In the real world, currency exchanges work on a market-based exchange rate, meaning that the value of one currency is directly linked to the value of another currency. The price of a unit of a currency changes when demand for that currency exceeds supply, and vice versa. When demand exceeds supply, the price of the currency increases. When demand is lower than supply, the price of the currency falls. However, that doesn’t mean that people don’t want to have money. It simply means that they would rather hold wealth in another form.

Currency exchange businesses earn their money by charging their customers and taking advantage of the bid-ask spread. This spread refers to the difference between the asking and bid price of a currency, which can be quite high. The higher the asking price, the more money Ellen will have to pay to purchase the currency. Using an example from earlier, Ellen would want to buy EUR 5,000, but this would cost her USD 7,000. In contrast, if she had a local bank, she could get EUR 5,000 for USD 7,500, but it would cost her USD 1,403.

The currency exchange store charges a fee, but it is well worth the extra money. By using a currency exchange calculator, you can convert over 190 currencies and four different metals. You can also take a look at the exchange rate of the two currencies by using the currency converter on Bankrate. This website uses OANDA Rates ™ based on the latest market data and is trusted by governments and corporations worldwide. This is why currency exchange can be your best bet for getting the most bang for your buck abroad.