Three rates, and only one of them is on the news
The rate quoted by financial sites and news outlets is the mid-market rate: the midpoint between what buyers are bidding and what sellers are asking in the wholesale market. Almost nobody outside that market transacts at it. What a consumer provider quotes is that midpoint moved in the provider's favour, and the gap between the two is the markup.
So there are three numbers in play. The mid-market rate, the rate you are offered when buying the foreign currency, and the rate you are offered when selling it back. Buy and immediately sell back at a 2.5 percent markup each way and about 5 percent of the money is gone without the market having moved at all. That round trip is the clearest way to see what the spread is worth to the provider.
The markup is not usually disclosed as a number. It is disclosed as a rate, and the only way to know what it costs is to compare that rate against the mid-market rate at the same moment. This calculator asks for the markup directly so that the comparison is visible rather than buried inside a rate you cannot audit.
Why the headline fee is the smaller number
Providers advertise the fixed fee because it is small and easy to state. On $1,000 moved at a 2.5 percent markup with a $5 fee, the fee is $5 and the markup is $25. The advertised part is a sixth of the cost. On larger amounts the ratio gets worse, since the fee stays put while the markup scales.
| Amount | $5 fee | 2.5% markup | Total, as a percentage |
|---|---|---|---|
| $200 | $5.00 | $4.88 | 4.94% |
| $1,000 | $5.00 | $24.88 | 2.99% |
| $5,000 | $5.00 | $124.88 | 2.60% |
| $20,000 | $5.00 | $499.88 | 2.52% |
The practical reading is that a zero-fee service with a wide spread is usually more expensive than a service that charges a visible fee on a tight one, and the crossover comes at a very small amount. The only comparison that settles it is the one at the bottom of the calculator output: how many units actually arrive.
Where the worst rates are
Airport and hotel exchange desks price for people who have run out of options, and markups in the high single digits or worse are ordinary there. Cash exchange in general costs more than an electronic transfer, because handling physical notes has real costs behind it. Less-traded currencies carry wider spreads everywhere, which is a genuine reflection of thinner markets rather than a trick.
Dynamic currency conversion deserves its own mention because it is presented as a convenience. A card terminal abroad asks whether you would like to be charged in your home currency, and says yes with a number attached so the choice looks like certainty. Accepting it moves the conversion from your card network to the merchant's payment provider, at a rate that provider chose. Declining it, and paying in the local currency, leaves the conversion with your issuer at the network rate plus whatever foreign transaction fee your card carries. Declining is usually cheaper, and the terminal will not tell you so.
Working out a markup you have not been told
Take the provider's quote for the exact amount you intend to exchange, including any fee, and note the units it says you will receive. Look up the mid-market rate at that same moment and multiply your amount by it. Divide what you would get by what you were quoted, subtract one, and that is the all-in cost as a percentage. Do it for two providers and the comparison is finished.
Doing this twice, for a small amount and a large one, exposes the fee structure quickly: if the percentage barely moves between them, the cost is almost all spread; if it drops sharply, the cost is mostly the fixed fee and larger transfers are proportionally cheap. That single test tells you more about a provider than its marketing does, and it takes about a minute.
Questions people ask
Does this page fetch live exchange rates?
No. Nothing on this site calls out to a server, and the rate field is a value you type. The default in the field is a placeholder so the page has something to display on load, not a quote, and it will be wrong by the time you read it. Take the mid-market rate from a source that shows a timestamp and paste it in. If the direction of the rate confuses you, the field wants units of the other currency per one US dollar, so a euro rate looks like 0.9 and a yen rate looks like 150.
How do I find the markup my provider is charging?
Compare their quoted rate against the mid-market rate at the same moment, then divide one by the other. If a provider offers 0.90 when the mid-market rate is 0.92, the markup is about 2.2 percent. Do it with the fee included and for the actual amount you plan to send, because some providers vary the spread by size and by currency, and a headline rate quoted for a popular pair may not be what a smaller currency gets.
Is it cheaper to use a card abroad or to carry cash?
It depends on the card and on where you are, so the answer is worth checking before travelling rather than at the counter. Cards issued without a foreign transaction fee usually convert at close to the network rate, which is competitive with anything a cash desk offers. Cards with a fee of two or three percent land in the same range as a reasonable cash exchange. What is reliably expensive is airport cash exchange and accepting dynamic currency conversion at a terminal. Cash withdrawals from a foreign machine add the machine operator fee and often a cash advance charge from the issuer as well.
Why does the amount I receive differ from what the calculator says?
Most often because the rate moved between your calculation and the transaction, since rates move continuously and a quote is usually held only for a short window. Beyond that, intermediary banks can deduct their own charges from a wire in transit, which neither end quotes in advance, and the receiving bank may apply a fee to credit the funds. If the difference is large and consistent rather than a small drift, the markup you entered is probably lower than the one being applied.