Banks do change currency, but not all banks do it the same way, and the cost and speed depend on which bank you use and what you're exchanging.

Most banks in the United States will exchange foreign currency for you — meaning they will take euros, pounds, yen, or other currencies and give you US dollars in return. Some banks do this at the branch counter. Some do it by mail. Some do not do it at all and will refer you elsewhere. The exchange rate they offer you is almost never the same as the rate you see online, because banks add a markup to cover their costs and make a profit on the transaction.

The reason banks change currency is straightforward: people travel, receive money from other countries, or need to send money abroad. Without currency exchange, you would be stuck with foreign bills and coins that have no value in the United States. Banks sit in the middle of that problem and charge you for solving it.

Key Takeaways

  • Most large banks offer currency exchange at the branch, but the exchange rate they give you includes a markup that can be 2 to 5 percent higher than the mid-market rate.
  • Some banks require you to order foreign currency in advance because they do not keep large amounts on hand, and the order can take three to five business days.
  • Credit unions, online banks, and currency exchange shops often offer different rates and fees than traditional banks, so comparing before you exchange is worth the time.
  • If you are exchanging a large amount of money, the markup percentage stays the same but the dollar amount you lose grows, so shopping around matters more.

What happens when you exchange currency at a bank

When you walk into a bank branch with foreign currency or ask to buy foreign currency, the teller looks up the current exchange rate — the price at which one currency trades for another. That rate changes throughout the day based on global markets. The bank then adds its own markup to that rate, quotes you the worse rate, and completes the exchange.

For example, if the mid-market rate for euros to US dollars is 1.10 (meaning one euro equals $1.10), a bank might quote you 1.05 or 1.06 instead. You lose the difference. On $1,000 worth of euros, that gap costs you $40 to $50. The bank keeps that money as profit and to cover the cost of handling the transaction.

The markup varies by bank. Large national banks like Bank of America, Chase, and Wells Fargo typically charge between 2 and 5 percent. Smaller regional banks and credit unions sometimes charge less. Online banks sometimes charge more because they have fewer physical locations to handle cash. You will not know the exact rate until you ask — banks are not required to post exchange rates in advance.

How long currency exchange takes

If the bank has the currency in stock, the exchange can happen the same day, usually within minutes. You hand over your money or your foreign bills, the teller counts it, applies the exchange rate, and gives you the result.

If the bank does not have the currency on hand — which is common for less-traded currencies like Thai baht or South African rand — you will need to order it. The bank then sources the currency from a larger bank or currency supplier, which takes three to five business days. You pay the same markup, but you wait. Some banks charge an additional fee for ordering currency, usually $10 to $25.

If you need currency urgently and your bank does not have it, a currency exchange shop (sometimes called a foreign exchange bureau) may have it in stock. These shops exist in airports, tourist areas, and some city centers. They charge higher markups than banks — sometimes 5 to 10 percent — but they move faster and do not require advance orders.

Why banks do not always exchange currency

Some banks, especially smaller ones or online-only banks, do not offer currency exchange at all. They may not have the infrastructure to handle physical currency, or the volume is too low to justify the cost. If your bank does not exchange currency, they will usually tell you where to go instead — often a larger bank, a credit union, or a currency exchange shop.

Online banks almost never exchange currency in person because they have no branches. If you bank online and need to exchange currency, you will have to visit a physical location elsewhere or use a service like OFX or Wise, which exchange money electronically without handling physical bills.

Alternatives to bank currency exchange

If your bank's markup is too high or they do not offer the service, you have other options. Credit unions sometimes offer better rates than banks, especially if you are a member. Currency exchange shops offer faster service but higher markups. Online money transfer services like Wise, OFX, and Remitly exchange currency electronically and often charge lower markups than banks, though they work best for larger amounts or regular transfers.

If you are traveling and need cash in a foreign currency, using an ATM in that country often gives you a better rate than exchanging money before you leave. The ATM uses the bank's wholesale rate plus a small fee, which is usually cheaper than a bank's retail markup. The downside is that your own bank may charge you a foreign ATM fee on top of that.

What to ask your bank before exchanging currency

Before you exchange currency, ask your bank three things: Do you have this currency in stock, or do I need to order it? What is your exchange rate and markup? Are there any additional fees? Write down the answers. If the markup seems high, call another bank or a credit union and ask the same questions. The difference between a 2 percent markup and a 5 percent markup is real money, especially on amounts over $500.

If you are exchanging a large amount — more than $5,000 — some banks may ask where the money came from. This is a federal requirement called Know Your Customer (KYC), and it is not personal. The bank is required to ask. Have documentation ready if you can: a receipt from selling something, a letter from an employer, or a bank statement showing the source.

Currency exchange for sending money abroad

If you need to send money to another country rather than exchange it yourself, banks offer wire transfers. A wire transfer is an electronic movement of money from your bank account to a bank account in another country. The bank exchanges your dollars into the foreign currency as part of the process and charges you a fee plus a markup on the exchange rate.

Wire transfer fees range from $15 to $50 depending on the bank and the destination country. The exchange rate markup is similar to what you would get at the counter — 2 to 5 percent. For this reason, online money transfer services like Wise and OFX are often cheaper for sending money abroad, especially for smaller amounts. They charge lower fees and better exchange rates, though the money takes longer to arrive (usually one to three business days instead of same-day).

Frequently Asked Questions

Can I exchange currency at any bank branch, or only my home branch?

Most banks let you exchange currency at any of their branches, but call ahead to confirm the branch has the currency in stock or can order it. Some smaller branches handle fewer transactions and may not keep foreign currency on hand.

What is the difference between the exchange rate I see online and what the bank quotes me?

The rate you see online is the mid-market rate — the wholesale price banks pay each other. Your bank adds a markup (usually 2 to 5 percent) to that rate before quoting it to you. The markup covers the bank's costs and profit.

Is it cheaper to exchange money before I travel or when I arrive in the country?

Using an ATM in the destination country usually costs less than exchanging money before you leave, because ATMs use the wholesale rate plus a small fee. However, your own bank may charge a foreign ATM fee, so compare. Exchanging at the airport is usually the most expensive option.

Do I need to report currency exchange to the IRS?

Exchanging currency for personal travel does not need to be reported. If you exchange large amounts regularly or for business purposes, consult a tax professional about reporting requirements.

Can I exchange coins, or only bills?

Most banks exchange bills only. Foreign coins are harder to process and many banks will not take them. If you have foreign coins, a currency exchange shop may take them, but expect a lower rate or a flat fee.