If you want to compare currency broker exchange rates you need to know what a brokers mark up is.
You can find this out by asking these two simple questions:
- How far is my price from the mid market?
- Is that rate fixed?
You will get an answer as a percentage i.e. “our rates are 0.5% from the mid-market.” What this means is that the brokers fees are 0.5% of the transaction value. So if you are converting £100,000 it will cost you £500 in fees. You won’t see this on a statement because it will be built into the exchange rate, which the broker widens from the mid market.
- If the brokers percentage from the mid-market was 0.5% your price would be a little better.
- You would be selling 100,000.00 Pound Sterling (GBP)
You would be buying 125,690 Euros (EUR)
Your exchange rate 1.2569
Mid-market exchange rate 1.2632
- The broker has charged you EUR 630 (£500)
So, why don’t banks and some brokers just show you what percentage from the mid-market a broker charges?
Probably because they are over charging you.
After all exchange rates can move around 1% in a day so the exchange rate you are given by a currency comparison site is at best a guide. By the time you’ve actually got round to getting an account open and arranging the transfer the price will have moved.
You also need to ask if that percentage is fixed. It’s all very well a broker saying they will charge you 0.5% then changing the rate after the your initial deal.
At Berry FX – we always charge a fixed transparent percentage from the mid-market (you can see them here). If you want to find out more about our rates and how much you can save on your personal or business foreign exchange request a quote or contact us.
You may also find our 10 step guide to preparing for a large currency conversion and international transfer helpful.