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BasicEconomics1 min

A spread is the difference between a buying price and a selling price: for example, between the rate at which a bank buys currency and the rate at which it sells.

In plain words

At exchange offices and on exchanges the spread is a hidden charge for the service: the narrower it is, the better the deal. In transfers and conversion the spread can hide in the rate: with “0% commission” the rate may be worse than the market one. So compare the final amount, not only the fee, and treat the official NBU rate as a benchmark (it is not the rate at which you will be sold currency).

Example. A bank buys dollars at 40.10 and sells at 40.60: the difference of 0.50 hryvnia is the spread. If you buy a dollar and sell it straight away, you lose about 1.2% (0.50 / 40.60); the numbers are illustrative.

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