Bank rate vs reference rate: what the fee % means
Short answer: the reference rate is the mid-market rate published once a day (for example by the ECB). Banks and card networks sell you currency at that rate plus a margin. Fee % = (bank rate − reference rate) ÷ reference rate × 100. Apply that % to the reference rate to see what you actually get.
Reference rate
A daily mid-point between buying and selling prices, used as a benchmark. Nobody sells cash to consumers at exactly this rate.
Bank rate
Banks quote separate cash buy/sell and transfer send/receive rates. The gap to the reference rate is their spread, and there may be a flat fee on top. Exchange rate discounts ("90% preferential rate") reduce the spread, not the reference rate.
A worked example
Reference rate: 1 USD = 1,380 KRW. Bank sells cash at 1,404 KRW. Fee % = (1,404 − 1,380) ÷ 1,380 × 100 ≈ 1.74%. Exchanging 1,000,000 KRW gets you about 712 USD instead of 725 USD at the reference rate.
How to compare offers
- Convert every offer into a single fee % against the same day's reference rate.
- Include flat fees by dividing them by the amount.
- Card payments abroad often add a network fee plus an issuer fee; check both.
Doing it with Rate Nudge
Rate Nudge's converter has a fee field: enter your bank's or card's % and every row shows the amount you actually receive, both ways. It uses daily reference rates (ExchangeRate-API) with the source and time on screen, so you know exactly what the number is based on.