Here at Currensea, we are proud to offer our customers 16 interbank currencies with no hidden fees, even at the weekend. But what is the interbank exchange rate?
The interbank rate defined
In simple terms, the interbank rate got its name as it’s the rate used by banks when they trade large amounts of foreign currency. Also known as the ‘real-rate’ and is never normally accessible to the general public.
When you spend internationally with your existing debit or credit card, for example when you spend in US$ from your GB£ account, the bank will charge you a fee in addition to the rate they previously used to transfer between themselves. The fees that are included in your foreign card spend allow your banks to make a profit from the exchange.
By spending in multiple currencies at the interbank exchange rate, you avoid any fees and charges.
How the interbank rate is calculated
The price at which banks sell currencies is called the ask and the price at banks buy these currencies is called the bid. The difference between the two is known as the bid/ask spread. There are many factors that can influence the bid/ask spread including; politics, inflation and interest rates, government debt and supply, and demand for the currency.
When the rate isn’t interbank, the bid/ask spread can be set by foreign exchange brokers, who generally set the selling price a fraction higher than the buying price. This fraction allows them to make money off the currency conversion.
Currency exchange rates are fluctuating all the time, here at Currensea we make sure you have access to real-time exchange rates to make sure that you’re paying at the most accurate rate possible.
Why does this matter to me?
If you’re using your debit card, credit card, or travel card services when spending abroad, you’re unlikely to receive the interbank exchange rate. This means that every time you spend in a foreign currency you might be paying a big markup on each transaction. Different service providers can charge different markups, but on average your bank charges a markup of over 3.25%. If you’re buying goods for your business or going on holiday with your family, these costs can add up quickly. If you’re making international payments regularly, these costs can have a huge impact. By ensuring that you are getting a rate as close to the interbank rate as possible, helps you save as much as possible per transaction.
How can I get the interbank exchange rate?
Currensea partners with your existing bank account so you get all the perks of your high-street bank but without the foreign transaction fees. We offer 16 interbank currencies. All other rates are offered at the Mastercard exchange rate, which is as close to the interbank exchange rate as possible.