If you’ve ever sent or received money from another country, you’ve likely heard the term ‘exchange rate’. But what exactly are exchange rates and why are they so important when it comes to transferring money overseas? Let’s unpack the basics – how they work, why they matter and how to get the best exchange rate.
What is an exchange rate?
An exchange rate is essentially the value of one currency compared to another. Imagine you’re planning to send some Australian dollars (AUD) to your family in the Philippines. The exchange rate will tell you how many Philippine Pesos (PHP) your family will receive in exchange for your dollars.
Exchange rates are not fixed. They fluctuate and can change significantly over time. External factors like interest rates, inflation, economic conditions and supply and demand all play a role in determining exchange rates between currencies.
Why do exchange rates matter?
Exchange rates are important as they dictate how much money you need to send and what the final amount received by your recipient will be. A favourable exchange rate means that your domestic currency will convert into more foreign currency, allowing you to send a larger sum to your recipient.
If you’re sending to loved ones overseas, then obviously you want your financial support to make as much impact as possible. By understanding exchange rates and keeping an eye on the fluctuation trends, you can make more informed decisions about when to initiate a transfer.
What exchange rate will I get when transferring money online?
You may have noticed that exchange rates not only fluctuate from day to day, but also between foreign exchange providers. So what is the ‘real’ exchange rate? It’s called the mid-market rate. Also known as the spot rate or interbank rate, the mid-market rate is the middle point between the buy and sell price of two currencies.
When a currency exchange service offers you an exchange rate, the closer it is to the mid-market rate, the better. You’ll find that banks usually have the highest mark-ups on their exchange rates in order to turn more profit. If you’re looking for a reasonable exchange rate and low-cost international transfers, online money transfer platforms are a great option.
With OrbitRemit, you can trust that the exchange rate offered is always highly competitive. Alongside low fees and a transparent pricing structure, customers can feel confident they are making every dollar count when transferring with OrbitRemit.
How to get the best exchange rate?
If you’re planning to send money overseas or already do, here are a few handy tips to make sure you’re getting the best exchange rate possible.
- Look out for misleading information
When a foreign exchange provider catches your eye with ‘no fees’, this usually means the exchange rate has been marked up even more to ensure they still make a profit. Be sure to check with other providers and against the mid market rate to see if the deal is really as good as they say.
- Avoid banks with hidden fees and marked up rates
In the past, banks were the only option for sending money overseas. This means they could get away with high fees and marked up exchange rates. While many people still default to their banks out of convenience, you’ll find significantly better rates and lower fees with online money transfer providers like OrbitRemit.
- Use an online currency exchange
OrbitRemit’s low fixed fees and competitive exchange rates are designed to help customers make their money count for more. We are dedicated to keeping our services affordable and reasonable, so you’ll always find a fair price when choosing to transfer with us.
- Check OrbitRemit’s currency converter for current rates
With our online currency converter, you can stay across live exchange rates and find out exactly how much money your recipient can expect to receive at the time. It’s a simple and effective way to compare currencies at your convenience.