Guide to Currency Exchange and International Transfers

Whether you are traveling abroad, shopping from international websites, sending money to family overseas, or running a global business, understanding how currency exchange works can save you significant money. Banks and money transfer services often hide fees in unfavorable exchange rates, and knowing the difference between the mid-market rate and the rate you are offered is the key to getting a fair deal.

Use our free currency converter to check the real mid-market rate before making any international transaction.

Understanding Exchange Rates

An exchange rate is simply the price of one currency expressed in terms of another. If the EUR/USD rate is 1.08, it means 1 euro buys 1.08 US dollars. Exchange rates fluctuate constantly based on supply and demand in the global foreign exchange market, which is the largest financial market in the world with over $7 trillion traded daily.

Rates are influenced by interest rates set by central banks, inflation data, political stability, trade balances, and market speculation. This is why rates can change significantly even within a single day. Our exchange rate calculator fetches up-to-date rates so you always know the current market value.

The Mid-Market Rate vs. The Rate You Get

The mid-market rate (also called the interbank rate) is the exchange rate that banks use when trading with each other. This is the fairest, most transparent rate available. However, when you exchange money through a bank, airport kiosk, or online transfer service, you will almost never get the mid-market rate. These providers add a markup to the rate, which is how they make money.

The difference between the mid-market rate and the rate offered to you can range from 1% to 10% depending on the provider and the currencies involved. Airport currency exchange kiosks often have the worst rates, sometimes adding 8% to 10% above the mid-market rate. Online transfer services like Wise and Revolut typically offer rates within 0.5% to 1% of the mid-market rate.

Hidden Fees to Watch For

When sending money internationally, be aware of these common fees:

• Transfer fees: Fixed fee charged per transaction, typically $5 to $50 for international wires
• Exchange rate markup: The difference between the mid-market rate and the rate you receive
• Receiving bank fees: The recipient's bank may charge a fee to accept an international transfer
• Intermediary bank fees: SWIFT transfers often pass through intermediary banks that each take a fee
• ATM fees: Using an ATM abroad usually incurs both a foreign transaction fee and an ATM operator fee

Tips for Getting the Best Exchange Rates

• Check the mid-market rate first: Use our free currency converter to see the real rate before making any transaction.
• Avoid airport and hotel exchanges: These offer the worst rates. Use local ATMs or dedicated exchange services instead.
• Use a credit card with no foreign transaction fees: Many travel cards offer fee-free spending abroad with rates close to the mid-market rate.
• Consider specialist transfer services: Companies like Wise, Revolut, and OFX typically offer better rates than traditional banks.
• Compare total costs: Look at both the exchange rate and any fees together to find the best overall deal.

Currency Conversion for Travelers

When traveling internationally, plan ahead to avoid paying more than necessary. Withdraw local currency from ATMs at your destination rather than exchanging cash before you go. Notify your bank of your travel plans to avoid having your card blocked. Keep some local cash for small purchases, but use cards for larger transactions to get better exchange rates and purchase protection.