IG Slashes Foreign Exchange Fees for Overseas Shares, But Cheaper Options Exist
The trading platform has reduced its FX fee to 0.49% until September, yet competitors offer even lower rates.
IG, a trading and investing platform, has reduced its foreign exchange (FX) fee on overseas shares to 0.49% from 0.7% for all share dealing customers until September 4. This reduction means a £10,000 investment in international stocks now incurs a £49 FX fee, down from £70.
This move follows IG's elimination of a £24 quarterly charge for less active investors. However, the current promotional FX fee is still higher than that offered by competitors such as Trading 212, which charges 0.15%, and Lightyear, with a 0.1% FX fee.
High FX fees can significantly impact long-term investment returns, especially for those who regularly trade international shares. The cost difference can be substantial; for a £5,000 investment in a US stock, the FX fees can vary by as much as £44.50 across different platforms.
IG also offers high-risk financial instruments like spread bets and contracts for difference (CFDs), with its website indicating that 69% of investors lose money trading these products.
FX Fee Comparison
Here's how FX fees stack up for a £5,000 investment in a US stock across various platforms:
- Lightyear: 0.10% (£5)
- Trading 212: 0.15% (£7.50)
- IG: 0.49% until September 4 (£24.50), then 0.7% (£35)
- Interactive Investor: 0.75% on its Core plan (£37.50), with a tiered rate on its Plus plan.
- AJ Bell: 0.75% for the first £10,000, with decreasing rates for higher investment amounts (£37.50 on initial £5k).
- Freetrade: 0.99% on its Standard plan (£49.50), and 0.59% on its Plus plan.
- Hargreaves Lansdown: 0.99% (£49.50), with a tiered rate structure based on investment value.
It is crucial to ensure that platforms provide the market interbank exchange rate, which reflects live currency trading prices without any platform markup.
Top Platforms for International Investors
Lightyear, launched in 2020, is highlighted for investors trading international shares frequently. It offers a 0.1% FX fee, no trading or account fees, and access to over 6,000 UK, US, and EU stocks. Robinhood UK also offers a 0.1% FX fee, but is limited to US stocks.
Trading 212 is another option for those seeking a more established platform, charging a slightly higher FX fee of 0.15%. Both Lightyear and Trading 212 provide multi-currency accounts within their general investment accounts, allowing users to hold different currencies. This feature can help reduce FX fees by avoiding repeated conversions and enabling users to capitalize on favorable exchange rates. However, multi-currency accounts cannot be used within a stocks and shares ISA due to HMRC regulations, meaning they are subject to tax.