What is the market rate?
The market rate, also known as the ‘interbank’ or ‘mid-market’ rate, is used primarily for consumers as a benchmark. It is essentially a ‘wholesale’ rate that is typically only available to large financial institutions, like banks, when they purchase large amounts of currency.
That’s often not the rate that is then translated to the customer when they lock in a rate to make a transfer. Often, banks can charge a margin of up to 5% on the market rate when they send your money overseas which, depending on the size of your transfer, could end up costing you hundreds of dollars. Say for example you wanted to transfer $10,000 AUD, with that 5% margin, you’d be paying up to $500 on top of the banks fees. Ouch.