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If you are planning a trip abroad, or maybe you are a freelancer working in the Gig economy and constantly sending money abroad, you have to get more knowledgeable about fees.
Why? Just because some of the fees associated with currency exchanges and cross-border transactions can easily be avoided by choosing the right bank account.
And who wants to let banks eat a portion of their profit when you can collect it all by yourself?
If you are transacting between different currencies, then you are probably using a currency exchange platform. The thing is that most currency exchange platforms have a sneaky way of introducing fees, that are sometimes hard to understand, and you end up paying more money for a service you don’t really want or need.
So, how can you avoid these wallet-draining traps in the form of fees? Is it really possible? Let’s find out.
Well, banks and exchanges are there for a reason and they have costs of operations, right? They are not some non-profit organizations that are doing you a favor by exchanging your currency for a different one.
They take fees just because that’s the only way they can make money. But how they do this is what’s important.
They usually do this in two ways:
They can inflate the exchange rate (meaning that they will give you an unfavorable exchange rate and make money) or
They can apply a service fee and give you regular market rates.
The first case is sneakier, and you need more time and effort in order to find out whether you are paying more than expected. For example, an inflated exchange rate might not seem like a fee at first, but when you compare it to the market rate and find out that is worse, that money goes into the platform’s pocket.
That’s why you need to look for a transparent online platform that has a low-rate currency exchange like Genome. Read more here.
On the other hand, the service fee is much more transparent, although some exchanges have a sneaky strategy of introducing the fee (monthly account management, or at the last page of the exchange process).
You find a currency exchange service that looks promising, the exchange rate seems fair, and you’re ready to go. But then, just as you hit “confirm,” you see the final amount — and it’s way higher than you expected. Where did all that extra money go? – hidden fees!
It’s easy to get tricked by these fees because they’re often buried in fine print or rolled into the exchange rate. The key to avoiding them is understanding exactly what to look for and choosing platforms that are upfront about their costs.
Let’s break down the most common offenders. First, you have the exchange rate markup, which is the difference between the rate the platform gives you and the actual market rate. It’s like paying for an extra-large pizza and getting a medium — you’re not getting what you paid for.
Then, there are processing fees and transfer fees, which might be disguised under names like “service charges” or “administration fees.” To make matters worse, the recipient can sometimes get hit with additional fees, meaning your friend or family member receives less than you intended.
And let’s not forget about bank fees — if you’re using wire transfers, banks often tack on their own charges just because they can.
So how do you find a currency exchange platform that’s not out to drain your wallet? Transparency is the magic word here. A good platform will offer exchange rates that closely match the real market rate, also known as the mid-market rate. This is the rate you’d find on Google or XE.com, and it’s a solid baseline for fairness.
A transparent platform will also disclose all fees upfront. You shouldn’t have to click through multiple pages or dig into the fine print to find out how much you’re being charged. If the platform offers a clear breakdown of the fees before you confirm the transaction, that’s a good sign.
Some services even provide fee calculators so you know exactly how much you’re sending and how much the recipient will get.
Even if you’re using a transparent platform, there are still a few tricks to help you save more. First, always compare the rate offered with the actual mid-market rate. If the numbers don’t match up, you’re probably getting short-changed.
As we mentioned earlier, websites like XE.com or Google can give you a real-time rate to compare against.
Timing also matters. Some platforms apply extra fees or worse rates on weekends because the markets are closed. If you can, exchange your money on a weekday to get the best deal. Also, avoid wire transfers for small amounts, since banks love to charge hefty fees for these. Stick to digital platforms for smaller transactions to keep costs down.
The world of exchange fees might be a big sneaky industry, but with the right tools and knowledge (knowing what to look for) you can easily save tons of money that is usually paid for avoidable fees.
