So, I’ve been messing around with sending money overseas a lot lately, right? Keeps costing me an arm and a leg with all these crazy fees and spreads. I finally got fed up and decided to actually dig into who’s ripping me off the least. It’s a real headache trying to figure out the real cost because everyone hides stuff in their exchange rates.
My goal was simple: find the absolute lowest FX spread out there among the big players I use. I figured, if I’m doing this, I might as well share the mess I uncovered. This isn’t some fancy academic study; this is just me throwing money around and tracking the damage.
Setting Up the Test
First thing I did was pick five services I use regularly for international transfers or just holding foreign cash: Wise (formerly TransferWise), Revolut, PayPal, my standard bank (let’s call them MegaBank), and Interactive Brokers (IBKR) because I heard they were surprisingly good.
I decided to standardize the test on one specific day, aiming to exchange USD to EUR, transferring exactly $1000 equivalent for each attempt. This way, the volume was consistent, and the market conditions were the same. I used a live Reuters or XE spot rate at the exact moment of checking as my baseline—that mythical mid-market rate everyone promises but never delivers.
The Gritty Process
This part was annoying. With Wise and Revolut, it was straightforward. They show you their fee upfront, and the rate is pretty close to spot, making their spread calculation easy. For Wise, I checked their borderless account rate. Revolut needed me to look at their standard account during a weekday to avoid weekend markups—that’s a sneaky trick they pull.
PayPal, oh boy. PayPal is a monster. They quote a rate that is miles off the spot. You have to initiate a transfer or conversion to even see the rate they are offering. I put in $1000 USD to see how much EUR I would get. Their fee is baked right into that awful rate, making their spread huge. I had to calculate their implicit spread by comparing their offered EUR amount against what the spot rate should have given me.
MegaBank was the worst time sink. I had to call them, pretend I was transferring money, wait on hold, and finally get the exchange rate from the representative. They charge a flat transfer fee plus a huge spread on the rate. Their exchange rate was generally the furthest from the spot rate—classic brick-and-mortar behavior.
IBKR was a different beast. They use institutional rates. You pay a tiny commission for the currency trade itself (like $2 or something tiny), and the rate you get is virtually the spot rate. It felt like cheating compared to the others. I had to make sure I simulated the currency conversion and the cost structure for a retail client like myself.
The Revelation (The Damage Report)
After tracking all five for the same $1000 exchange, I calculated the effective percentage loss from the true mid-market rate, which essentially is the spread and fees combined:
- IBKR: The lowest. Their effective spread plus commission was negligible. I’m talking seriously tiny, under 0.05% loss. It was basically the spot market with a cup of coffee fee.
- Wise: Very competitive. They were next up, clear about their fee structure. The total spread/loss came in around 0.5% to 0.7%, depending on the specific fee tier that day.
- Revolut: Solid, but tricky. On a weekday, they were right there with Wise, maybe slightly higher, around 0.6% to 0.8%. But I know if I tried this on a weekend, they’d rocket up.
- MegaBank: Predictably terrible. Between the flat fee and the terrible exchange rate, I was losing over 3% easily. They are just not meant for this kind of thing.
- PayPal: The biggest fee bandit. They don’t even pretend to be fair. Their spread was massive, chewing up 3.5% or more of my money just in the bad exchange rate they gave me. Insanity.
If you’re making big transfers or moving money around all the time, sticking with IBKR or Wise is the only sensible move. I tossed out my old bank transfers and PayPal for good after this little experiment. The numbers don’t lie when you put in the time to actually track where every cent goes.