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Understanding Currency Exchange Rates

The language of currency exchange can be confusing, whether you’re at the bank or trying to navigate online currency exchange rates. Using sites such as Xchange for America takes away much of the guesswork, but what if you come across some strange language as you try to understand your currency exchange to the fullest? Luckily, the language is easily explained, with a basic overview of each term.

Read on to understand what’s happening with your money at every exchange. If you have any specific questions about currency exchange rates, you can always call Xchange of America at (888)-7-XOA-XOA 7 days a week.

Sell Rate

This term is used to discuss the rate which foreign currency is sold for local currency. When you are preparing to change your American money for the target company’s currency, you will use your target country’s sell rate to determine how much your exchange is worth. You’ll also hear this term as “holiday money rate” or “tourist rate”. All three phrases mean the same thing.

Buy rate

This term is used at the end of the trip. It is the rate at which the foreign currency, from the target country, is bought back from the travelers who have returned home. This moves the target country’s money back to the local money, and is subject to the most updated rates.

Spot Rate

This term is a little more confusing. It is the interbank rate, and is the rate that most larger financial institutions will charge each other, if they are trading higher amounts of foreign currency. It is not a tourist rate, nor can a traveler buy currency under these rate parameters, because the amount of currency being purchased are not large enough. Compare the spot rate to the buy or sell rate by using retail terms: the difference is similar to wholesale and retail prices. The rates that you might see in financial newspapers or in other media typically reflect these spot rates.


This term refers to the difference between sell and buy rates, usually offered by foreign-exchange providers. It’s important to pay attention to this, so you get the most for your money, both before you exchange, and after you return home from your trip.

Cross Rate

The cross rate is the rate given to customers who wish to change currency that doesn’t involve local currency. The best way to understand this is through example: do you want to change Australian dollars to American dollars? You’ll have to ask about the cross rate for this transaction.


The commission is the common fee applied to currency exchange, so the exchangers are able to make some money. Fees for exchanges are unavoidable; this is why it is essential to find the best possible rates, with the fewest amount of fees, so you get the best exchange possible.

Get more information about currency exchange rates by calling any of our experts at (888)-7-XOA-XOA. You’ll be able to ask about rates for any of the currencies that we offer on our website and find out whether or not it’s a good time to make a currency purchase.


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