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How to get the best exchange rate on international money transfers
Learn about the mid-market rate and how to get the most money for your US dollars.
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There are many times when you may find yourself needing to exchange money, and seeking out the best exchange rate will help you get more foreign currency for your dollars. Whether you need to exchange money in person in a foreign country, online when sending money internationally or even in your home town before you leave for a trip—understanding the best way to exchange money is key.
How do I get the best exchange rate?
Where to get the best exchange rate depends on your situation, so we’ve broken down the best ways based on the three main situations when people exchange money:
- Best exchange rates for international transfers – Look to money transfer companies that specialize in offering the mid-market rate while double-checking that the fees you are paying are worth it.
- Best exchange rates when traveling internationally – Seek out local banks, post offices or even an ATM. Avoid exchange bureaus in tourist areas and airports.
- Best way to exchange money in the US – If your bank operates internationally it may be where to get the best exchange rate before you pack your bags.
How important is an exchange rate?
When exchanging large amounts of money, a small variance in exchange rate can lead to hundreds of dollars lost or gained when exchanging. Exchange rates are calculated based on what people are willing to buy and sell foreign currencies for. You’ll often hear the phrase “mid-market” rate thrown around when looking for the best exchange rates, pay attention to this.
How to calculate an exchange rate
Let’s say you’re planning a trip to Europe and need to secure some Euros. In order to calculate the exchange rate you are getting on your transfer, follow these steps:
- Look up the mid-market rate on Google or XE.com by searching USD to EUR.
- You’ll see something similar to 1 USD = 0.91 EUR.
- Compare the rate you’re being offered by your bank, money transfer service or currency transfer bureau against the mid-market rate.
- If the rate you are offered is 1 USD = 0.89 EUR, calculate the change by subtracting the bank rate from the mid-market rate: 0.91 – 0.89 = 0.02
- Turn it into a percentage by dividing it by the original exchange rate and multiplying by 100 and rounding for simplicity: 0.02/0.91 = 0.02198 x 100 = 2.2%
- Repeat these steps for various exchange rates to find out which offers the most competitive deal.
Being offered a rate that only appears to vary in a cent or two could be the difference of a percentage point or more. When transferring $1,000 a 2% loss on the exchange rate would cost $20.
How do I get the best exchange rates for international transfers?
It is always best to shop around and compare your options when sending an international money transfer, and the more time you can leave yourself before needing to send the transfer the better. Here are a few tips to help find the best exchange rate:
- Know the mid-market rate for your currency.
Because this rate is the midpoint between worldwide supply and demand for that currency, the rate banks and transfer services use when they trade among themselves tends to differ. Services make money by skewing exchange rates in their favor. Use the mid-market rate as a baseline to compare against the rates they’re offering, as we explained above, to learn who’s offering the better deal.
- Get quotes from a few services.
Compare the quotes from a range of money transfer companies to see which offers a better deal. Many offer a quick and easy way to get a quote online, and it should include transfer fees to give you a better idea of how much your total transaction will cost. Use our comparison table below to see how our money transfer partners stack up for your planned international money transfer.
- Avoid the bank when possible.
It may seem counterproductive, given that we use banks to store money, but banks almost never offer the best exchange rates. Take this example using live exchange rates accurate on May 20, 2020.
Money transfer service vs. bankSending $1,000 to Europe.
Wells Fargo TransferWise Exchange rate 1 USD = 0.867 1 USD = 0.913 Transfer fee $25 $9 Pounds received 845 EUR 905 EUR
Considering the exchange rates and fees, using TransferWise instead of the bank sends €60 more.
- Seek out multiple transfer options.
Time and knowledge can save you even more money when sending an international transfer. Consider the following hedging options as additional ways to secure the mid-market rate:
- Recurring payments – set up regular transfers to take advantage of fluctuating exchange rates and save more on fees over the long term.
- Forward contract – lock in the current exchange rate for a transfer that will be placed days, weeks, or even months into the future.
- Limit order – set up a transfer request that will only be executed when specified market conditions are met — such as the exchange rate reaching a certain level.
- Use a multi-currency bank account.
If you need to send more regular transactions using commonly traded currencies, a multi-currency bank account could offer better exchange rates and lower fees. Also referred to as foreign currency accounts, these accounts allow you to hold funds in multiple currencies, meaning you can convert them into dollars at a time when the rate suits you.
- Send a larger amount.
Many money transfer services offer stronger rates for larger transfers. Use our comparison table to see how different amounts change the offered exchange rates from our partner money transfer services.
- Post offices
- Your hotel
- Tourist destinations
- Street-side exchange bureaus
- Airports, train stations, bus stations and the like
- Check your local bank
Even small banks can often order money from larger branches. If you bank at one of the larger bank chains in the US, they will almost certainly be able to sell you a wide range of foreign currency. Just beware of poor exchange rates.
- Use a currency ordering service
Travelex allows you to order more than 50 currencies and have them delivered straight to your doorstep. As with the bank, though, you won’t be getting the mid-market rate. To learn more about this service, read our Travelex review.
- Use an international transfer service, but have it delivered for cash pickup at your destination.
Use the following quiz to find a provider who can deliver your transfer to an agent location and have it waiting for you when you arrive.
Compare exchange rates of money transfer services
Enter the amount you want to send, select your destination currency and click Calculate to see what your transfer could cost.
How do I get the best exchange rate when traveling internationally?
When traveling internationally you’ll typically get the best exchange rates at banks, ATMs and post offices. Using an ATM, especially if you have a bank card that doesn’t charge international ATM fees, will almost always be the strongest and most convenient option when traveling internationally. It may be possible to exchange money at the hotel you are staying at, but double check the rate they are offering against the mid-market rate to see how strong it is. In short:
Do exchange money at:
Do not exchange money at:
Depending on where you are traveling to, some local shops and restaurants may offer to accept payment in your native currency. For instance, a lot of tourist destinations in Mexico will accept both US dollars and Mexican pesos. This is convenient, but you’ll almost always be overpaying when using dollars instead of pesos — but it might be worth the convenience depending on your situation.
What’s the best way to exchange money in the US?
Preparing for a trip can be an exciting time, and holding a foreign currency for the first time comes with its own special thrill. If you’re eager to get your hands on some international bills, here’s how to get the best exchange rates for your USD:
Read our guide on exchanging currency to get the full breakdown on the best and worst ways to get foreign currency before and during your trip.
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Unfortunately there is no straightforward solution to finding the best exchange rates, as the best option changes based on so many diverse variables. But, by understanding how to calculate the strength of an exchange rate, knowing what to avoid and comparing your options you can save money and maybe even secure the best exchange rate. Learn more about how to compare your money transfer options to get started today.
Frequently asked questions
Should I withdraw money from an ATM while traveling internationally?
Check the rates and fees offered by your bank. If your bank gives you free international ATM withdrawals, this may be one of the cheapest options to get cash while traveling abroad.
What do I do with extra foreign currency after my trip?
Try and spend the coins while abroad, as they are harder to get rid of. If you have extra bills left over, consider selling them to a friend that has a trip planned or saving them for the next time you visit that country again.
Is it safe to use my credit card internationally?
There are protections in place to keep you and your credit card protected from fraud and theft, but these protections don’t guard you from high fees and poor exchange rates. Always double-check the fees and rates charged by your credit card before using it to pay for things internationally.
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