FXplained
Check the true cost of an FX quote
The true cost of an FX quote is the exchange-rate margin compared with the mid-market rate, plus any separate charges. Compare both rates for the same currency pair, in the same direction and at the same time, then check the total paid and received. Our free calculator does the sum for you.
01
Start with the mid-market rate
The mid-market rate is the midpoint between buying and selling rates for a currency pair. Use a timestamped benchmark for the same pair and quote time; rates from different sources can differ or be delayed. It is a comparison point, not a guaranteed rate you can transact at.
02
Compare it to your quoted rate
Express both rates as units of the receiving currency per unit of the sending currency. Then calculate the rate margin as (mid-market rate − quoted rate) ÷ mid-market rate × 100. Use comparable timings and settlement terms: a difference between a forward rate and today’s spot rate is not simply a provider’s margin.
03
Add any stated fees on top
Check for transfer fees, processing charges and any intermediary or recipient-bank charges. Establish whether each charge is additional, included in the amount paid or deducted from the amount received, so you do not count it twice.
04
Multiply by your transfer size
Multiply the sending amount by the difference between the benchmark and quoted rates to calculate the receiving-currency shortfall. To express that shortfall in the sending currency, divide it by the same benchmark rate.
05
The one number that matters
Indicative total cost in the sending currency = sending amount × (rate margin percentage ÷ 100) + separate charges converted to that currency. Include each charge once, using a consistent benchmark and timing. Ask the provider to confirm the total amount payable and the amount the recipient will receive.
Worked examples
All rates are illustrative, not live quotes.
1. Sending £10,000 to euros
- Mid-market 1.1700; your quote 1.1500.
- Margin: (1.1700 − 1.1500) ÷ 1.1700 × 100 = about 1.71%.
- You receive €11,500 instead of €11,700 – €200 less, which is about £171.
- Add a £15 transfer fee and the total cost is about £186, or roughly 1.9% of what you sent.
2. Paying a $50,000 invoice from pounds
- Mid-market 1.2700; your quote 1.2500.
- At your quote the invoice costs £40,000; at the mid-market rate it would be about £39,370.
- The cost of the rate is about £630 – a margin of roughly 1.57%. Add any separate fees on top.
- If the payment uses the SHA charging option, an intermediary bank may also deduct a fee, so your supplier could receive slightly less than $50,000.
3. Comparing a forward quote
- A forward rate for a date three months away isn't comparable with today's spot rate on its own. The interest-rate difference between the two currencies moves the price.
- Compare a forward quote with a forward benchmark for the same date, or ask the provider to show the spot rate and the forward points separately.
Frequently Asked Questions
What is the true cost of an FX quote?
The true cost is the exchange-rate margin compared with a suitable mid-market benchmark, plus any separate transfer or other charges. Compare the amount you pay and the amount the recipient receives, using the same currency pair, rate direction and quote time.
How do I calculate the exchange-rate margin?
For a quote expressed as units of the receiving currency per unit of the sending currency, divide the mid-market rate minus the quoted rate by the mid-market rate, then multiply by 100. If your quote uses the opposite direction, convert both rates to the same direction first.
Does a fee-free transfer have no FX cost?
Not necessarily. A provider can charge no separate transfer fee but include a margin in the exchange rate. Check both the rate and any separate charges before comparing offers.
Can I compare a forward quote with the current mid-market spot rate?
A forward contract has a future settlement date, whereas a spot quote is for near-term settlement. Forward pricing reflects that date and the interest-rate difference between the currencies, so a comparison with the current spot rate alone does not isolate the provider’s margin.
Read our mid-market rate guide and guide to reading FX quotes, or return to the My Currency Cost home page.
Is the mid-market rate a rate I can actually trade at?
No. It's a benchmark – the midpoint between buying and selling prices. Providers deal at their own rates, which is why the gap between the two is worth checking.
Does the size of my transfer change the margin?
Often, yes. Larger transfers can attract tighter margins, so compare quotes for the amount you actually intend to send.
Is the calculator result a guaranteed cost?
No. It's an indicative estimate based on the rates you enter and a benchmark at a point in time. Ask your provider to confirm the final amounts.
Is the margin the same as the spread?
Not quite. The spread is the gap between the buying and selling prices in the market. The margin is how far your quote sits from the mid-market rate – which is what you pay the provider.
What's a reasonable margin to pay?
It depends on the amount, the currency pair and the provider, so there's no single right number. Comparing two or three like-for-like quotes against the mid-market rate shows you what's competitive for your transfer.
Why does my quote cost more in one direction than the other?
Often it doesn't – it just looks that way, because a rate quoted the other way round (e.g. 0.85 instead of 1.17) makes the gap look different. Always express both rates in the same direction – units of the receiving currency per unit of the sending currency – before you compare them.