Interactive Brokers steps to convert and send money from USA

This could be attributed to my not RTFM, but for the benefit for all the others that do not RTFM… I got hit with negative interest charges because I simply tried to replicate some suggestions from the forum without actually reading through the docs more thoroughly - which I would recommend all of you do before using IBKR, as things seem to change frequently with this information.

Learning 1: Interactive Brokers always has a withdrawal hold period for your money
Learning 2: Interactive Brokers has negative interest rates for assets held in EUR of any amount > 50K EUR

Therefore, here is what needs to be done to avoid fees and interest:

Step 1:
Wire 450K USD (or whatever you need to move to Portugal) into IB account - no need to split this up as there is no negative interest for any amount in USD. This also helps because it starts the 3 day withdrawal hold clock on the entire 450K from day 1.
If you choose to ACH your money, the hold period below is 4 days, but could also be 44 days (unclear from docs as it says it is 44 days if you ACH it out to a bank different from the one it came from - not sure if SEPA transfer has the same limitation). Also, ACH has to be done in 100K chunks every 7 days.
https://www.interactivebrokers.com/en/index.php?f=46385

Step 2: VERY IMPORTANT:
Wait 3 business days if wired, or 4 (or 44?) business days if ACH (there is a hold on that money even if the money is available to trade) - the hold means even though you can trade with it, you cannot move the money out of IB for 3 days - so DO NOT convert it to EUR before the 3 day hold period is done
https://www.interactivebrokers.com/en/index.php?f=1544

Step 3:
Convert the whole amount into Euros (or in smaller chunks if you want to rate average across days).

Step 4:
Transfer whatever is converted via SEPA to your bank in Portugal immediately. It will only get there 3-4 days later, due to 2 days of your currency trade settlement time and 1 day of SEPA. However, there will be no negative interest charge for that time.

Some of the prior posts tell you to:

Move in 100K chunks of USD, convert and move - that due to this hold period issue would take two weeks to move about 400K. Also, if you convert as soon as the money arrives, you will pay interest for 3 days till you can move it out (unfortunately, I speak from experience here). Most importantly, at some point the limits may have been 100K - but now there is negative interest from 50K on.

So move all the USD there, cure it for 3 days, then convert upto the entire amount and move the EUR out in one day, and repeat if you did not convert the whole amount to get a different rate the next day.

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Thank you for taking the time to write this in detail. This is quite a laborious way to move money with arcane rules.

I am glad I did not take this route which I was very much considering and would have pretty much resulted in the expiry of my background clearances and delaying the whole process. The whole point of this method was to save some fees and exchange rate but this would have resulted in more bills in another form.

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I hear you - that is what I thought as well. However, I have since sent money using multiple banks and Wise and OFX, which I will summarize in a separate thread when I have all of them resolved one way or another, but compared to most other methods, believe it or not, this is actually much simpler and more predictable. Also Bison Bank rate was substantially worse than what I was getting at IBKR. Hence my using this method. If your bank has better international wiring ability, you may end up finding that is a much simpler way of doing it, even if you spend a little more for the transfer.

I used IBKR for the conversion and SEPA transfer with only one minor issue. The OP is correct to be aware of the hold period, but that really is only a concern with ACH transfer into IBKR. If you wire in your funds in, it really isn’t an issue.

Also, people seem to be overly concerned about the negative interest rate. It’s only 0.5% apr and only applies over 50k. So even if you have the full EUR 350k in your account, it’s only 4 EUR/day. Sure you don’t want to have it sitting there for months, but a week or two is still less than a wire transfer fee.

The only issue I had was IBKR didn’t want to let me SEPA transfer out to an account that I had not received any funds from before. To solve that issue, used my Wise account and transfered a couple thousand EUR into my Bison account using that, and then sent 100 from Bison to IBKR using SEPA. After that, my accounts were linked and I could transfer from IBKR to Bison via SEPA. I was able to transfer the whole 350k amount in one transaction. There was a message that said because of the amount they had to review the transaction but I didn’t have to do anything and it processed in less than 24 hours.

I can attest to the fact that this is definitely not true. I did wire my funds in and I am unable to transfer it out, and I have been repeatedly told by customer service, that my funds are not available to be moved out for 3 business days (and it is further corroborated in the link above from their website).

BTW, you may be thinking of funds availability vs the withdrawal hold period (those are two different “hold” periods). Wire funds are available immediately to trade. ACH funds have a 1 day hold before you can trade. However, wire funds have a 3 day hold for withdrawals, and ACH have a 4 or 44 day hold for withdrawal depending on how and where you are withdrawing to.

Their Customer Service also confirmed that since I already converted them to Euro before I was aware of that, I will be charged the negative interest for the rest of the hold period. It is however accurate that it is a small amount (0.85% for IBKR Lite, not 0.5%) - €2 per day (given I only converted €84K Euro - and the first €50K is not charged). So it will only be about €10 for the period, (due to a weekend in between) but still annoying as I was not aware of this ahead of time. However if this happened on each of my transfers, it would add up as I have to do the entire amount in 7 tranches.

I am not disagreeing with your description of IBKR rules, but 3 business days isn’t a big deal. If that level of delay is going to be a source of frustration, then this GV process is going to be very frustrating.

I also wouldn’t get bent out of shape trying to avoid 50 EUR in negative interest when you are already saving a few hundred (maybe 1k) doing the conversion on IBKR and using SEPA. You should do what you want, but I certainly wouldn’t go to the hassle of doing seven 50k transfers.

That is kind of the conclusion I am coming to as I process this more and take the emotion out of it :slight_smile: Maybe just easier to take the negative interest hit, but still worth waiting the 3 days after the wire before you convert to Euro.

Decent article explaining how to use IBKR for USD to Euro transfer, covers some of the points highlighted above.

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Keep in mind that IB really doesn’t care about making this easy on you because they don’t really want to support you doing this - they aren’t a bank or a money transfer service; that you CAN do it doesn’t mean they WANT you to do it or that they’re going to make it easy to do in any way. :slight_smile:

This is very helpful, I appreciate you sharing this information. This is the route I’m doing currently planning although have only done one test transfers so far and will be doing the remaining amount shortly. Could you help us understand why you would withdraw in 50k EUR increments - is this to simply avoid negative interest rates?

Would there be any downside to putting the $450k into the account, waiting 3 days for the withdrawal hold period, then converting the full amount to 350k EUR, and lastly withdrawing/wire to your PT bank account?

The 50K is only for negative interest avoidance and probably more hassle than it is worth. though you may want to chunk for exchange rate reasons, if you see rates moving in a particular direction for example.

As I mentioned in a post above, you can absolutely do as you suggest above - just wait 3 days after wire, convert the entire thing, and move it out. I think it takes a day or so for the trade to settle, so not sure if you can move it out immediately, but you will be paying only a day or two of negative interest that way - or about $10-20 in all in negative interest.

Perfect, thanks Jim! Super helpful

So it turns out that the settling time (2 days) you are NOT charged negative interest. They will in fact move your money out to SEPA account with an effective date 2 days out.

So basically, as long as you wait 3 days after the wire to buy and SEPA out the same day, you will not really pay anything in negative interest either.

So I am going to simplify the instructions above.

My quick take on this: I hold a brokerage account with IBKR. Since about 2 years, I use TransferWise as my “international money hub”, including for withdrawals from that IBKR brokerage account, including for 6 digit amounts. The TransferWise account comes by default with a US based bank account, based in NYC. Set this up as the USD withdrawal reference account within IBKR account management. Always withdraw your money this way, and you avoid compliance questions. Then within TW, you can easily and instantly convert your USD balance to any needed currency (e.g. EUR). Lowest exchange rates, instant availabilty of the money and you have a dedicated EUR bank account with TW as well. Use this EUR bank account to then transfer to your Portuguese bank at no extra cost and within hours. Make this the default “bridge” solution and no more hassle and fully compliant. If you transfer large amounts, maybe notify TW prior to the transfer maybe, so there are no hickups with compliance. Always been super smooth and responsive with me.

Doing the conversion on Wise rather than IBKR is going to be noticeably (hundreds of Euros) more expensive.

If you already have an IBKR account it really doesn’t make sense to use Wise. You can SEPA transfer directly from IBKR after converting at the market rate. Wise will always charge you a conversion fee.

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Reading through the documentation at Funding Reference | Interactive Brokers LLC, under “online bill payment,” that is categorized as “A check or electronic fund transfer that originates from an online payment service provided by your financial institution.” When I look at the way to make deposits at IBKR, in addition to the wire transfer, it looks like there are two categories of ACH: (1) Connect Your Bank via ACH and (2) Direct ACH Transfer from your Bank, where the former involves logging in via IBKR to make the connection, and the latter just involves entering the account and routing numbers of an account at IBKR at the other bank.

I’m thinking #1 is the ACH that is subject to the potential 44 day hold at IBKR, and #2 is an online bill payment, or “electronic fund transfer that originates from an online payment service.” If that is the case, then it looks like that is only a three-day hold before withdrawing (“Electronic fund transfers: you may withdraw your funds after three business days”).

Does that interpretation seem correct?

It is really hard to tell, and is best to clarify with multiple IBKR reps (I got different answers from different reps on some of these items).

My understanding is that the hold period is 44 days if the outbound bank account is DIFFERENT than that inbound ACH bank account. The differences in the two kinds of ACH you mention above I believe is the number of days you have a funds availability hold (which is a completely different hold period than the funds withdrawal hold).

Currency exchange is way more expensive at Wise than at IBKR. IBKR can transfer FX Euros directly to Europe through SEPA.

Yes, it almost certainly isn’t worth the wire transfer fee savings to risk things being tied up for 44 days!

Many thanks to Jim for the thorough information and all others for helpful information. I am just starting the process for GV and feel like I am drinking from a firehouse. We decide to go with MFG for the one stop process and they use a bank called CDG. Based on my research in this forum, I am going with interactive brokers for the transfer since we already have an account with IBKR. But I have not done any transfer yet. I would very much appreciate any feedback on whether ther will be any complications regarding an ibkr to CDG transfer as most I heard here use Bison bank. Also, any feedback on MFG will be appreciated too. Thanks!