4 min read·2025-12-07

How Exchange Rates Work — And Where to Get the Best Ones

If you've ever exchanged money at an airport, you paid 8-15% in hidden fees. Here's how to avoid it.

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When you see "1 EUR = 1.08 USD" on Google or in our calculator, you're seeing the interbank rate — the rate big banks use among themselves. That is NOT the rate you get.

The secret: the spread

Every provider (bank, exchange house, fintech app) adds a margin over that interbank rate. That margin is called the spread.

Wise / Revolut / Remitly: 0.3% to 0.9%

Traditional bank: 2% to 4%

Airport exchange booth: 8% to 15%

Exchanging $1,000 at an airport can cost you up to $150 in invisible fees.

Why rates fluctuate

Exchange rates move based on:

Interest rate differences between central banks (Fed, ECB, BoE).

Inflation: high-inflation currencies weaken.

Trade flows and capital movement.

Speculation and political events.

Practical tips

For travel: use a multi-currency card (Wise, Revolut). Zero fees up to a monthly cap.

For international transfers: never use a traditional bank. Specialized apps are 5-10x cheaper.

For investing: check your broker's FX spread. Some hide a 1% cut on every conversion.

Always compare against the interbank reference rate (which our calculator uses).

Check current exchange rates

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