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8 Silly Mistakes to Avoid When Sending Money Online

8 Silly Mistakes to Avoid When Sending Money Online

Ever Make Mistakes Sending Money Online? Welcome to the club! Here Are 8 Silly Money Mistakes People Make When Sending Money Online8 

Sending money online is easier than ever these days, especially when you consider the availability of money transfer services and third-party wallet accounts. An increase in the use of transfer companies has led to people making common mistakes when sending money online, so here we cover a few of the most common mistakes and offer possible solutions so that you do not repeat your mistakes.

What Do I Mean By Third-Party And Transfer Accounts

When referring to transfer accounts and transfer companies, I am referring to online accounts that transfer money without storing it. For example, Transferwise allows you to create online money transfers, but it was not designed for holding money. However, PayPal allows you to transfer money, but it is also built so that you may store money too. PayPal is the type of account I am writing about when I mention third-party services or third-party accounts.

Sending Money Abroad Through Your Bank (Using Bank Currency Conversion)

Unless you have a special currency conversion account with a bank or a special deal, it’s almost always a bad deal to convert your currency through your bank while doing a Wire transfer. Your bank won’t give you the best rate.

For small sums of money, the convenience of using your bank to convert your currency when wiring money abroad (either through your bank or through the receiving bank), but you’ll always pay a price. You won’t be getting the inter-bank or mid-market rate, but something much worse. You’ll likely pay 2-4 percent on top. For larger sums of money, this can add up.

We recommend using a service such as Transferwise or CurrencyFair to get a MUCH MUCH better exchange rate.

 

Transferwise Currency Conversion

Want to send money abroad or convert currency? We recommend using Transferwise to get the best rates. Use the Transferwise calculator below to see what your exact conversion is

 

Using Personal Accounts For Business Uses

Set up an account with a third-party money service or a transfer service and the usual default is a personal account. These are used for sending money to friends and colleagues. If you start using such accounts for sending money to business associates, contractors, freelancers and so forth, then most transfer and money services ask that you sign up for a business account.

Some companies will charge you extra for a business account, where others will simply offer you more services and different transfer and transaction fees. Using a personal account for business purposes may break the terms set out by the transfer/third-party service, and the IRS prefers that you keep your business and personal transactions separate. Don’t make these sorts of mistakes when sending money online because the transfer companies, third-party money companies, and the IRS will not appreciate it.

 Avoid These Mistakes When Sending Money Online

You can either set up two accounts; one for personal and one for business, or you can inform the money company that you are using your account for business purposes and then sign up for their business services. Some money companies will charge subscription fees, so be ready to add those costs into your budget.

Trying To Hide Overseas Income

Hiding money under leaves

If you are getting currency from overseas and it is classified as income, then your tax return will become more difficult to fill out, and you may have to pay extra taxes. In order to avoid this, some people will have foreign currency transferred into a third-party account, convert it, and then either withdraw or transfer it.

Avoid These Mistakes When Sending Money Online

You are free to do this if you wish, but there is a chance you will be in trouble with the IRS if they discover that you are receiving currency from abroad. When the IRS looks at your bank statement, they will see your currency (US dollars) entering your account from your third party service. However, if they dig deep and take a look at your third party account, they will see that you have been receiving money from overseas–and they may decide to punish you for not declaring it. If you want to avoid any chance of getting in trouble, then declare your overseas income on your tax return.

Using A Credit Card Rather Than A Debit Card

Pile of Credit Cards

Some online money accounts will allow you to either fund your account with a credit card and/or will allow you to transfer money by linking a credit card. It is more common with third-party services that also allow you to buy things. However, unless your transfer is signaled as a purchase, it is likely to be regarded as a cash advance.

Almost all credit cards charge a fee for anything that is or appears to be a cash advance. In addition to that, your credit card may charge a further usage fee, and the transfer company itself may have its own share of fees for using a credit card to fund your account or to fund your transfer.

 Avoid These Mistakes When Sending Money Online

Only use a credit card to fund your account if you absolutely have to, and take into account the cash advance fee, the fee the transfer company will add, the additional fees your credit card company will add, and the possibility of a higher interest rate on the money you use. If the transfer company charges extra for using a credit card, then transfer the money from your credit card to your checking/debit account and that way, you will at least save yourself from the extra transfer company fee.

Funding The Account Or Linking The Account With A Savings Account

The reason some people link their transfer accounts or third-party accounts with their savings account is actually rather clever. Let’s say that you have to make four transfers to your kids in college per year. You slowly build up your cash each quarter by adding it to your savings account, and then you send part of it when the sending date is due. However, you don’t want to see your money sitting around doing nothing, so you keep it in your savings account and link your transfer account to your savings.

It makes sense in theory, but the legal definition of a savings account in the US is in part based on how many convenient withdrawals are made every month. If a savings account has more than six withdrawals per month, then it cannot be defined as a savings account. If you send money online more than six times per month, then you shouldn’t link your transfer or third-party money account to your savings account.

Avoid These Mistakes When Sending Money Online

Make a point of linking your debit/checking account to your transfer account. If you are spending your savings, then take a few seconds to transfer your money from your savings account to your checking account. It is usually better to do that anyway just to check that you have enough funds available in order to send your money online.

Not Double Checking The Details

Steps to checking with 3 ticks

People who do not send money online very often are probably the most prone to making mistakes when sending money online. Generally, it is good common sense to check and double check your details before you send any money. It is a good idea to double check because you do not want to lose the money. In addition, if you send the money incorrectly and/or you do not check, then it may cause trouble with the person you wish to send the money to.

You should also double check the details you send to other people. You may think you are above such a rookie mistake, especially if you are using an online third-party account where all you need is an email address, but other forms of online transfer are not so simple. For example, if you are sending money overseas, a bank will ask for account numbers that are long and complex. A simple character or number mistake can mess up your entire transfer.

 Avoid These Mistakes When Sending Money Online

Your first step is to confirm the details with the person you wish to send the money to. If you are using bank transfers or money-account transfers, then try not to write and receive account numbers digitally. It is often better to take them over the phone, or better still, take them down in person. Putting such numbers in digital form gives a hacker a slightly better chance of getting a hold of them. Once you have confirmed the details, you need to carefully enter the account details into your transfer system. Check and double check to be sure before you send. Consider sending smaller amounts at first to test your account and your accuracy before you send larger amounts.

Not Checking When You Send Money Regularly

Failure to double-check the details you enter is a rookie mistake. One of the few veteran-level mistakes when sending money online is to assume your numbers are correct. A common example is when people are paying bills. You may have been paying the same account number for your landline phone and Internet for years. The details have never changed, so why bother checking…right? Wrong! There are some companies that will change their bank details, payment details, and customer reference details on an almost annual basis.

For example, if you have bills that are generated every year, such as if you have to pay your water bill in eight monthly installments to cover all 12 months, then you may receive a new reference number each time your newest bill is generated.

Another is example stems from the bank wars that started out in Switzerland and emigrated to places like the Emirates, Belize, Panama, Vanuatu and even parts of the US. Banks approach large companies on a yearly basis in attempts to steal their custom from other banks, and some banks succeed. That means the payment details of the company may have changed, and if you simply execute your transactions without checking first, then you are going to lose money.

Avoid These Mistakes When Sending Money Online

Steps to checking with 3 ticks

Avoid the temptation to be lazy about the payment process. Laziness is the only reason why you would make such silly mistakes when sending money online. It may be a hassle and a pain, but it is only a few seconds out of your day, which is a drop in the ocean compared to what happens if you send your money to the wrong account and/or do not attach the correct reference information.

Assuming The Recipients Details

In an age where people are able to send money online by simply entering a phone number of email address, it is hardly surprising that some people make mistakes when sending money online. A common one is to assume that a person’s personal email address is the same as the one they have linked to their bank and transfer accounts.

Many people set up their transfer, banking, and third-party money accounts with a different email address to the one they use for correspondence. There are many reasons for this in both civilian life, and especially in the business world where it doesn’t pay to show everybody the email address that is linked to your financial accounts.

Avoid These Mistakes When Sending Money Online

Actually ask people what their payment details are. If they are using third-party money account, such as PayPal and Google Wallet, then ask for their payment email. If you send it to their correspondence email or the email you have for them, then there is a good chance the money will send, but the recipient may not be able to pick it up. This is especially true with online accounts that both store and transfer money, over the accounts that transfer without storing. It is quite possible to send money via PayPal to a random email address that you made up and it will sit in your PayPal transfer history as sent but unclaimed.

Sending The Same Payment Twice

There are plenty of people who lose money because they send the same payment twice. We all make mistakes and we are all forgetful at times, so it is hardly surprising that people make simple mistakes such as this one.

Some accounts and online transfer companies will tell you if you make a duplicate transfer request. For example, if you try to send money online with a HSBC account and you try to send the same amount again within 24 hours, then the system will tell you that have already sent that amount and will ask you to re-confirm your transfer.

 Avoid These Mistakes When Sending Money Online

Save yourself from making these types of mistakes when sending money online by double checking your records before you send money. As a point of due diligence, you should probably check your payment and transfer records as a general rule anyway. The key is to check before you send, which is often easy because most online accounts allow you to pull up your transfer history very quickly.

Conclusion – Experience Is Your Best Teacher

experience

The silly mistakes that people make when transferring and sending money online are often eliminated with experience. Use what you have read to avoid silly mistakes in the near future, and allow experience to be your guide going forwards.

About The Author

Ash The Great

After a varied career in different industries from the hospitality industry to the financial consultancy industry, Ash now spends his days working as a professional writer.

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