Today’s currency exchange rates

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

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

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.
• Forward contracts. Receive a guarantee that you can exchange money at a specified rate in the future.

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

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	Bank transfer
Fee	$3.99	$25 + additional correspondent bank fees
Exchange rate	1 USD = 0.842 EUR	1 USD = 0.801 EUR
Transfer speed	Minutes	2-5 days
Amount received	EUR 1,681	EUR 1,582
Verdict	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.

Compare your options