Currency Exchange Spread.

In plain English

The currency exchange spread is the difference between the rate at which a bank, kiosk, or app will sell you a foreign currency and the rate at which it will buy it back. The midpoint between those two prices is the mid-market rate, the rate you see on a news site. Whoever exchanges your money sets their buy and sell rates a little to either side of that midpoint, and that gap is their profit. A wider spread means a worse deal for you, even when there is no separate fee listed.

01Why it matters

A bad spread can cost you more than an upfront fee would, and because it is buried in the rate, most people never notice they paid it.

02The math, step by step

Suppose the mid-market rate is 1 dollar to 0.90 euros. An airport kiosk might sell you euros at 0.84 and buy them back at 0.96 (illustrative round numbers, not a quoted market spread). Buying at 0.84 instead of the 0.90 midpoint is roughly 7 percent worse than the mid-market rate, so on a 1,000 dollar exchange that spread alone costs you around 70 dollars even with a fee of zero advertised.

03What this is NOT

04Receipts

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