What is currency?

Currency is the most specific sense of money that we use as a medium of exchange and to exchange banknotes and coins. In modern times, we have another type of currency: Digital currency, which raises with the development of the Internet and computers. Digital currency has several kinds, and are cryptocurrencies, virtual currencies, and central bank digital currencies. Digital currencies are most similar to traditional currencies; they do not appear in physical forms such as banknotes and coins. The government does not issue digital currencies, so they are illegal and cannot change their own beyond the borders of one state. In ancient Egypt, they used money in the form of receipts, which represented grain stored in temple granaries in Sumer in ancient Mesopotamia and Ancient Egypt.

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What is the cross rate?

The foreign exchange rate is the current rate of a particular currency that denominates in another currency. Currency pair is a comparison of two currencies. For example, we can take the most common currencies converted into each other, which are USD in EUR and vice versa. That means one $ 1.22 is € 1.00.


How to convert currency?

Foreign exchange rates calculation can be manually or converted using our Currency Converter – Foreign Exchange Rates. Either way, you must first check the conversion rate by using an online exchange rate calculator or contacting your bank. Your bank’s currency rates may differ from what you see online since banks make modest profits on exchanges, although online rates are the same as those offered between banks.

The method for determining exchange rates is as follows:

Exchange Rate = Starting Amount (Original Currency) / Ending Amount (New Currency)

The conversion rate would be 1.25 if you wanted to buy 80 Euros with 100 US Dollars. However, the conversion rate is 0.8 if you want to convert 80 Euros for 100 US Dollars.

What is the best way to convert currency?

The greatest currency conversion rates can be found if you don’t have your suitcases packed yet. Many banks provide currency exchange services to their clients. The best location to convert money is at your local bank or credit union, even if there is a cost (and the cheapest). You can request currency to be delivered to you or picked up at a branch via phone, online, or at a branch location. You may pick up your money the following day, have it sent in one to three working days, or choose overnight shipment from some currency suppliers.

Also, you may use a currency converter online and have the money sent directly to your house. However, the exchange rate is less advantageous, and the shipping fees will deplete your cash. Also, only resorting to airport shops or kiosks should be considered an option. Fees are excessive, and exchange rates are bad.

How to make money by converting currencies?

Foreign exchange trading allows investors to trade almost any currency in the world (Forex). When trading foreign exchange for profit, you should be aware that you are doing it at the risk of losing money. In essence, you’re placing a wager that one currency’s value will rise against another. Currency trading has a lower anticipated return than the stock or bond markets but is equivalent to the money market. While this is true, increasing leverage can raise both rewards and risk at the same time. Active currency traders typically make more money than passive investors from their trades.

Currency pairings are crucial to keeping in mind while trading and evaluating currency values. For instance, you could have seen a EUR/USD exchange price of 1.1256. To illustrate, we’ll use the Euro as our foundation currency. The quotation currency is the American dollar.

Factors that change the exchange rate

Many factors change the exchange rate, and some of them are:

  • Inflation factor – if the influence increases, the value of money decreases and on that basis, other currencies strengthen.
  • The economic stability of the state – if a country experiences economic growth, the rates increase, which results in a decrease in demand.
  • Fiscal and monetary policies – significant fiscal gains and expenditure deficits caused by the expansion of the monetary and fiscal system and influence lead to a significant fall in the currency.
  • Interest rate – is a factor that affects supply and demand, which changes the value of money and thus all other costs and revenues.

Good, bad, and ugly of currency exchange

Currency conversion costs, if you’re not cautious, might add up to more than you think. Updating your understanding of currency conversion rates can help you get the most out of your dollar when traveling overseas. Because currency conversion rates vary widely from country to country, tourists should be prepared before departing.

Many alternatives come with exorbitant hidden costs, and some locations are more difficult to negotiate since they are more cash-based than the typical American is accustomed to. There are more convenient and less expensive options to convert currencies at airports and large hotel foreign currency exchange offices. While some exchanges promote “no-fee” transactions, they nevertheless make a lot of money by charging a large commission.

Multiple currency converter and cross rates

Software that allows trading in various currencies, such as a multi-currency converter, makes buying and selling across borders easier.

Companies in today’s global marketplace must do transactions in many currencies, including foreign ones. Many European countries have had to get used to coping with the Euro and their national currency simultaneously. Because of this, companies having clients in the United States may have to deal with three or more currencies. As a result of globalization and outsourcing, U.S. firms now have to deal with numerous currencies.

The market rate and the customer rate – what’s the difference?

The market rate is also referred to as the interbank rate or the wholesale rate. That is the rate at which banks and financial institutions will trade out. That is where all effects will step in and will offer you a very competitive customer rate. As close to the market as possible, there would just be a small margin or markup involved with these transfers.

To calculate the customer rate, we take into account the current market rate and our profit margin but do not add any fees (if applicable). Customers may receive a varied rate depending on the market rate, the amount sent, how often it is transferred, and the currency pair.

Currency exchange methods

Credit card

In contrast to using cash, which necessitates conversion, using a credit card allows you to do it instantly. Even if you have a card that doesn’t charge international transaction fees, currency conversion on your credit card may still come with additional costs.

The card network, such as Visa and Mastercard, charges a currency conversion fee. Both charge a flat rate of one percent. The card issuer will charge you an additional fee. This is usually 1% or 2%, although it might be more or less depending on the card issuer and the card.

Debit card

When using a debit card in a restaurant or business, you may be charged fees much as when using a credit card abroad. When withdrawing cash from ATMs, use your debit card to receive the best rate, also when making larger purchases, use your credit card. Carrying large sums of cash is not recommended. Even if you receive a better exchange rate, carrying cash increases your risk of losing it or having it stolen.

Prepaid card

If you’ve never used one before, a currency card is a prepaid card that lets you make purchases in other currencies without incurring any costs. You may load the card with various currencies depending on where you live, including pounds, euros, and U.S. dollars. The currency on the card is set at the current exchange rate.

You may load several prepaid cards with pounds and then use them for your holiday shopping anywhere around the world, in different currencies. Many debit and credit cards incur high international transaction fees if you use them, so pre-loading your card with cash in advance allows you to avoid them.

Airport or hotel exchange desk

Airport currency exchange offices offer some of the highest exchange rates, so you pay more in dollars for conversion. The profitability of airport currency counters is heavily reliant on the ease of their services. You’ll be better off utilizing your debit card to withdraw cash from an airport ATM than trying to use your credit card. Hotel exchange bureaus are also expensive, but for a different reason. Because it’s a burden for them, hotels that still provide this service often charge exorbitant exchange rates.

Dynamic currency conversion

Some credit card issuers allow customers in the United States to choose between paying in U.S. dollars or the local currency while transacting overseas. It’s referred to as dynamic currency conversion. Using dynamic currency conversion is a risky business if you’re not careful. Dynamic currency conversion is mostly used in Europe and lets you pay with your native currency instead of the one you’re charged in. Even though it’s handy, this is one of the worst travel discounts you can get. When traveling, it’s always preferable to use the local currency to make your purchases. Due to the additional conversion, your costs will increase.

Traveler’s checks

Travelers’ checks are seeing a decrease in sales as people switch to more convenient payment options like credit cards and mobile wallets. Traveler’s checks written out in euros are still widely accepted by many establishments abroad. However, if the checks are in U.S. dollars, you’ll have to exchange them at a bank or currency counter, which will cost you money or result in a bad conversion rate.

Cash advance

Taking out a credit card cash advance is a simple way to become bankrupt no matter where you are. While the foreign exchange rate on your card may be reasonable, the interest rate on cash advances on your card may be prohibitive. Depending on your credit card, you may be charged interest rates as high as 20% on cash advances.

Currency exchange table

The most common currencies that we convert are:

  • EURO
  • American Dollar
  • British pound
  • Indian rupee
  • Australian dollar
  • Canadian dollar
  • Singapore dollar
  • Swiss franc
  • Japanese yen and
  • Chinese yuan


What are foreign transaction fees?

Financial institutions charge consumers who use electronic payment cards to make purchases in foreign currencies with foreign transaction fees. “Foreign transaction fees” or “foreign currency transaction fees” are other names for these costs.

How much do foreign transaction fees cost?

The average foreign transaction charge is about 3% of the total transaction value in U.S. dollars. 1 This cost may be composed of a 1% payment processor fee (such as MasterCard or Visa) and a 2% card issuer fee (such as Bank of America).

How to avoid foreign transaction fees?

Payment networks, banks, ATM operators, and retailers all have the option of charging currency conversion fees. These are conversion rate markups, and they’re almost always necessary. There are, however, methods for minimizing their impact. Foreign transaction fees are also charged by a few debit and credit cards. If you buy something in a foreign currency or a foreign bank processes your transaction, you may be charged a fee.

Other Calculators

Once your grace period has expired (if you have one), you will be charged interest in the form of finance charges for any remaining amount on your credit card, so for calculating all that use our free Finance Charge Calculator it will help you a lot. For more calculators in math, physics, finance, health, and more, visit our CalCon Calculator official page.