The exchange rate in a search result or a news headline is usually the mid-market rate. You'll rarely be able to buy currency at it. Banks, card companies and exchange desks all quote something a little worse, and knowing the size of that gap lets you compare them.
Two prices and the point between them
At any moment the currency market has a price at which traders will buy and a price at which they will sell. Suppose buyers are offering 1.0990 dollars per euro and sellers are asking 1.1010. The mid-market rate is halfway between them, 1.1000. It moves throughout the trading week as those two prices move.
Why your rate is different
The company changing your money has costs and wants a profit, and it takes them in different ways:
- Exchange desks post a buy rate and a sell rate with a gap between them, and airport desks are often among the widest. A "0% commission" sign means no separate fee. The margin is still in the rate.
- Bank transfers usually add a margin to the rate, and some add a transfer fee as well.
- Card payments use your card network's rate, plus any foreign transaction fee from your bank.
- Cash machines can add a fee from your bank and another from the machine's operator.
Work out what you're paying
Say you're changing 1,000 USD. The reference rate is 0.90 EUR per dollar, and an exchange desk offers 0.86. At the reference rate you'd have €900. At the desk you get €860, so the conversion costs you €40, or 4.4%.
When you compare two offers, ignore the word "commission" and ask how many euros you'll receive for your 1,000 dollars after everything. The bigger number is the better deal.
Where a converter app fits
Currency Converter shows reference rates, updated daily and saved on your iPhone. You can't buy at those rates, and banks and card companies will quote something different. Use them as a yardstick: type the amount, note the result, and compare it with the figure the exchange desk gives you before you hand over any money.