Currency conversion

[bongo2]

I have about 40,000 british pounds in a brokerage account and I'm trying to figure out the best / cheapest way to convert that to US dollars. Calling my current broker and bank it looks like I could pay a fee of around 1% (in one case), or I can pay a spread, which also turns out to be around 1% in the other. There must be a cheaper way. Any advice?

[hogtied]

I've used HSBC to buy sterling to make voluntary class 3 National insurance contributions from the States. I've found them to be the most economical since they are based in London. However that being said I have not found a cheap way to do it. HSBC rates are approximately $0.08 per pound to go either way. That is above the currency rate you will find in the WSJ. They also tack on a flat fee of $25.
Thomas Cook costs more.

[Peter]

Not sure if your brokerage account offers wire transfer facilities, but if it does, you might want to look into http://www.xe.com/

I've used them for several transactions, reliable and also decent rates.

I will say, though, that for large transfers I've found that the banks offer a pretty good deal. You have to phone them up and ask for the commercial wholesale rate. This applies in either direction. So if you have a UK bank account that might be another way to go.

Peter

[eridanus]

Interactive Brokers has a very small spread on currency pairs. Currently, it's at

GBP-USD Bid 1.97145 Ask 1.97150

They also charge a fee of .2 BP with a minimum of $2.50.

[bongo2]

Interactive Brokers appears to blow everyone else out of the water with a spread of about 0.01%. If I was going to do this a lot I'd have to go there. For this one trade, though, it looks to be very complicated to set up a new account, and quite a few fees to close it again, so I will probably just pay. Even xe.com, which is quite a bit lower than others, has a >1% spread at this trade size. I don't understand how I can trade Intel with a 0.05% spread, but two of the worlds biggest currencies have a spread at least 10 times that almost everywhere you look!

Thanks for the infomration all. I'm surprized more ex-pat RE's haven't found a cheap way to do this.