Ask what a euro costs and there is no single answer, even at the same institution on the same afternoon. Banknotes have one price, a card payment another, an account-to-account transfer a third. The gap between them can easily exceed the entire annual movement of the pair, which makes choosing the form more consequential than choosing the day.
Why cash is the most expensive
Physical currency is a commodity with storage costs, and every one of them ends up in the spread.
Banknotes have to be transported under security, insured, counted, checked for counterfeits, and held in a drawer earning nothing until someone wants them. A bureau holding £20,000 in Swiss francs has that money doing no work and carries the risk that the rate moves before anyone asks for it.
There is also an asymmetry most people never see. Banknotes are a nuisance to repatriate — a bank that accumulates foreign cash must physically ship it back — so wholesale banknote rates are worse than electronic ones even before the retail counter adds its own margin. That is the structural reason cash is the priciest form of currency, and why the gap widens sharply for anything outside the majors.
Why cards sit in the middle
When you pay abroad by card, the conversion is done by the card scheme at a wholesale rate that sits close to the interbank market — much closer than any counter will offer you. Your bank then adds a foreign transaction fee, commonly a percentage of the amount, and some cards charge nothing at all.
So the card cost is: a near-market rate, plus a stated fee. That transparency is what makes it usually the best deal for day-to-day spending, and it is why the total is easy to check afterwards against the reference rate for that date.
There is exactly one way to ruin it, and it is offered to you at almost every terminal: agreeing to be charged in your home currency. That hands the conversion to the merchant's provider at a rate of their choosing, and it costs several percent invisibly. The full mechanics are in dynamic currency conversion; the rule is to always choose the local currency.
Why transfers are cheapest per unit, and not always cheapest
An account-to-account conversion involves no notes, no vault and no counter. The bank buys the currency electronically and the margin can be very thin — which is why a large conversion should almost never be done in cash.
The catch is that transfers carry fixed costs that do not shrink with the amount: a sending fee, sometimes an intermediary bank's deduction along the way, and an incoming payment fee at the receiving end. On £10,000 those are rounding errors. On £150 sent monthly they can dwarf the exchange rate difference entirely. That arithmetic is worked through in what a cross-border transfer really costs.
The comparison in one table
| Rate quality | Extra costs | Best for | |
|---|---|---|---|
| Cash | Worst | Usually none separately | Small sums, immediate use, places without cards |
| Card | Good | Foreign transaction fee, ATM operator fee | Everyday spending abroad |
| Transfer | Best | Fixed fees at both ends, possible intermediary cut | Large one-off amounts |
The ordering by rate is stable. The ordering by total cost is not, because it depends entirely on the size of the amount — which is the whole point.
How to decide, in practice
Under a couple of hundred: take some cash for convenience and pay by card for the rest.
A few hundred to a couple of thousand — a holiday budget: cash for small purchases and transport, card in the local currency for everything larger. See how much cash to take abroad for the split.
Thousands — a car, a deposit, a property payment: this belongs in a transfer or an electronic conversion at a bank, not at a counter. The difference between cash and electronic rates on £20,000 is the sort of number that pays for a week of the holiday you were saving for.
Regular small amounts in and out: count the fixed fees first and the rate second. If you receive foreign currency repeatedly, holding it in a foreign-currency account and converting less often pays the spread fewer times.
Checking what you actually paid
Whichever form you used, there is one check that works for all three. Take the amount you received, divide by the amount you gave, and compare that figure with the reference rate for that day using the converter. The gap, expressed as a percentage, is the whole cost of the transaction — rate, fees and everything else combined, in a single number you can compare against the next time.
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Frequently asked questions
How an exchange rate is actually set, what a spread costs on a real transaction, what happens when your income and your debt are in different currencies, and what to check before paying or being paid abroad. They explain mechanisms rather than forecast rates, and each one carries the date it was last revised at the top.
No. We publish no forecasts, price targets or trading calls, and no article recommends buying or selling a currency. Exchange rates over short horizons are close to unpredictable, and a site that pretends otherwise is selling something. What the articles do instead is explain the mechanism, so that you can read the news for yourself.
They are written by the kursdanas.rs editorial team. We accept no commissioned or sponsored articles, and advertising has no influence on what is published or on the order of anything in our tables. Where an article states a figure it names the source, and where we get something wrong we correct it and change the revision date shown on the page.