The Traveling Scholar

So, I’m happy to announce that I just received my HSBC card! Yessss! I think I willed it into being since I’ve been thinking positive thoughts for 20+ days now. In any case, I have run into the issue of transferring money from my Bank of America account into my HSBC Passport account. I have deposited a large amount of money from US Loan Checks directly into my HSBC account (at a $1.61 exchange rate… only a couple of cents higher than the actual; not bad) but since that takes up to six weeks to clear, I need some cash to be thrown in there ASAP. Now, the most obvious option would be the direct wire transfer from B of A to HSBC. BofA allows account holders to wire money online now, so it makes it super easy, but they offer two plans of attack:

1) Transfer ‘x’ amount of dollars from the US into the UK and allow the UK branch to exchange the money at their exchange rate on the given day of receipt

or

2) Transfer ‘x’ amount of pounds sterling from the US into the UK account at the exchange rate provided by Bank of America on the given day (today the exchange rate is $1.589 but BofA is having me change my money at $1.668!!)

I spoke with the guy at HSBC and he said that the latter option seemed to be the most viable since (theoretically) HSBC can make the exchange rate whatever they want at the time of receipt — for example, although the exchange rate at this moment in time is $1.589, HSBC’s exchange rate might be $1.63 and Bank of America’s might be $1.61 — the $1.589 is a base but not a given… banks have the flexibility to set their own rates based on the market. For peace of mind, he said that exchanging it at a higher rate that you are sure of might be better than depositing the money and just hoping for the best! This seems like a logical idea, but BofA’s pricing is extraordinarily high. Like I mentioned — though the exchange rate is $1.589 right now, BofA is going to exchange my money at $1.668! That’s such a rip-off it’s asinine. For people that aren’t obsessive about following the rate of exchange every second of the day, this might seem okay, but I guarantee you it’s not. So, that being said — I don’t like either option. They both seem shitty to me and I feel like either way, I’m losing money that should be mine.

So here’s my shady, alternative plan of attack: Since Barclay’s and Bank of America are sister banks, I can pop into a Barclay’s branch and take out 200 GBP at the exact exchange rate at that moment in time without incurring international fees or bank transaction fees. Soooo… I might make a few runs to Barclay’s over a week or so and take the cash from Barclay’s and run it over to HSBC and deposit the cash in my account. Obviously more work than the direct transfer, but at least I’m not being charged a $45 wire fee + an exchange rate that I’m not comfortable with.

Anyone else have ideas on how to work the system?

{I’ve been looking at these pictures to calm my financial concerns — if the year is amazing then it nullifies any exchange rate/financial concerns, right?}

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I recently received the paperwork for my loans detailing the loan money I would be receiving for the coming year. The money more than sufficiently covers the “tuition + maintenance funds” criteria detailed in the UK Visa application process, so that works perfectly! The loans, however, aren’t disbursed to me, they are disbursed to the academic institution (LSE, in this case) and the extra funds that aren’t used to pay tuition are sent to me. Now, this wouldn’t irritate me quite so much if the school took the entire tuition payment up front at the beginning of the year and sent the rest over to me. Instead, the school takes disbursements: one in September, one in January and one in April and I get the extra at each given payment period. If it were a US-based institution, my only issue would be the fact that I couldn’t have all of the money up front to manage on my own (versus the school managing my disbursements), but since this is a foreign institution, I have to deal with a whole other facet: the exchange rate! As of this moment, the exchange rate is $1.649… definitely not the best, but I can deal with it. If the exchange rate goes up even more in the coming months then my money is worth even less!

I’m not entirely sure how they do it… it would seem logical to take all of the money, convert it and pull disbursements at the three given points in time (to reduce exchange rate exposure/transaction exposure), but I highly doubt it’s that efficient. In the case that they take the three disbursement at the exchange rate on the given day, I am crossing my fingers that the exchange rate will drop, like many professionals have projected. (Note: Many forex pros that I have spoken with have said that they feel the exchange rate will go down/the US dollar will strengthen, however the exchange rate has not dropped at all as of late. In fact, it has increased in the last couple of months, leading to a definitely loss of faith in my ’sources’.)

Although it’s a little irritating, I’m trying my best to not let these things bother me, since they’re not under my control. Getting upset clearly doesn’t solve anything and just puts me in a bad mood. Maybe if we collectively think happy thoughts, the exchange rate will become more favorable! We should probably start now!

Talk soon,

Alright, I’m really, really hoping that someone who is familiar with forecasting foreign exchange (at a higher level than I am) can help me out with this. I obsessively watch foreign exchange fluctuations for the US dollar versus the British pound. During February/March it was pretty favorable for Americans. Really favorable actually — around $1.37 to $1.45. The currency is extremely volatile and thusly it’s really difficult to have a good idea of any direction based on a given moment in time. I have heard from reputable sources that the dollar may decline against the pound in the fall (this was not based on a quantitative analysis, but rather an inkling based on forex knowledge). I have also read on foreign exchange sites that the pound may increase against the dollar in the short term (Q2/Q3) hitting a peak in July or August, but will ultimately decline in the fall, returning to a low of $1.35 to $1.50 (give or take). I don’t know what to believe! I would like to believe the latter only because it’s very advantageous for me, but I don’t want to believe it if it isn’t true. Does anyone have any insight into this? Do we think that the dollar is going to strengthen by the end of the year (in which case I’ll wait to change my money!) or is the US government printing money faster than the British government, thusly causing the GBP to strengthen against the USD?

A little help, anyone?