Summary
Genuinely free foreign currency exchange does not exist in the traditional banking sector. Banks that advertise no-fee currency services still earn revenue through exchange rate markups, which can add 5% to 7% or more to the true cost of a transaction. Bank of America, Citi, PNC, and US Bank offer currency exchange with reduced or waived transaction fees for account holders, but all apply exchange rate margins. For truly cost-effective currency conversion, multi-currency fintech accounts from Wise, Revolut, and Charles Schwab Bank's ATM fee reimbursement policy typically offer significantly better value than ordering physical currency through a traditional bank.
Understanding Currency Exchange Costs
When a bank or currency exchange provider converts one currency into another, the price paid by the consumer is almost never the actual market rate. The real exchange rate, known as the mid-market rate or interbank rate, is the rate at which major financial institutions trade currencies with one another in wholesale volumes. It represents the midpoint between the buy price and sell price at any given moment and can be viewed in real time through financial data providers or a simple internet search.
Retail banks and currency exchange providers profit from the spread between the mid-market rate and the rate they offer to consumers. If the mid-market rate is USD 1.18 per EUR and a bank offers USD 1.10 per EUR, the consumer is effectively paying a 6.78% premium on the transaction. This margin is the primary mechanism through which banks earn revenue from currency exchange, whether or not they also charge an explicit transaction fee. Research on US currency exchange providers has found that the total cost of ordering foreign banknotes through banks or credit unions can range from approximately 2.15% to over 16% of the transaction value, with airport kiosks and tourist-area exchange bureaux consistently representing the highest-cost options.
Consumers assessing currency exchange options should therefore evaluate the total cost of conversion rather than focusing solely on advertised fee structures. A bank that charges no transaction fee but applies a 7% exchange rate margin is meaningfully more expensive than a fintech provider that charges a 0.5% conversion fee at the mid-market rate.
US Banks With Low or No Transaction Fees for Currency Exchange
Bank of America
Bank of America is widely regarded as the best traditional US bank for foreign currency exchange among account holders. Existing customers with a checking or savings account can order physical foreign currency online through Online Banking or the Mobile Banking App with no transaction fee, provided the order exceeds $1,000 in currency equivalent. Orders below this threshold incur a $7.50 delivery fee to the customer's address. The bank can process orders placed before 2pm local time for same-business-day shipping. Bank of America supports a broad range of currencies and allows orders of up to $10,000 every 30 days.
Preferred Rewards clients receive a discount of up to 2% off the published exchange rate based on programme tier, plus no delivery fee on standard shipping. This makes Bank of America a relatively competitive option within traditional banking for customers who already hold relationships with the institution and who need physical currency for travel purposes.
Citibank
Citibank's World Wallet Foreign Exchange Service provides access to more than 50 currencies for existing customers. Citigold clients and Citi Priority Account Package holders pay no transaction fee on currency orders. Standard account holders pay a $5 fee on orders below $1,000 in currency equivalent. Home delivery is free for Citigold and Citi Priority customers and starts from $10 for a standard overnight service for other account holders. Currency delivery to a local Citibank branch is free for all eligible customers. Orders must be placed by phone rather than online, which adds friction to the process compared to Bank of America's digital ordering system.
PNC Bank
PNC Bank, which operates in approximately 27 states primarily in the eastern and midwestern United States, offers currency exchange services to account holders with no transaction fees. The bank markets its exchange rates as competitive, though the specific margin applied is not disclosed publicly in advance. Currency ordered at a PNC branch is delivered to the local branch within 24 to 48 hours. PNC's coverage is regional, making it a practical option for customers in its service territory but unavailable to most consumers in the western United States.
US Bank
US Bank allows account holders to order foreign currency through online banking or at a local branch, with next-business-day delivery to the branch of the customer's choice if orders are placed before 2pm. For orders exceeding $250, there is no exchange fee. Orders of $250 or less incur a $10 exchange fee. As with other traditional banks, US Bank applies a margin to the exchange rate that represents the primary cost of conversion regardless of whether a transaction fee applies.
Wells Fargo
Wells Fargo previously maintained a robust over-the-counter foreign currency service but has restructured its offering. Branches no longer hold foreign currency cash on hand for same-day purchase, and over-the-phone orders are no longer accepted. Account holders can order foreign currency cash online or at a branch for delivery within two to seven business days. Wells Fargo explicitly acknowledges in its terms that it applies a markup to the exchange rate on all conversions, including wire transfers, to compensate for transaction costs, market risk, and desired return. The buy-back rate for foreign currency returned after a trip also differs from the rate at which currency was purchased.
The Truth About Exchange Rate Markups
The core insight for consumers is that the advertised absence of a transaction fee does not mean currency exchange is actually free. Every traditional bank in the United States applies an exchange rate margin when converting currencies. Independent research indicates that this margin typically ranges from 5% to 7% of the transaction value at US retail banks, though it can be lower for premium tier clients at some institutions.
As a practical illustration: if a consumer exchanges $1,000 into euros at a bank applying a 6% exchange rate margin, they receive approximately $60 less in equivalent euros than they would at the mid-market rate. Over multiple transactions or larger amounts, these margins compound significantly. Consumers who regularly convert currency for international travel, remittances, or cross-border business transactions benefit substantially from understanding and minimising exchange rate margins rather than focusing on nominal transaction fees.
Additionally, when using a credit or debit card abroad, many consumers encounter dynamic currency conversion (DCC), where the point-of-sale terminal offers to process the transaction in the consumer's home currency rather than the local currency. This typically results in an additional markup of 2% to 4% applied by the merchant's payment processor. The practical advice from financial experts is consistent: always pay in the local currency when using a card internationally, and be prepared to explicitly decline offers to convert the amount to dollars at the point of sale.
Better Alternatives to Bank Currency Exchange
Charles Schwab Bank
Charles Schwab Bank's High Yield Investor Checking account is frequently cited by frequent travellers as the gold standard for low-cost international cash access. The account reimburses all ATM fees worldwide, including both the fee charged by the foreign ATM operator and any surcharges, with no cap on reimbursements. This means that cardholders who withdraw local currency from foreign ATMs pay only the exchange rate applied by Visa or Mastercard's payment network, which is typically very close to the mid-market rate. Charles Schwab does not charge a foreign transaction fee. The main prerequisite is maintaining a Schwab brokerage account alongside the checking account.
Wise
Wise, formerly TransferWise, specialises in international money transfers and multi-currency accounts. It converts currency at the real mid-market exchange rate, charging only a transparent low conversion fee typically starting from approximately 0.41% depending on the currency pair. For consumers who need to hold foreign currency balances, send international transfers, or spend in foreign currencies with a linked debit card, Wise consistently offers lower total costs than traditional bank currency exchange. A Wise personal account has no monthly fee, and the linked multi-currency card can be used in over 150 countries with no foreign transaction fee on currencies held in the account.
Revolut
Revolut offers fee-free currency exchange up to $1,000 per month on its Standard free account, covering over 24 currencies. Within this limit, conversions occur at the interbank rate with no additional margin, making it among the most competitive exchange mechanisms available to retail consumers. Beyond the monthly free limit, a small conversion fee applies. Revolut also waives foreign ATM withdrawal fees up to $200 per month on the Standard tier. For frequent international travellers, Revolut's combined exchange and ATM fee structure often represents a significantly lower-cost alternative to ordering physical currency through a traditional bank.
FAQs
Do any US banks exchange foreign currency with no fees at all?
No US bank exchanges foreign currency without any cost to the consumer. Banks that advertise no-fee currency exchange still earn revenue through exchange rate markups, which represent the spread between the mid-market rate and the rate offered to the consumer. Bank of America waives its delivery fee for orders over $1,000, but still applies an exchange rate margin. PNC and US Bank waive transaction fees for account holders, but similarly apply margins. The concept of genuinely free currency exchange does not exist in retail banking; the cost is simply structured differently depending on the provider.
What is the cheapest way to get foreign currency for travel?
For cash-based travel needs, ordering through a bank such as Bank of America in advance of travel generally offers better rates than airport kiosks or tourist-area exchange bureaux, which typically apply the highest markups. For card-based spending, using an account with no foreign transaction fees and a low exchange rate markup, such as Charles Schwab High Yield Investor Checking or Wise, typically results in the lowest total cost. Using ATMs at the destination with a low-fee card is often cheaper than ordering physical currency in advance for amounts needed unpredictably during travel.
Should I use a debit card or credit card for foreign currency transactions?
Both options can be cost-effective if the specific card carries no foreign transaction fee. Credit cards with no foreign transaction fee, such as those from Chase Sapphire, Capital One, or Citi, typically apply the Visa or Mastercard network exchange rate with no additional margin. Debit cards linked to accounts such as Schwab's checking account or the Wise card offer similar benefits plus ATM access for local currency withdrawals. Regardless of card type, always decline dynamic currency conversion offers at the point of sale and pay in the local currency to avoid merchant-applied conversion premiums.
Are airport currency exchange kiosks ever a good option?
Airport currency exchange kiosks are almost universally the most expensive option for foreign currency exchange and should generally be treated as a last resort. Their combination of high exchange rate markups and explicit transaction fees frequently results in total costs ranging from 8% to 15% or more of the transaction value. The only circumstances in which an airport kiosk is advisable are when a traveller needs a small amount of local currency immediately upon arrival and has no other means of accessing local funds, such as a bank card that works in local ATMs.
What is the mid-market rate and why does it matter?
The mid-market rate, also known as the interbank rate or spot rate, is the real exchange rate at which major financial institutions trade currencies with each other in large-volume transactions. It represents the fairest benchmark for evaluating the cost of any currency exchange transaction. When a bank, exchange bureau, or fintech provider quotes a rate different from the mid-market rate, the difference represents their fee, regardless of whether an explicit transaction fee is also charged. Consumers can find the current mid-market rate for any currency pair through financial data providers or a simple web search to compare it against the rate offered by their bank or exchange provider before completing a transaction.
