One rate, three different prices
Converting currency is one multiplication. What makes it confusing is that the rate you see quoted is almost never the rate you receive, and the gap is where the cost hides.
The formula
Worked example: 100 USD to EUR
- Rate: 0.8594
- Result: 85.94 EUR
- Reverse: 1 EUR = 1.1636 USD
Both rates describe the same relationship. Quoting the one that flatters the transaction is a standard tactic, so check which direction a quote is in before comparing two of them.
The mid-market rate is not what you get
The figure in the news and in this calculator is the mid-market rate — the midpoint between what buyers bid and sellers ask. No retail customer trades there. What you receive is that rate minus a spread.
| Where | Typical spread | On 1,000 USD |
|---|---|---|
| Specialist transfer service | 0.3–0.7% | 3–7 USD |
| Card payment abroad | 1–3% | 10–30 USD |
| High-street bank transfer | 2–4% | 20–40 USD |
| Airport exchange | 5–12% | 50–120 USD |
The spread is frequently presented as "no commission", which is true and irrelevant: the fee is already inside the rate.
Dynamic currency conversion
When a card terminal abroad offers to charge you in your home currency, decline it. That option hands the conversion to the merchant's provider, which sets its own rate — typically 3 to 6% worse than your card issuer's.
Always pay in the local currency of the country you are in. The conversion still happens, but at your bank's rate rather than at one chosen by the shop.
Comparing two offers honestly
Ignore the advertised rate and the fee separately. Ask one question: how many euros arrive for exactly 1,000 dollars sent, after everything?
A service quoting 0.8550 with no fee delivers 855.00 EUR. One quoting 0.8594 with a 5 USD fee delivers 855.10 EUR. The second looks worse on both headline numbers and is better.
Rates move, and the direction is not predictable
Major pairs commonly move 5 to 10% within a year. On a property purchase or tuition payment that is a meaningful sum, and no forecast reliably calls it.
Where the amount is large and the date is known, a forward contract fixes the rate in advance. You give up any favourable move in exchange for knowing the figure, which for a budgeted payment is usually the right trade.
What this calculator leaves out
Live rates change continuously and the figure here is a reference point, not a dealing rate. Transfer fees, receiving-bank charges and intermediary deductions on international wires are also excluded.
Sending money against carrying it
For a holiday, a card in the local currency almost always beats cash bought in advance, because card networks settle near the mid-market rate and add a modest issuer margin. Airport bureaux are the worst option available and exist because they are the last one.
For a large one-off transfer — a property deposit, tuition, a salary paid abroad — a specialist service usually beats a bank by 2 to 3% of the amount. On 50,000 dollars that is $1,000 to $1,500 for filling in the same form somewhere else.
Related calculators
- Cross rate calculator — converting between two currencies via a third
- Forward rate calculator — fixing a rate for a future date
- Purchasing power parity — what the rate arguably should be