Travel, study abroad, remittances — you'll see "90% FX preferential!" everywhere. So why do you still feel shortchanged? One reason: the real cost of exchange isn't the fee, it's the spread (FX margin). Understand this and you'll never overpay again.
Base rate and spread
Every rate centers on the base rate — the "true" market rate. Banks add a margin (spread) when you buy and subtract it when you sell.
| Term | Meaning |
|---|---|
| Base rate | Market center rate |
| You buy | Base + margin → you pay more |
| You sell | Base − margin → you get less |
| Spread | The buy/sell gap = the bank's cut |
So the spread is the cost. Even a zero fee loses money if the spread is wide.
Margin varies by transaction
| Transaction | Margin (rough) | Note |
|---|---|---|
| Buying cash | ~1.5–2% | Most expensive (handling cost) |
| Remittance (wire) | ~1% | Cheaper than cash |
| Card abroad | ~0.2–1% + brand fee | separate guide |
| Travel/e-services | ~0–0.5% | Near base rate |
What "preferential rate" really means
"90% preferential" means 90% off the spread, not 90% off the rate.
Example: a 1.75% spread with 90% preferential → effective margin 0.175%. On 1,000,000 won that's 1,750 won instead of 17,500 won — a 10× difference from one number.
Where you exchange matters
| Place | Preferential / cost |
|---|---|
| Bank app / main bank | High preferential (up to 90%). Exchange in advance |
| Bank branch | Lower than app |
| Airport / hotel | Almost none — full spread, priciest |
| Travel / e-service | Near base rate; card types add convenience |
Don't scramble at the airport — pre-exchange in the app almost always wins.
Strategy by situation
- Travel — minimal cash; use low-fee cards/travel services (card fees).
- Study/support — transfers beat cash; compare methods.
- Large exchange — spread dominates; the preferential rate matters most.
FAQ
Zero fee means zero spread?
No — separate things. Zero fee + wide spread can still lose. Compare by the received/exchanged amount.
Is 90% preferential almost free?
It cuts 90% of the spread, so it helps most when the spread is wide — but never reaches zero, and fixed fees are separate.
Why is airport exchange expensive?
Little to no preferential, so you pay nearly the full spread. Exchange in advance.
The cost lives in the spread, not the "fee" label. Check the preferential rate and always compare by the amount received — that's the whole game.
This is general information, not financial advice. Spreads and preferential rates vary by bank and time. See also the remittance calculator and how to send money cheaply.
