What Are Currency Exchange Fees and How To Minimize Them

The equivalent of billions of dollars in currency exchange fees is paid by migrants and senders every year, often without even noticing it. In this short guide, we how to identify and avoid them to money in the process.

What Are Currency Exchange Fees?
Every time you exchange money from one currency to another, your bank or money transfer operator (e.g. Wise or Western Union) will apply currency exchange fees. This is either done transparently or obscurely. The difference between the exchange rate they decide to apply and the “real” mid-market exchange rate (i.e. the one you see on Google) is known as an exchange rate margin and often forms the bulk of currency exchange fees. 카지노사이트

In essence, this means that most banks and transfer operators offer you a poorer exchange rate than the one they obtained on the market. This allows the services to generate a profit and run their businesses.

However, the tricky part about currency exchange fees is that they’re often not displayed transparently to the user and are often a completely hidden fee to the untrained eye.

How To Calculate a Currency Exchange Fee?
Let’s say you are sending British pounds (GBP) to your Polish bank account in Polish zlotys (PLN). First, you have to find the exchange rate applied by the money transfer operator of your choice. Here is an example with Sami Swoi:

Here’s you’ll notice that Sami Swoi show an exchange rate on their calculator online of 5.2200 zlotych for 1 pound.

Next, you’ll have to find the mid-market exchange rate for GBP/PLN. This is the rate at which banks exchange different currencies with one another. You can find the live or daily rate on currency converters such as Oanda or Concurrently, the mid-market exchange rate is 5.30966 PLN/GBP*. Be aware that even if this difference seems small at negligible at first, every digit is important when it comes to exchange rates.

Lastly, you’ll have to calculate the currency exchange fee applied by this currency transfer service. To get the job done using the example above, we’ll need to use the formula below:

1 – (Mid-market exchange rate/Commercial exchange rate)*100 = Exchange rate margin (%)
(In the formula above, the subtraction from 1 and multiplication by 100 make sure the final answer is in percentage form.) 안전한카지노사이트

Applying this formula to the example we discussed above, we get the following:

1 – (5.30966/5.2200)*100 = 1.7176%

Using this nifty calculation, we can determine that the currency exchange fee applied by Sami Swoi for this transaction is 1.7176%. If we apply this percentage cost to the amount we want to send to Poland from the United Kingdom (£200), we can see that we pay £200*1.7176 = £3.44 in currency exchange fees.

If we add now the flat transfer fee of £2.99 into the picture, we see that the total transfer fee of £3.44 and £2.99 is £6.43, or 3.12% of the amount transferred. That’s more than double the declared cost of £2.99.

To Sum Up
Flat transfer fee: £2.99
Currency exchange fee: £3.44
Total fee actually paid: £6.43

Minimizing Currency Exchange Fees 카지노사이트 추천
Now that you know what currency exchange fees are and how they’re applied to international money transfers, you might be wondering how you can avoid paying such high conversion costs?

The first step is to be aware of the costs when they are applied and recognize them. The second step is to compare the exchange rate offered by money transfer operators and choose the best suits your needs. According to Monito’s research, comparing the market of competitive money transfer services can easily save you up to 95% in fees compared to making the same transfer through your bank.

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