Exchange Rate Spreads
The spread is the difference between what you pay when buying a currency and what you get when selling. It's how banks and exchange services make money.
What is a Spread?
In forex, the bid is the price at which a dealer will buy from you. The ask is the price at which they sell to you. The spread is the gap between those two rates. When you convert currency, you typically pay the ask (higher) and receive the bid (lower) if you reverse the trade.
💡 Use our Currency Converter for live quotes. Rates shown are typically mid-market; your bank or provider may add a spread.
Why Do Spreads Exist?
- Dealer profit — Banks and exchanges need to cover costs and earn a margin
- Market risk — Prices can move before a trade settles
- Liquidity — Less-traded pairs often have wider spreads
How to Get Better Rates
Compare providers before converting. Specialist brokers and some fintech apps often offer tighter spreads than traditional banks. See our Mid-Market Rate guide to understand the reference rate.
Calculating Spread Cost
Use our Forex Spread Cost Calculator to see exactly how much you lose when converting a given amount at a specific spread. For example, a 1% spread on $10,000 costs you $100. Knowing this helps you compare providers and choose the best deal.
Spreads Vary by Pair
Major pairs (e.g. USD/EUR, USD/GBP) typically have tighter spreads because they're more liquid. Exotic pairs (e.g. USD/TRY) often have wider spreads. Our Currency Pairs Explained guide covers major vs minor vs exotic pairs.
For informational purposes only. Not financial advice.