Bank vs Currency Specialist: How Much Do You Lose on Exchange Rates?
Banks rarely charge a visible fee on international transfers. The cost is in the rate. Here's how to work out what you're really paying, with examples.
Globe FX team · · 5 min read
In short
- Banks rarely show a fee. The cost is the margin built into the exchange rate.
- Compare the rate you're offered with the mid-market rate to see the margin you're paying.
- On a €600k purchase, 3% vs 0.6% is roughly £12,700.
In this guide
"No fees" is the most expensive phrase in international payments. On a big transfer, the fee was never really the cost. The exchange rate was.
How banks make money on FX
When you send £200,000 abroad, your bank converts it at its own rate. That rate is usually worse than the mid-market rate, the rate halfway between buying and selling that you see on Google or our exchange rates page.
The gap is the margin. On large transfers banks commonly charge a few percent, and it's rarely shown as a separate line.
Working out what you're paying
- Check the mid-market rate at the moment you're quoted.
- Compare it with the rate you're offered.
- Divide the difference by the mid-market rate. That's your margin.
Example: mid-market GBP/EUR is 1.1800 and your bank offers 1.1446. The difference is 0.0354, and 0.0354 ÷ 1.18 = 3%.
What that costs on real purchases
| Buying | At 3% margin | At 0.6% margin | You keep |
|---|---|---|---|
| €600,000 villa | ~£524,200 |
This article is general information, not financial, legal or tax advice. Exchange rate examples are illustrative. Speak to a qualified professional about your own situation.
