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How to Find the Best Exchange Rate

Understanding your exchange rate is crucial to finding the best deal for your money transfer. Here’s how you can ensure you find the most favourable rates on the market - from choosing the right provider to utilising different transfer methods to target rates as they fluctuate.

Mehdi Punjwani
Author 
Mehdi Punjwani
6 minutes
September 8th, 2023
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What is an exchange rate?

An exchange rate is how the value of two currencies are compared to each other. When you send money from one country to another, more likely than not this will involve exchanging currencies. For example, if you send $200 from the USA to the UK, the person receiving the money in the UK will need to get the money in pounds for it to be useful.

Swapping dollars for pounds means getting an amount in pounds that is the same value as the amount you’re sending in dollars - and this value is determined by the exchange rate.

Which money transfer providers offer the best exchange rates?

When you send money abroad, the transfer is facilitated by a third party - normally a money transfer provider, or in some cases a bank or digital wallet. These companies have to make a profit somehow, so they’ll normally charge a transfer fee or a markup on the exchange rate - or both, in some cases.

This is why it’s so important to compare different providers, so you can see who charges what in fees and exchange rate markups and find the best deal for your money transfer. To illustrate how the exchange rate you get can affect the overall amount of money received by the recipient of your money transfer, we’ll run through examples below:

Sending £200 from the UK to Spain

ProviderRateFeesTotal amount received
XE1.11£0€222.67
PassTo1.12£2.5€221.44
Wise1.13£1.02€224.05
Barclays1.1287£10€214
HSBC1.1243£15€208

How to find the best euro 🇪🇺 exchange rate?

Finding the best euro exchange rate is easiest when you compare your options online. Rates are constantly changing, so check now to see what’s available.

Sending £1,000 from the UK to India

ProviderRateFeesTotal amount received
WorldRemit99.23£1.99₹99229.00
XE98.62£0₹98624.99
Wise99.59£6.54₹98939.58
Santander97.78£20₹95824
RBS97.98£15₹96510

How to find the best pound 🇬🇧 exchange rate?

GBP exchange rates are always going up and down, so compare rates now to find the best available deal.

Sending $10,000 from the USA to Mexico

Find the latest rates on sending money from USA to Mexico.

ProviderRateFeesTotal amount received
XE17.02$0170,200 MXN
Currencies Direct17.0266$0170,266 MXN
Wise17.12$74.29169,928.16 MXN
Capital One15.81$30157,626 MXN
Bank of America15.84$45157,687 MXN

How to find the best dollar 🇺🇲 exchange rate?

Compare USD exchange rates to find the best deal when sending dollars abroad - remember, USD exchange rates are always changing so look for deals today.

What type of international money transfers get the best rates?

Depending on the provider, amount and reason for your transfer, you may be able to access certain types of tools to hedge your risk in the foreign exchange market:

Forward contracts

A forward contract enables you to lock in a decent exchange rate which protects you against unexpected movements in exchange rates. However, there is a chance that the rate will improve and you could get locked into a lower rate. Forward contracts are ideal for those making regular transfers or for businesses. The agreement will guarantee you a rate between 30 days and two years. A deposit is required, and the balance paid upon execution of the contract.

Limit orders

You state your ideal exchange rate, it is locked in once the market reaches that rate, and the transfer company will contact you to authorise and complete the transfer.

Stop-Loss Orders

A stop-loss order is the opposite of a limit order, it involves specifying the rate you want to avoid dropping below. Your currency is purchased automatically when the market falls to that rate. People often combine stop-loss orders and limit orders together.

Read our simple guide on how money transfers work to get a better understanding of forward contracts and limit orders.

How to find the best exchange rates for international money transfers

Finding the best exchange rate for your international money transfer is easier when you keep the following in mind:

Keep an eye on the mid-market rate
Avoid bank transfers
Avoid credit and debit cards
Focus on the final sum
Consider multi-currency accounts
Compare rates with MoneyTransfers.com

How do exchange rates work

A currency exchange rate tells you how much your money is worth in another currency, so you could think of it as the cost of buying another currency. You’ll normally see it written as a number with a decimal - for example, the GBP to USD exchange rate at time of writing is 1.2042. This means for every one pound you can get roughly one dollar and 20 cents.

So if you’re sending money abroad, you’ll be buying currency - so you want a higher rate because you’ll get more for your money. However a lower rate is better for those selling the currency as this is how they can make a profit.

What is the mid-market rate?

The mid-market rate is the midpoint at which banks trade currencies with each other, or the midpoint between the buy and sell price of two different currencies. It’s also referred to as the interbank or middle rate.

The mid-market rate is the cheapest rate you’ll generally be able to get anywhere, so look for providers that offer rates as close as possible to this. This means their markup low and you’ll get more for your money.

However keep in mind that providers who offer the mid-market rate will likely make their money through fees instead. Comparing deals and providers with MoneyTransfers.com is the best way to find the cheapest overall deal for your money transfer.

Why are exchange rates important?

Exchange rates are important as they affect how much your money is worth when sending it abroad. It’s particularly noticeable for big transactions, such as property purchases or inheritance matters, where even small changes in foreign exchange rates can impact how valuable your assets are.

More money transfer guides

FAQs

What is the difference between 'buy' and 'sell' exchange rate?
Can I use my credit card to buy foreign currencies?
Is my money protected if a provider goes bust?
When is the right time to exchange currencies?
Money transfer providers or foreign exchange brokers?
How to calculate an exchange rate markup?

Conclusion

Exchange rates are always changing and it’s impossible to determine the direction they will go. But as you have read, the question of how to get the best exchange rate have steps you can take to ensure you get the best rate available at that time. We pride ourselves on providing reliable information that will benefit the reader, don’t just take our word for it; go out and do the research for yourself, so you are confident about the transaction you are going to make when sending money abroad.

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Contributors

Mehdi Punjwani
Mehdi is an accomplished writer and editor, specializing in personal finance with over five years of experience. His expertise is reflected in his work for prominent brands such as MoneySuperMarket, Equifax, and The AA. Additionally, Mehdi contributes as an author at USA Today, further showcasing his proficiency in the field.