Guides › Everyday calculators

Currency conversion basics: rates, spreads, and fees

Last updated 10 October 2026 · Written by Souren Das

Sending money abroad, paying for something in dollars with an Indian card, or changing cash before a trip all involve the same question: how much will actually arrive? The answer depends on more than the exchange rate you see on a search engine. This guide explains how exchange rates work, what the mid-market rate is, how spreads and fees change the result, and how to check a real quote yourself. It also explains what the FX worksheet on this site is for and what it is not.

This is general information, not financial advice. Rates and fees change constantly. Always confirm the final amount with your bank or provider before you send money.

What an exchange rate is

An exchange rate is the price of one currency in another. If 1 US dollar costs 83 rupees, the USD/INR rate is 83. The rate moves throughout the day as banks and traders buy and sell currencies.

A rate can be written either way round. USD/INR 83 means 1 dollar = 83 rupees. INR/USD is the reverse, 1 ÷ 83 ≈ 0.012, so 1 rupee = 0.012 dollars. Mixing up the direction is the most common conversion mistake, so always check which currency comes first.

The numbers in this guide are round examples for explaining arithmetic, not today's rates.

The mid-market rate

At any moment there is a price at which large banks are willing to buy a currency and a slightly higher price at which they will sell it. The mid-market rate is halfway between. It is the rate you see on news sites and search engines, and it is the fairest reference point. Almost no individual customer gets exactly this rate.

Spreads: the hidden cost

A bank or transfer service usually converts your money at a rate worse than mid-market and keeps the difference. That difference is the spread or markup. It is often not shown as a fee, which is why a transfer advertised as "zero fee" can still be expensive.

Example: the mid-market rate is 83 rupees per dollar. A provider offers you 81.75. The markup is 1.25 rupees per dollar, about 1.5 percent. On 1,000 dollars, the recipient gets 81,750 rupees instead of 83,000, a hidden cost of 1,250 rupees.

Fees on top

Providers may also charge:

A fixed transfer fee, such as 5 dollars per transfer.
A percentage fee on the amount.
Intermediary or receiving bank fees on international wire transfers, which can be deducted along the way.
Card foreign transaction fees, often a percentage, when you pay in a foreign currency with a card.
In India, tax collected at source (TCS) may apply to some outward remittances above certain thresholds under the Liberalised Remittance Scheme. Rules change, so check the current position with your bank.

Work out the true cost of a quote

Note the total you pay, including every fee, in your currency.
Note the exact amount the recipient will get, in their currency. Good providers show this before you confirm.
Divide what arrives by what you pay. That is your effective rate.
Compare it with the mid-market rate at the same moment. The gap, as a percentage, is your real cost.

Example: you pay 1,005 dollars (1,000 plus a 5 dollar fee). The recipient gets 81,750 rupees. 81,750 ÷ 1,005 = 81.34 rupees per dollar. Against a mid-market rate of 83, the total cost is about 2 percent. Comparing providers this way, on the amount that arrives, is more reliable than comparing advertised fees.

Using the FX worksheet on this site

The FX worksheet is for practising this arithmetic, and it has limits: it uses a fixed table of example rates bundled with the page, last set in September 2026, not a live feed. The chart is an illustration, not market history. The remittance cards are hypothetical fee examples, not quotes from real providers.

Enter an amount in Send Amount and choose the source currency.
Choose the destination currency next to Converted Recipient Value.
Read the example rate at the bottom of the card, in the form 1 USD = x EUR.
Use the swap button to reverse the direction.
Scroll to Hypothetical remittance fee examples to see how a percentage fee, a fixed fee, and a worse rate change what arrives.

For a real transfer, look up the live mid-market rate from a current source and use the method above with your provider's actual quote.

Common mistakes

Comparing only the fee. The spread is often larger than the fee.
Using the rate in the wrong direction. Check whether you are multiplying or dividing.
Letting the card network or merchant convert. When a foreign shop or ATM offers to charge you in rupees ("dynamic currency conversion"), the rate is usually worse. Choosing the local currency and letting your card issuer convert is often cheaper, but check your card's foreign transaction fee.
Exchanging cash at the airport. Airport counters often have wide spreads. Compare before you go.
Forgetting receiving fees. Ask whether the recipient's bank charges for incoming international transfers.

Privacy

The FX worksheet runs in your browser tab and does not ask for any account or bank details. Nothing you type is sent to FileTools Kit.

FAQ

Why does my bank's rate differ from Google's?

Search engines show a mid-market rate. Banks add a spread.

Are the worksheet's rates live?

No. They are fixed examples. Use a live source for real decisions.

Is crypto cheaper for sending money?

Network fees can be low, but buying and selling crypto has its own spreads and fees, prices move quickly, and regulations and taxes apply. The worksheet's stablecoin card does not include cash-out costs.

When is the best time to convert?

Nobody can reliably predict short-term moves. Focus on getting a fair rate and low fees.

Written by Souren Das, FileTools Kit, Bengaluru. Last updated 10 October 2026. Spotted a mistake or a step that does not match the tool? Email support@filetoolskit.com and I will fix it. See how tools and guides are tested.