizen living in the EU. IBKR Lite account is only available for US residents. So they would have to open IBKR Pro account and either have more than 100k to avoid monthly fees or pay the $10 monthly fee. That said, I agree IB exchange rates are probably the best... you're effectively getting the actual market rate, so it could still be worth it depending on amounts involved.
Side note, if one does open a Transferwise (or other type of account), note that as a US citizen it most likely needs to be declared on your FBAR.... would be interested to hear from others on that.
Topic Author
sociableorg
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by sociableorg »

occambogle wrote: Thu Aug 27, 2020 2:39 am
fujiters wrote: Thu Aug 27, 2020 1:33 am I don't understand the reluctance to open an account with IBKR (especially now that they have the IBKR Lite account, which removes fees for having less than $100k there). Wouldn't you also have another account to track by using TW too?
OP is a US citizen living in the EU. IBKR Lite account is only available for US residents. So they would have to open IBKR Pro account and either have more than 100k to avoid monthly fees or pay the $10 monthly fee. That said, I agree IB exchange rates are probably the best... you're effectively getting the actual market rate, so it could still be worth it depending on amounts involved.
Side note, if one does open a Transferwise (or other type of account), note that as a US citizen it most likely needs to be declared on your FBAR.... would be interested to hear from others on that.
Thanks. This is what I was wondering about. I am a US citizen living ("temporarily" for the last many years, my work contract keeps getting extended) in Belgium and when I try to access the IBKR website a lot of the links don't work - likely blocked because they are US based. I can get around it using a VPN of course.

I do maintain a permanent address in the US, so I could get an IBKR lite account for US residents. So my base currency will be USD. Do I automatically get a SEPA account number? How do I transfer to this IBKR lite account from my EURO account? Sorry if this is a stupid question.
occambogle
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by occambogle »

sociableorg wrote: Thu Aug 27, 2020 3:54 am Thanks. This is what I was wondering about. I am a US citizen living ("temporarily" for the last many years, my work contract keeps getting extended) in Belgium and when I try to access the IBKR website a lot of the links don't work - likely blocked because they are US based. I can get around it using a VPN of course.
That surprises me. I am not based in the US (but not in EU either) and have no issues with the site. PS - Am US expat citizen also and while not living in Belgium, I have family and other connections there.
sociableorg wrote: Thu Aug 27, 2020 3:54 am I do maintain a permanent address in the US, so I could get an IBKR lite account for US residents. So my base currency will be USD. Do I automatically get a SEPA account number? How do I transfer to this IBKR lite account from my EURO account? Sorry if this is a stupid question.
I only use IBKR for sending money to and investing in ETFs, I haven't actually used it for Forex or withdrawing money yet, but this link mentions SEPA transfers... https://www.interactivebrokers.com/en/i ... h1&conf=am
The whole IBKR system of funding your account is a bit complicated TBH... however the rates you are getting have virtually zero spread as you're buying on the market - see below.

https://imgur.com/a/tvAkB5G

So if you just need to do one transfer that's not huge you may be better off with a simpler system like transferwise. But if you are doing regular and/or large transfers the better rates may be advantageous. At least that's my impression - as I say I have not actually had the need to do forex so far. Also note when you open your account and it asks you what products you'd like to trade (like funds, ETFs, etc) you'd need to also choose Forex.
Last edited by occambogle on Thu Aug 27, 2020 4:19 am, edited 1 time in total.
Johnfmh
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by Johnfmh »

I can’t comment of Schwab but I have been using TW for about two years now for USD to EUR and EUR to EUR transactions. I purchase EURs when exchange rates are low and keep a balance of 3-5K. I then transfer EURs when I need to from the my EUR balance to a payee. I pay .63 EUR per transfer, using this methodology. When you first setup an account for a transfer, test it with a small sum. Also, first transfers generally take a few days but subsequent transfers often take just hours, sometimes minutes. I never hold more than 5K in my TW account because it’s not FDIC insured. I would never hold more than 10K because of the FBAR issue. On the rare occasion someone pays me, there are no fees as long as I hold the EURs as EURs and don’t convert them.

The TW app works well for Android and remembers all IBANs once they are entered. The debit card is still a work in progress. It is not always accepted by merchants and ATMs. I tend to use no foreign transaction fee credit cards and my Fidelity debit for cash withdrawals while traveling in Europe (hope that happens again in 2021).
occambogle
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by occambogle »

Johnfmh wrote: Thu Aug 27, 2020 4:18 am I would never hold more than 10K because of the FBAR issue.
The 10k is across (i.e. total) of all your foreign financial accounts, not per account. You probably know that already, just pointing it out in case.

What I'd like to know (as someone who has not used them before) about TW is... if you end up doing a bunch of currencies, do you end up with multiple different account numbers for each currency and thus separate FBAR entries, or it's just one account number?
ivk5
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by ivk5 »

imperia wrote: Wed Aug 26, 2020 11:42 pm I suggest Revolut
+1

For my location and currency pair (not EUR/USD) Revolut is materially cheaper than TransferWise, though marginally more learning curve - considerably easier than IBKR from my understanding. IBKR would prob be cheaper still, but more involved, and not an option for me for unrelated reasons.
Johnfmh
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by Johnfmh »

occambogle wrote: Thu Aug 27, 2020 4:22 am
Johnfmh wrote: Thu Aug 27, 2020 4:18 am I would never hold more than 10K because of the FBAR issue.
The 10k is across (i.e. total) of all your foreign financial accounts, not per account. You probably know that already, just pointing it out in case.

What I'd like to know (as someone who has not used them before) about TW is... if you end up doing a bunch of currencies, do you end up with multiple different account numbers for each currency and thus separate FBAR entries, or it's just one account number?
I did not know that but fortunately, TW is the only foreign account I use. Thank you for pointing this out.

Currencies are kept in separate baskets. TW gives you account numbers for certain major currencies such as EUR and GBP and USD. I am not sure where minor currencies reside. Never tried transferring or holding anything but EURs and USDs. You could email their customer service. I have done so a few times and received prompt responses.

PS Bank details (ie actual account numbers) are available for the currencies of the US, Great Britain, New Zealand, Australia, Europe, and Singapore
Topic Author
sociableorg
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by sociableorg »

occambogle wrote: Thu Aug 27, 2020 4:11 am
sociableorg wrote: Thu Aug 27, 2020 3:54 am Thanks. This is what I was wondering about. I am a US citizen living ("temporarily" for the last many years, my work contract keeps getting extended) in Belgium and when I try to access the IBKR website a lot of the links don't work - likely blocked because they are US based. I can get around it using a VPN of course.
That surprises me. I am not based in the US (but not in EU either) and have no issues with the site. PS - Am US expat citizen also and while not living in Belgium, I have family and other connections there.
sociableorg wrote: Thu Aug 27, 2020 3:54 am I do maintain a permanent address in the US, so I could get an IBKR lite account for US residents. So my base currency will be USD. Do I automatically get a SEPA account number? How do I transfer to this IBKR lite account from my EURO account? Sorry if this is a stupid question.
I only use IBKR for sending money to and investing in ETFs, I haven't actually used it for Forex or withdrawing money yet, but this link mentions SEPA transfers... https://www.interactivebrokers.com/en/i ... h1&conf=am
The whole IBKR system of funding your account is a bit complicated TBH... however the rates you are getting have virtually zero spread as you're buying on the market - see below.

https://imgur.com/a/tvAkB5G

So if you just need to do one transfer that's not huge you may be better off with a simpler system like transferwise. But if you are doing regular and/or large transfers the better rates may be advantageous. At least that's my impression - as I say I have not actually had the need to do forex so far. Also note when you open your account and it asks you what products you'd like to trade (like funds, ETFs, etc) you'd need to also choose Forex.

It looks like the issue with the connection failure was just a glitch. I am able to access the IB US websites no problem
Also, seems like the EURO deposits are straight forward: From the IBR website:

Code: Select all


For EURO payments, IBKR will accept SEPA transfers. Use the button above or follow the procedure below to create a deposit notification and obtain routing instructions:

    Log in to Client Portal/Account Management
    Select Transfer & Pay followed by Transfer Funds
    Select Make a Deposit
    Choose **Euro (EUR) **as the currency
    Click How To Wire Funds next to Wire/SEPA
    Follow the remaining instructions provided to initiate the transfer with your bank.
    
Last edited by sociableorg on Thu Aug 27, 2020 6:13 am, edited 1 time in total.
Topic Author
sociableorg
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by sociableorg »

Johnfmh wrote: Thu Aug 27, 2020 4:18 am I can’t comment of Schwab but I have been using TW for about two years now for USD to EUR and EUR to EUR transactions. I purchase EURs when exchange rates are low and keep a balance of 3-5K. I then transfer EURs when I need to from the my EUR balance to a payee. I pay .63 EUR per transfer, using this methodology. When you first setup an account for a transfer, test it with a small sum. Also, first transfers generally take a few days but subsequent transfers often take just hours, sometimes minutes. I never hold more than 5K in my TW account because it’s not FDIC insured. I would never hold more than 10K because of the FBAR issue. On the rare occasion someone pays me, there are no fees as long as I hold the EURs as EURs and don’t convert them.

The TW app works well for Android and remembers all IBANs once they are entered. The debit card is still a work in progress. It is not always accepted by merchants and ATMs. I tend to use no foreign transaction fee credit cards and my Fidelity debit for cash withdrawals while traveling in Europe (hope that happens again in 2021).
This is a good point about TW not being FDIC insured. Also, I definitely don't like the ideas of yet another bank account to monitor and track on my FBAR. I usually transfer around 50K Euros over the course of a year (usually to Schwab/Vanguard US accounts), so not very high amounts. But looks like I could save a few hundred euros with IB even for the small amount (50KE) here. I am looking into IB seriously now, will report back.
Johnfmh
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by Johnfmh »

sociableorg wrote: Thu Aug 27, 2020 6:11 am This is a good point about TW not being FDIC insured. Also, I definitely don't like the ideas of yet another bank account to monitor and track on my FBAR. I usually transfer around 50K Euros over the course of a year (usually to Schwab/Vanguard US accounts), so not very high amounts. But looks like I could save a few hundred euros with IB even for the small amount (50KE) here. I am looking into IB seriously now, will report back.

I will be curious to hear about your experiences. For larger transfers, I would use Fidelity. Fidelity allows you to trade dollars for Euros when rates are favorable, and then hold a position in Euros. You can then transfer the Euros to your European bank account at your convenience. The catch with Fidelity is that I had to physically go to a Fidelity center for the first transfer to fill out paperwork. However, I could do subsequent transfers without going into the centers. TW does not require such bureaucracy (probably because of looser government regulation), and so moving dollars from a US bank account to TW is very easy—it can be done on the app. I use TW for small amounts for convenience and Fidelity for larger amounts. Before TW, I used to use Paypal but the exchange rates charged were exorbitant. TW has better rates and Fidelity, the best rates I have found.

PS I used to fill out the FBAR for a foreign account. It was no big deal. I did it online every year.
hunoraut
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by hunoraut »

I do this transfer multiple times a year, for many years now, for sums of $xK and $xxK

Each time, the net money received goes: Schwab >> Revolut >> Transferwise

Sometimes I go in the reverse direction, Schwab outbound to Europe, sent from Schwab as EUR.

Conversion: I always let Schwab do the conversion rather than the (local) counterparty bank. I trust their rates and it proves better.

Fees: Schwab charges $25 to send wires, nothing to receive. My local bank charges ~$35 to send, nothing to receive.
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Tourne
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by Tourne »

A bit tangential to your original question, but I have seen several posters cautious about using a transfer service (TW or Revolut) to make a direct transfer into a Schwab investment account. Schwab has informed all clients that any EU-based investors (regardless of whether you are temporary or not) are not allowed to invest in US ETFs because US ETFs do not meet EU regulations (no Key Investment Information Documents - KIIDs). Vanguard is even more stringent in not permitting investments from overseas (from the EU or otherwise). So while an EU-based person might use a VPN to connect to the Schwab or Vanguard website, another way the brokerage might know the person is not US-based is by seeing regular transfers from a money transfer service like TW or Revolut. Those trying to avoid having their brokerage accounts frozen first make a transfer to a US bank account, and then an onward to their Schwab or Vanguard account.
Plans are nothing; planning is everything - Dwight D. Eisenhower
palanzo
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by palanzo »

hunoraut wrote: Mon Aug 31, 2020 4:27 am I do this transfer multiple times a year, for many years now, for sums of $xK and $xxK

Each time, the net money received goes: Schwab >> Revolut >> Transferwise

Sometimes I go in the reverse direction, Schwab outbound to Europe, sent from Schwab as EUR.

Conversion: I always let Schwab do the conversion rather than the (local) counterparty bank. I trust their rates and it proves better.

Fees: Schwab charges $25 to send wires, nothing to receive. My local bank charges ~$35 to send, nothing to receive.
Surprised you use Revolut. A lot of bad press about that company.
hunoraut
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by hunoraut »

palanzo wrote: Mon Aug 31, 2020 2:41 pm Surprised you use Revolut. A lot of bad press about that company.
The short answer is that I didn't read any bad press, and it's not my primary account.

The long answer is that it was the least bad of the new age digital banks (N24, Monza, Starling, Transferwise). I considered press, trustpilot, their reviews as employers on glassdoor, track record of founders and board members, etc.

Most of the unhappy reviews are common to all these banks, having to do with account freezes and closures. They related to "sketchy" account provenances, activities, incomplete authentications and verifications. Not entirely unpredictable. But also not applicable to my situation.

Theirs and Transferwise's app are truly modern and full featured. Revolut, more so than xwise. They provide FX previews in real time. (Which, again, Schwab beats with 100 basis points or more, net of fees)

I keep a small balance in there for use as small debit purchases outside EUR zone. In EUR zone I use my traditional EUR bank. For big purchases of all curre cies I use US credit cards (the points rewards outweighs the FX hit) It's just that these pin and sign cards aren't convenient in some places.
sean.mcgrath
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by sean.mcgrath »

sociableorg wrote: Thu Aug 27, 2020 3:54 am
Thanks. This is what I was wondering about. I am a US citizen living ("temporarily" for the last many years, my work contract keeps getting extended) in Belgium and when I try to access the IBKR website a lot of the links don't work - likely blocked because they are US based. I can get around it using a VPN of course.

I do maintain a permanent address in the US, so I could get an IBKR lite account for US residents. So my base currency will be USD. Do I automatically get a SEPA account number? How do I transfer to this IBKR lite account from my EURO account? Sorry if this is a stupid question.
I access the IB website from NL, and never have pages getting blocked.

For IB, I transfer to a bank in Germany which transfers to my bank in the US, and there are no bank fees involved on either side. Not the most beautiful UI, but it works very well.
Topic Author
sociableorg
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by sociableorg »

So here are my findings with transferring 1000 Euros to USD. I compare Schwab vs Transferwise here:
  • Both transfers were initiated at exactly the same time on a Monday morning (Europe time)
  • Source bank here is a SEPA accredited European bank; I have my Euro checking account with this Europe based bank
  • Destination bank is Schwab US (I have a checking account and a brokerage account)
Schwab:
  • Transfer was initiated from a European bank with wire instructions per Schwab - to a German based Schwab SEPA account "with future credit to <Schwab brokerage US account>
  • Transfer was super fast; Received in my US brokerage account in less than 12 hours
  • Total amount received in USD was 1189.55
  • I have no details on the exchange rate, forex fees etc. (I had asked Schwab before but got a rather vague reply about them using spot rates)
Transferwise(TW):
  • Transfer was initiated from TW website; I chose the "low cost transfer" option - initiate transfer directly from my European bank to a bank in Estonia with a provided reference number
  • Transfer was fast, but it took a bit more than one day for the transfer to show in my Schwab checking account (~30 hours)
  • Total amount received in USD was 1,184.58
  • Fee: 5.14 EUR Exchange rate EUR->USD 1.19070
IB:
  • I had originally intended to open an IB account to save some money on forex fees, but given that I have way too many brokerage accounts (Schwab, Fidelity, TD), I decided against opening yet another account
So it looks like Schwab came out slightly ahead, at least for the small transfer here. I believe Schwab will come out ahead overall given that they claim not to charge any forex fees (not confirmed).
Topic Author
sociableorg
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by sociableorg »

Tourne wrote: Mon Aug 31, 2020 1:28 pm A bit tangential to your original question, but I have seen several posters cautious about using a transfer service (TW or Revolut) to make a direct transfer into a Schwab investment account. Schwab has informed all clients that any EU-based investors (regardless of whether you are temporary or not) are not allowed to invest in US ETFs because US ETFs do not meet EU regulations (no Key Investment Information Documents - KIIDs). Vanguard is even more stringent in not permitting investments from overseas (from the EU or otherwise). So while an EU-based person might use a VPN to connect to the Schwab or Vanguard website, another way the brokerage might know the person is not US-based is by seeing regular transfers from a money transfer service like TW or Revolut. Those trying to avoid having their brokerage accounts frozen first make a transfer to a US bank account, and then an onward to their Schwab or Vanguard account.
This is an interesting point. I maintain permanent residences both in the US and in Europe. As as US citizen, I wonder how they qualify "EU-based investors". I have definitely heard of Vanguard not allowing expats to open accounts (i.e. opening new accounts from overseas). Good to know that Schwab might have similar policies. My experience so far with Schwab has been great (knock on wood).
900
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by 900 »

TransferWise was cheap but they increased their fees 2-3 times in the past years. If you're looking for the cheapest exchange rates then you should definitely use IB.
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sociableorg
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by sociableorg »

911 wrote: Tue Sep 01, 2020 8:49 am TransferWise was cheap but they increased their fees 2-3 times in the past years. If you're looking for the cheapest exchange rates then you should definitely use IB.
Thanks. Yes, looks like I might even just stick with Schwab. Although comments above about Schwab locking out brokerage accounts is quite concerning.
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Tourne
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by Tourne »

sociableorg wrote: Tue Sep 01, 2020 8:08 am
Tourne wrote: Mon Aug 31, 2020 1:28 pm A bit tangential to your original question, but I have seen several posters cautious about using a transfer service (TW or Revolut) to make a direct transfer into a Schwab investment account. Schwab has informed all clients that any EU-based investors (regardless of whether you are temporary or not) are not allowed to invest in US ETFs because US ETFs do not meet EU regulations (no Key Investment Information Documents - KIIDs). Vanguard is even more stringent in not permitting investments from overseas (from the EU or otherwise). So while an EU-based person might use a VPN to connect to the Schwab or Vanguard website, another way the brokerage might know the person is not US-based is by seeing regular transfers from a money transfer service like TW or Revolut. Those trying to avoid having their brokerage accounts frozen first make a transfer to a US bank account, and then an onward to their Schwab or Vanguard account.
This is an interesting point. I maintain permanent residences both in the US and in Europe. As as US citizen, I wonder how they qualify "EU-based investors". I have definitely heard of Vanguard not allowing expats to open accounts (i.e. opening new accounts from overseas). Good to know that Schwab might have similar policies. My experience so far with Schwab has been great (knock on wood).
Here is the discussion ( viewtopic.php?f=22&t=288175) from the board last autumn when Schwab sent the email out. Up to that point Schwab had been quite good about working with EU-based US expats. As of 19 September 2019 no one with an EU address on their account was able to purchase US ETFs. There are workarounds, and I haven't heard about Schwab liquidating and closing accounts (I have seen some posters say that Vanguard has done this to them!), but it is important enough that a bit of caution might be in order.
Plans are nothing; planning is everything - Dwight D. Eisenhower
Topic Author
sociableorg
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by sociableorg »

Tourne wrote: Tue Sep 01, 2020 10:23 am
sociableorg wrote: Tue Sep 01, 2020 8:08 am
Tourne wrote: Mon Aug 31, 2020 1:28 pm A bit tangential to your original question, but I have seen several posters cautious about using a transfer service (TW or Revolut) to make a direct transfer into a Schwab investment account. Schwab has informed all clients that any EU-based investors (regardless of whether you are temporary or not) are not allowed to invest in US ETFs because US ETFs do not meet EU regulations (no Key Investment Information Documents - KIIDs). Vanguard is even more stringent in not permitting investments from overseas (from the EU or otherwise). So while an EU-based person might use a VPN to connect to the Schwab or Vanguard website, another way the brokerage might know the person is not US-based is by seeing regular transfers from a money transfer service like TW or Revolut. Those trying to avoid having their brokerage accounts frozen first make a transfer to a US bank account, and then an onward to their Schwab or Vanguard account.
This is an interesting point. I maintain permanent residences both in the US and in Europe. As as US citizen, I wonder how they qualify "EU-based investors". I have definitely heard of Vanguard not allowing expats to open accounts (i.e. opening new accounts from overseas). Good to know that Schwab might have similar policies. My experience so far with Schwab has been great (knock on wood).
Here is the discussion ( viewtopic.php?f=22&t=288175) from the board last autumn when Schwab sent the email out. Up to that point Schwab had been quite good about working with EU-based US expats. As of 19 September 2019 no one with an EU address on their account was able to purchase US ETFs. There are workarounds, and I haven't heard about Schwab liquidating and closing accounts (I have seen some posters say that Vanguard has done this to them!), but it is important enough that a bit of caution might be in order.
Yes, I think this is an issue for folks who don't maintain a home in the US - so called "digital nomads" (I might be wrong here). I spend time both in the US and the EU, so all my US accounts are linked to my US mailing address (permanent address in the US).
Topic Author
sociableorg
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by sociableorg »

sean.mcgrath wrote: Mon Aug 31, 2020 4:12 pm
sociableorg wrote: Thu Aug 27, 2020 3:54 am
Thanks. This is what I was wondering about. I am a US citizen living ("temporarily" for the last many years, my work contract keeps getting extended) in Belgium and when I try to access the IBKR website a lot of the links don't work - likely blocked because they are US based. I can get around it using a VPN of course.

I do maintain a permanent address in the US, so I could get an IBKR lite account for US residents. So my base currency will be USD. Do I automatically get a SEPA account number? How do I transfer to this IBKR lite account from my EURO account? Sorry if this is a stupid question.
I access the IB website from NL, and never have pages getting blocked.

For IB, I transfer to a bank in Germany which transfers to my bank in the US, and there are no bank fees involved on either side. Not the most beautiful UI, but it works very well.
I debated about opening an account with IB and finally went ahead after reading posts here about Schwab potentially flagging accounts with too many forex incoming transfers. I will use IBKR-lite account only for EUR->USD transfers, and then move the USD to Schwab/Vanguard accounts. Since I have a US address, I opened a IBKR-lite account in USD. The only tricky bit was the employer address. I provided the address for my employer in the US (last place where I worked with my current company in the US).

My base currency at IBRK-lite is USD. So if I make a wire
transfer from my EURO SEPA account into this IBRK-lite USD account, I assume the money will show up in USD? So need to mess with forex/currency trades etc, right? Thanks
Topic Author
sociableorg
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by sociableorg »

Answering my own question on IBKR currency conversion:
  • On the web portal, under "Order Ticket" there is a 'Convert Currency" option (apparently this is relatively new and easy option - forex conversion used to be a bit more complex before)
  • Seems pretty straightforward. I have initiated a EUR SEPA transfer (via the provided Frankfurt/Citi account) into my IBKR-lite account
  • Will report back once the EUR amount arrives in my account and I can do the conversion to USD to check on the transfer rates (but as confirmed by several members here, I assume my conversion rate will be stellar i.e. without fees)
Topic Author
sociableorg
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by sociableorg »

A short review on IBKR-lite after one day of use:
  • Used only for currency conversion (EUR-USD)
  • Transfer from SEPA Euro account to IBKR US based account via the Citi/German account was very fast (less than 12h) - shows up as Euros deposit and balance shows in Euros
  • Extra step needed to convert from Euro->USD (see earlier post)
  • Exchange rate is almost the spot rate with a $2.50 commission - looking at the figures I think Schwab might come out better for the small 1K Euros I transferred
  • There is a 3-business day hold on the transferred funds i.e. cannot transfer out using ACH to other US banks; I assume the money is available for trading inside the IB account
Other general comments
  • The user interface and general experience with the app has been “meh” - I see intermittent connectivity issues with / without VPNs. Not the most user friendly interface, took a bit of time to understand
  • Integration with 3rd party software like Quicken does not seem to be great - I have a ticket open with IB now because I could not get direct connect to work
  • One withdrawal to any bank per month is free. Any more withdrawals is a dollar per transaction
If not for the “potential” issue where Schwab “may” target US expat account holders, Schwab US is the painless and cost effective way to currency exchange in my view. IB is a nice backup plan.
AlohaJoe
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by AlohaJoe »

911 wrote: Tue Sep 01, 2020 8:49 am TransferWise was cheap but they increased their fees 2-3 times in the past years. If you're looking for the cheapest exchange rates then you should definitely use IB.
Yeah, I had used Transferwise in the distant past when they were better than fx/xe.com. However, a year or two back I again needed to start doing regular forex transfers and was somewhat shocked to learn that my boring, backwards, in-country, local brick & mortar bank gave better overall rates than Transferwise and that was without even needing a special relationship or calling sometime up and pleading for better than rack rates.
rchmx1
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by rchmx1 »

I just recently opened an IBKR account, was using TW for all my conversions (MX expat). I think I'll try using IKBR for at least part of this month's transfer. To make sure I understand the process, say I have USD in the account. Using the Convert Currency tab, I'd purchase an amount of Pesos which would be deposited into my IBKR account. Then, using the Withdraw tab, I'd withdraw the Pesos into my Mexican bank account? But you only get one free withdraw a month? Seems like a pretty straightforward process, and even though these transfers are typically quite small, it'll be nice saving a couple bucks vs TW.
slinky$
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by slinky$ »

When Schwab is mentioned here, does that mean sending or wiring your local currency to your existing Schwab checking or investment account, which Schwab then automatically converts to USD?

I have been using Transferwise and think I've been paying too much :shock:
hunoraut
Posts: 111
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by hunoraut »

slinky$ wrote: Fri Sep 25, 2020 4:32 pm When Schwab is mentioned here, does that mean sending or wiring your local currency to your existing Schwab checking or investment account, which Schwab then automatically converts to USD?

I have been using Transferwise and think I've been paying too much :shock:
You can do both

But generally rates are more favorable when conversion is done at Schwab's end
fujiters
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Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by fujiters »

rchmx1 wrote: Tue Sep 15, 2020 12:47 pm I just recently opened an IBKR account, was using TW for all my conversions (MX expat). I think I'll try using IKBR for at least part of this month's transfer. To make sure I understand the process, say I have USD in the account. Using the Convert Currency tab, I'd purchase an amount of Pesos which would be deposited into my IBKR account. Then, using the Withdraw tab, I'd withdraw the Pesos into my Mexican bank account? But you only get one free withdraw a month? Seems like a pretty straightforward process, and even though these transfers are typically quite small, it'll be nice saving a couple bucks vs TW.
This is approximately the process I follow to transfer into UK/EU bank accounts (I use limit orders to do my FX transactions instead of using the convert currency tab). No problems this far.
“The purpose of the margin of safety is to render the forecast unnecessary.” -Benjamin Graham
rchmx1
Posts: 72
Joined: Sat Oct 26, 2019 6:38 pm

Re: TransferWise vs Schwab for EUR to USD recurring transfers

Post by rchmx1 »

fujiters wrote: Sat Sep 26, 2020 2:29 am
rchmx1 wrote: Tue Sep 15, 2020 12:47 pm I just recently opened an IBKR account, was using TW for all my conversions (MX expat). I think I'll try using IKBR for at least part of this month's transfer. To make sure I understand the process, say I have USD in the account. Using the Convert Currency tab, I'd purchase an amount of Pesos which would be deposited into my IBKR account. Then, using the Withdraw tab, I'd withdraw the Pesos into my Mexican bank account? But you only get one free withdraw a month? Seems like a pretty straightforward process, and even though these transfers are typically quite small, it'll be nice saving a couple bucks vs TW.
This is approximately the process I follow to transfer into UK/EU bank accounts (I use limit orders to do my FX transactions instead of using the convert currency tab). No problems this far.
Thanks, I appreciate the response. It's nice having a clear idea of how it works before trying it out the first time. :beer
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