Converting money from one currency to another can be done at a bank, through an online transfer service, at a foreign ATM, or with a currency exchange kiosk. The method that saves you the most depends on how much you’re converting, how quickly you need it, and whether you’re traveling or sending money abroad. Here’s how each option works and what it actually costs.
Start With the Mid-Market Rate
Before you convert money anywhere, you need a baseline to judge whether you’re getting a fair deal. That baseline is the mid-market exchange rate, sometimes called the “real” exchange rate. It’s the midpoint between the buy and sell prices on global currency markets, and it’s the rate banks use when they trade currencies with each other.
The problem is that most providers don’t give you the mid-market rate. They add a markup, often called a “spread,” which is the difference between the rate they offer you and the rate they actually pay. This spread functions as a hidden fee on top of any flat fees or commissions they charge. A provider might advertise “no fees” while quietly marking up the exchange rate by 3% to 5%. Before converting any amount, look up the current mid-market rate for your currency pair using a search engine or financial site, then compare it to the rate you’re being offered. The gap between those two numbers is your real cost.
Use Your Bank or Credit Union
If you need foreign cash before a trip, your own bank or credit union is typically the cheapest option. Major banks offer currency exchange services and charge a commission of about 1% to 3%. Some waive fees entirely for premium account holders. You’ll usually need to order the currency a few days in advance, especially for less common currencies, and some banks require a minimum exchange amount.
Call your branch or check their website to confirm they offer foreign currency exchange. Not every location keeps foreign cash on hand, but most can order it for you within two to five business days. Because you’re already a customer, the process is straightforward and the rates tend to be more competitive than standalone exchange services.
Withdraw From a Foreign ATM
If you’re already abroad, pulling cash from a local ATM is often cheaper than exchanging bills at a kiosk. ATMs typically use rates close to the interbank rate, which is the same rate banks use to trade with each other. That means you’re starting from a much better baseline than the marked-up rates at an airport booth or tourist-area exchange counter.
The tradeoff is fees. Your home bank may charge a foreign transaction fee of 1% to 3% per withdrawal, and the ATM operator may add its own flat fee. To minimize costs, stick to ATMs operated by reputable international banks rather than independent machines in shops or hotels. Also, when the ATM asks if you’d like to be charged in your home currency instead of the local currency, always choose the local currency. Accepting the home-currency option triggers a process called dynamic currency conversion, which layers on an additional markup that you don’t control.
Skip the Airport Exchange Booth
Airport currency exchange kiosks are convenient, but that convenience comes at a steep price. These providers face captive demand (you need cash and have limited alternatives), so they charge unfavorable exchange rates plus service fees that can significantly eat into your money. If you’re converting $500, the difference between an airport kiosk and your bank could easily cost you $20 to $40 or more. Use airport exchanges only as a last resort for small amounts you need immediately upon arrival.
Use a No-Foreign-Transaction-Fee Card
For everyday spending abroad, a credit or debit card with no foreign transaction fees is the simplest way to convert money. Most credit cards charge 1% to 3% on purchases made outside the U.S., with 3% being the most common. On a $3,000 hotel bill, that’s an extra $90 in fees. Cards that waive this fee save you that cost entirely, and the exchange rates card networks use are typically close to the mid-market rate.
Several major issuers offer travel-oriented cards with no foreign transaction fees. If you travel internationally even once a year, having one of these cards in your wallet eliminates the need to carry large amounts of foreign cash and gives you a consistently competitive conversion rate without any extra effort.
Send Money Internationally Online
When you need to convert money and send it to someone in another country, online transfer services are usually faster and cheaper than a traditional bank wire. Apps like Remitly, Wise, Western Union, and others let you send money from your phone or computer. Delivery times range from minutes to five business days depending on the platform, payment method, and destination country. Express options on services like Remitly can arrive within minutes, while economy transfers take three to five business days.
Traditional bank-to-bank wire transfers, by comparison, can take three to five business days for international transfers, and the fees are often higher. Banks may charge a flat wire fee of $25 to $50 on top of their exchange rate markup. Online services typically charge lower flat fees and offer rates closer to the mid-market rate, though you should always compare the total cost (fee plus exchange rate) rather than looking at either number in isolation.
When choosing a service, pay attention to how you fund the transfer. Paying with a debit card or bank transfer is usually cheaper than using a credit card, which may trigger cash-advance fees from your card issuer on top of the transfer fee.
Converting Large Sums for Business or Real Estate
If you’re converting tens of thousands of dollars or more for a business payment, real estate purchase, or investment, the stakes on exchange rates get much higher. A 1% difference on a $200,000 conversion is $2,000. At this level, you have access to tools that everyday travelers don’t.
Major banks offer foreign exchange services designed for businesses that let you lock in an exchange rate for up to a year, protecting you from rate fluctuations while you finalize a deal. These services cover everything from one-time cross-border payments to recurring international payroll. Some banks also offer multicurrency accounts that let you hold balances in several currencies and convert when the rate is favorable rather than being forced to convert at the moment of payment.
Specialized foreign exchange brokers also serve individuals making large transfers, such as buying property overseas. These brokers often beat bank rates because currency conversion is their core business. They typically assign you a dedicated dealer who monitors the market and can execute your trade at a target rate. For any conversion over $10,000, it’s worth getting quotes from at least two or three providers, including your bank, an online transfer service, and a specialist broker, before committing.
How to Get the Best Rate Overall
- Check the mid-market rate first. Any provider’s rate should be close to this number. The further away it is, the more you’re paying in hidden markup.
- Add up all costs. Compare the total you’ll receive after fees, commissions, and the exchange rate spread. A “no fee” provider with a bad rate can cost more than a provider that charges a small flat fee but gives you a rate near mid-market.
- Avoid converting at the last minute. Airport kiosks, hotel desks, and tourist-area exchanges charge premiums because they know you’re out of options. Order currency from your bank a few days early or rely on a no-fee card abroad.
- Use local currency when given a choice. Whether at an ATM or a point-of-sale terminal, always choose to pay in the local currency. Opting for your home currency lets the merchant or ATM operator set the exchange rate, which is almost always worse.
- Time large conversions carefully. Exchange rates fluctuate daily. If you’re converting a large sum and have flexibility on timing, watch the rate for a few days or weeks. Even a small improvement on a six-figure transfer can save hundreds of dollars.