also called foreign-exchange spread · currency conversion margin
The hidden markup between the mid-market currency rate and the worse rate a bank, card, or ATM actually gives you.
The FX spread is the quiet markup between the true mid-market exchange rate and the worse rate a bank, card or ATM actually hands you. It is different from a foreign transaction fee, which is a stated percentage added on top; the spread is hidden inside the rate itself, so you rarely see it as a line item. A small shave on every coffee and every rent payment adds up to a serious sum over a year.
Your card shows no foreign transaction fee, so you assume paying in local currency is free. But on every purchase the rate you get is quietly a little worse than the real market rate, and across a year of daily spending that hidden spread costs you more than a visible fee ever would.
A small percentage on every coffee and rent payment compounds into a large annual cost.
The difference is the whole point, so here is each one in a line.
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