Exchange Rates Explained: Mid-Market Rates, Spreads and Card Fees

By the SAA Tool editor, an IT support engineer · Last reviewed 1 October 2026 · 6 min read

The exchange rate you see in the news is almost never the one you get. Banks, card providers, money transfer services and exchange counters all start from roughly the same market price and then add their own margin, and sometimes a fee on top. Once you know where those costs hide, you can compare offers properly. The rates in the examples below are made up to keep the maths easy, so check today's figures before you rely on them.

How to read an exchange rate

An exchange rate is the price of one currency in another. "EUR/USD 1.10" means one euro buys 1.10 US dollars. The first currency is the one you're pricing, and the number tells you how much of the second currency it costs.

To flip a rate, divide 1 by it. If 1 euro is 1.10 dollars, then 1 dollar is 1 ÷ 1.10 = 0.9091 euros.

You can also work out a rate between two currencies from their rates against a third. If 1 US dollar is 0.92 euros and 83 Indian rupees, then 1 euro is 83 ÷ 0.92 = about 90.22 rupees. This is called a cross rate, and it's how most converters, including ours, cover every pair of currencies from one table.

The mid-market rate and reference rates

In the wholesale currency market there is always a price at which dealers will buy a currency and a slightly higher price at which they'll sell it. The mid-market rate is the point halfway between the two. If euros are being bought at 1.0995 dollars and sold at 1.1005, the mid-market rate is 1.1000.

Central banks and data providers also publish reference rates, which are a snapshot taken once a day. The European Central Bank's euro reference rates are based on a daily procedure between central banks at around 14:10 CET and are usually published at around 16:00 CET on working days. The ECB says they are published for information only and strongly discourages using them for transactions.

Reference rates are ideal for budgeting, checking an invoice or estimating what something costs. They aren't a price anyone has promised to deal at.

The spread: where the cost hides

Anyone who changes money for you sets their own buying and selling rates around the market price. The gap between their rate and the mid-market rate is their margin. That's why "no commission" or "0% fee" doesn't mean free: the cost is built into the rate.

Say the mid-market rate is 1 British pound = 1.25 euros, and an exchange counter offers 1.15. Changing £500 gets you €575 instead of €625. That's €50 less, a margin of 8%.

Margin % = (Mid-market rate − Rate you get) ÷ Mid-market rate × 100

The same formula works for any offer. If the mid-market rate is 1 Australian dollar = 0.66 US dollars and your bank gives you 0.643, its margin is (0.66 − 0.643) ÷ 0.66 = about 2.58%.

Changing leftover cash back at the end of a trip costs a second spread, so converting money back and forth loses you money twice.

Card payments abroad and dynamic currency conversion

When you pay by card abroad in the local currency, your card provider converts the amount at its own rate, and some banks add a foreign transaction fee. Your card's terms will show the fee, if there is one.

Some card machines and cash machines offer to charge you in your home currency instead. This is dynamic currency conversion, and the rate is set by the shop's or machine operator's provider rather than your bank. It can feel reassuring to see a familiar currency, but compare the numbers before you accept.

Take a US visitor in Japan with a ¥12,000 bill and a rate of 1 US dollar = 150 yen. At that rate the bill is $80.00. Paying in yen with a card that adds a 3% fee costs $82.40. Accepting a conversion into dollars with a 7% margin built in costs $85.60, over $3 more for the same meal.

Within the EU, Regulation (EU) 2019/518 requires the total currency conversion charges to be shown as a percentage mark-up over the latest ECB euro reference rates before you pay by card or withdraw cash, and your bank must send you an electronic message with the same information after a payment in another EU currency. Outside the EU, rules on what must be shown differ. The safe habit anywhere is to choose to pay in the local currency.

Sending money abroad

For international transfers the total cost is the fee plus the exchange margin, so the only fair comparison is how much arrives at the other end.

Suppose you're sending $500 to the Philippines and the mid-market rate is 1 US dollar = 57.00 pesos, so ₱28,500 at that rate:

The fee-free offer is the more expensive one. In the United States, remittance providers must tell you the exchange rate, their fees and taxes, and the amount expected to be delivered, as the Consumer Financial Protection Bureau explains, which makes this comparison easy. The World Bank's Remittance Prices Worldwide database, which counts the fee and the exchange rate margin, put the global average cost of sending money at 6.36% of the amount sent in the third quarter of 2025.

How to use our Currency Converter

The Currency Converter covers more than 160 currencies with daily reference rates from ExchangeRate-API.

1. Type the Amount.
2. Choose the currencies under From and To. The popular ones are listed first, then all currencies.
3. Click ⇄ Swap to reverse the direction.
4. Read the converted amount, the Rate, the Inverse and when the Rates updated. A table below shows the same amount in other popular currencies.

To estimate what a bank or card might really give you, take the margin off with the Percentage Calculator, using the "Increase or decrease X by Y%" line. At a made-up rate of 1 euro = 90 rupees, €1,000 is ₹90,000, and with a 2.5% margin you'd receive about ₹87,750.

Know its limits. The rates are reference rates, updated once a day according to ExchangeRate-API's documentation, not live dealing prices, and your browser keeps a copy for up to six hours. The page downloads the whole rate table and does the sum on your device, so the amounts you type aren't sent anywhere, but it does need an internet connection to load the rates.

Quick answers

• Why is my bank's rate different from the news? News and reference sites show a market or reference rate. Your bank adds its margin.
• What should I compare? The amount you or your recipient ends up with, after every fee.
• Pay in local or home currency? Usually local, then check your card's foreign fee.
• Does "no commission" mean no cost? No. Work out the margin from the rate offered.
• Should I change money back? Only if you have to, since each conversion costs a spread.

This guide is general information, not financial advice. Exchange rates move constantly, and rules on fees and disclosure differ by country, so check the terms with your bank, card issuer or transfer provider.

Spotted a mistake or something out of date? Tell us and we'll fix it.