Sunday, November 1, 2009

US to India Money Transfer Strategies

Many of us go to US to earn money. The USD -> INR exchange rates make it lucrative for more and more people to go to US, to work. If we keep the hard earned dollars as dollars in US, we won't be able to appreciate the value of it. The real value of a dollar is seen, only when you transfer that to India and spend it in India. This blog post helps you to find the best strategy, to transfer money from US to India. Also, I've presented the findings of the survey that I conducted on this subject.

Aren't you curious to learn about the strategies adopted by people to transfer money to India? 

Regular Monthly Transfers - You can request your bank in India to automatically withdraw a fixed amount from your US Bank account, every month or at regular intervals. This technique is similar to Dollar Cost Averaging (DCA). Throughout my stay in US, I followed this approach & it proved to be very rewarding. I never have to "time the market" and didn't have to worry about the "conversion rates".

Timed Transfers
- Some folks keep accumulating the money in their US bank accounts and do transfers to India only when the exchange rates are at their peak levels. However, the challenge with this approach is - it is difficult to "time the market". At the least, you cannot be RIGHT, all the times. For example,

    in 2006, 1 USD = 46 INR
    in 2007, 1 USD = 39 INR,
    in 2008, 1 USD went from 41 to 49 in just few months.

Looking back, you can say we could have gotten the best conversion rates by transferring all the money during 2008. But, how do you know 'what is the real peak' & 'what is the real bottom'? When 1 USD was 39 INR in 2007, people were speculating that it may go all the way down to 36 INR. When 1 USD was 41 INR in early 2008, who knew that it would go all the way to 52 INR in 2009? This is no way different from "Timing the Stock Market". But, similar to trading stocks, if you are disciplined enough to have your own self-targets for the exchange rates (& not become greedy), you'll be able to make some good money by taking advantage of the exchange rates.

Need based Transfers
- There are a few folks who transfer the money only when there is a real need. They keep their investments in US Stocks, Bonds, Houses & at times, the money just sleeps in their US checking account. They transfer it to India only when there is a need such as buying a property, wedding, medical expenses etc., With the US FDIC providing insurance for only up to $200,000, you have to be a bit cautious if you are maintaining huge chunks of balance in your checking account.

Random Transfers - There are folks who don't transfer money to India, regularly. But they do the transfers only when they feel like moving some money to their Indian bank account. The disadvantage of this approach is, you may not be getting the best of "DCA" & also the "Timed Transfers".

I did a survey with my friends to find out

  1.     Which bank/service they use for transferring money to India?
  2.     How long does it take to transfer money from US to India?
  3.     How often the folks transfer money from US to India?
  4.     What is their money transfer strategy?
  5.     Do they like their money transfer service/bank?

(click on the image to enlarge)

The findings of the survey are given below:
  •  ICICI service is predominantly used for money transfers. Other services being used are SBIOnline, Citibank, Wells Fargo, Central Bank of India, and Fedwire.
  •  It takes anywhere from 4 hours - 10 days to do the transfer. (Fedwire can do it in 4 hours. ICICI can do it in 3 days. SBI takes 5 days)
  •  Most folks do the money transfers at regular intervals. They take advantage of DCA.
  •  12% of the surveyed folks hated ICICI's service

(click on the image to enlarge)

Additional info found during the survey: SBI Online provides one of the best exchange rates. Citi gives the best exchange rates if you are looking out to transfer more than 25K USD.

Related Posts:

The need for more money never ends
How much money do you need to return back to India 


  1. What is the benefit of doing Regular Transfers(DCA)?

  2. You don't have to "time the market" and hence don't have to worry about the ups and downs of the USD->INR "exchange rates". The exchange rates for your money transfers, would get averaged out over a period of time. So, you are minimizing the risk, significantly.

    Indirectly, you are also getting disciplined enough to save some money for the future, on a regular basis :)


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