Bank rate boards show several numbers, which can be confusing. Once you know these four terms, you can tell which option is cheaper.
Mid-market rate
The midpoint between buying and selling prices that banks use as a reference. You cannot actually exchange at this rate; fees are added or subtracted. The rate at the top of the converter is this mid-market rate.
Buy and sell rates
The buy rate is what you pay to buy foreign currency; the sell rate is what you get when you sell leftover currency back. Both are set less favorably for you than the mid-market rate.
Spread (the exchange fee)
The gap between the mid-market rate and the buy rate, as a percentage. A 1.75% spread means you pay 1.75% more than the mid rate. Widely traded currencies have smaller spreads.
Exchange discounts
Some banks discount the spread, especially through their apps. A 90% discount on a 1.75% spread leaves a real fee of 0.175%.
Summary
- Real fee = spread × (1 − discount)
- Always compare the final amount you receive.
- To judge whether a rate is cheap, compare it with the last few months.
FX Route uses this formula to calculate what you receive on each route, and shows whether today's rate is cheap compared with the last 3 months.