Get our weekly newsletter for the latest in money news, credit card offers + more ways to save
Exchange rates change often, so staying on top of trends is crucial to saving money on international money transfers. Today, $1 is worth…
Select the currency pair to fit your needs
Updated: 25 Nov 2020 23:02:39 UTC
How is currency converted?
Every day, traders buy and sell currency on the forex market. As they do, they increase and decrease the value of currency.
Market demand dictates how much one currency is worth compared to another currency — this is the mid-market rate. For example, the mid-market rate between the US dollar (USD) and Japanese yen (JPY) could be 1 USD = 100 yen. This is the rate that banks use to trade money with one another.
How currency is converted for consumers
When you convert money through a money transfer provider, you likely won’t get the mid-market rate. Instead, your provider adds a margin on top of the exchange rate to make money.
In our example above, the mid-market rate used by banks is 1 USD = 100 JPY, but the rate the bank will offer you may be 1 USD = 96 JPY.
If you transfer $1,000, you won’t receive 100,000 JPY. Instead, at the rate offered, you’ll receive 96,000 JPY. This transfer would cost you 4,000 JPY — about $30, because of exchange rate markup.
How to get the best exchange rates
To get the best rates, you’ll have to look for money transfer providers that aren’t your bank.
Use an online money transfer specialist Some online money transfer specialists will offer the mid-market rate on your exchange while charging you high fees. Others will charge you lower fees and offer a slight markup on the exchange rate. Either way, you’ll almost always save money by comparing money transfer specialists and avoiding your bank.
Watch the exchange rate markets Staying on top of currency exchange trends can help save you money. If the USD is gaining strength against the currency you want to send to, consider waiting to see how high it will go before you buy.
Hedging options are tools that can help you save more money when used correctly. These tools help you delay orders until the exchange rate is in your favor, create recurring transfers and even buy currency as a failsafe if the exchange rate is trending against you.
Limit orders. Your currency trade is executed only when a currency reaches a price you’ve set beforehand.
Some online money transfer specialists allow you to lock in exchange rates for your transfer, saving you the trouble of watching the markets daily.
Compare online money transfer specialist rates
The way to find the best exchange rates is to compare several money transfer providers at once. Enter the amount you want to send, select the currency you’re sending to and click Calculate to see live rates.
Disclaimer: Exchange rates change often. Confirm the total cost with the provider before transferring money.
Common mistakes to avoid
Transferring through banks or brick-and-mortar providers. These providers tend to charge high fees and offer poor exchange rates.
Forgetting to look at both fees and exchange rates. Providers usually make big money in these two categories. If a service charges no fees, be wary: It probably includes a huge margin on the exchange rate.
Not comparing providers. Many of the cheapest providers are online. Before settling on one, compare several to get the best rate.
Let’s crunch the numbers: Sending $2,000 to Europe
Let’s say you need to send $2,000 to France. Here’s what you might face as far as fees and exchange rates as of October 22, 2020.
Online money transfer specialist
$25 + additional correspondent bank fees
1 USD = 0.842 EUR
1 USD = 0.801 EUR
Better value and faster
Slower and more expensive
The bank option is slower and more expensive, costing you almost 100 EUR more to send money. Although fees factor into this, the weaker exchange rate is where you really lose money on your transfer.
Currency exchange rates change frequently and are based on many things, including politics, global and national economies, natural disasters and more. Stay on top of the current exchange rates to save money on your international money transfer.
Adrienne Fuller is the head of publishing at Finder US. With a decade of experience creating guides in finance and education, she aims to deliver the accurate and transparent information she wishes she had when she made some of life's important financial decisions. For the past 3 years she has been the publisher of money transfers, helping readers save when they send money all over the globe. She has a BA from Colorado College and loves to hike with her two Catahoula dogs around her home in San Diego.
Pros and cons to consider before opening an account with either of these brokerages.
How likely would you be to recommend finder to a friend or colleague?
Very UnlikelyExtremely Likely
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.