Many foreign exchange providers advertise their service as fee free implying that you do not pay anything.

The reality is that you are often purchasing the foreign currency at an inflated rate that masks a hidden fee. This means you receive less of the currency you are buying than you should be.

Many providers do not give you the market rate when you are looking to make an exchange. So, how can you tell if the rate you are quoted is a good rate?

There are three methods:
(1) Compare the exchange rate you are receiving to the market rate on our Markets page. This page shows you the best possible exchange rate available for any currency pair.

Or if you do not have access to the rate but know you want to buy a fixed amount of currency:
(2) compare how much you will pay for conversion to a fixed amount. A better rate means it will cost you less to buy a fixed amount of foreign currency.

Or if you want sell a fixed amount of currency to exchange into another currency then:
(3) compare how much you will receive after conversion from a fixed amount. A better rate means you will receive more of the currency you are buying.

Worked Example:
You want to sell Sterling to buy US Dollars, so the relevant rate is GBPUSD. You are offered two rates 1.4700 and 1.4600 and the market rate is 1.5000. Which is the better rate and what is the cost?
This number equates to how many USD you will receive for every 1 GBP you sell. Therefore the higher the number (1.47) the better the rate. This gives you the most US Dollars for the least Sterling.

The cost is calculated by comparing how many USD you will receive from your foreign currency provider versus the market. So, if you sell GBP10,000, you would receive USD14,700 versus USD15,000 if you could directly access the market, i.e. the cost is USD300. In percentage terms, this is 2% (1 – Offered Rate/Market Rate). If you purchase USD25,000 the cost would be USD25,000 x 2% = USD500.

Be aware some firms may initially offer you a competitive rate only to push it away from you over time when they think you are not looking.

Moneydero is transparent. With us, you deal at the market rate, which is the best possible rate, and we charge a fixed low percentage fee.

Moreover, all this information is clearly detailed in our trade confirm for your records.

New clients can sign up here.