How to convert currency: multiply, divide and check your answer

To convert money, multiply your starting amount by the rate quoted in the direction you need. If the quote is shown in the opposite direction, divide instead.

The easy formula

Amount received before fees = amount sent × exchange rate. Suppose an example quote says 1 GBP = 1.25 USD. Converting 80 GBP gives 80 × 1.25 = 100 USD. The currency units help you check your work: pounds multiplied by dollars per pound leaves dollars.

When division is the right choice

Now suppose you have 100 USD but the screen still says 1 GBP = 1.25 USD. You need the reverse direction. Calculate 100 ÷ 1.25 = 80 GBP. Multiplying 100 by 1.25 would answer the wrong question.

A quick check before pressing pay

1. Write down the amount and currency you have.
2. Look for the value of one unit of that currency in the currency you need.
3. Multiply, then subtract any fees according to the provider's calculation.
4. Compare your estimate with the displayed final amount.

Put fees in the right place

A fee charged before conversion affects a different amount from a fee charged after conversion. For a made-up example, you have a total budget of 100 GBP and a 4 GBP fee is taken first. Only 96 GBP is converted. At 1.25 USD per GBP, the recipient gets 120 USD. If you instead convert 100 GBP and pay a separate 4 GBP fee, the recipient gets 125 USD but you spend 104 GBP.

Neither description can be shortened to just "the fee is four pounds" without losing important information. Check whether the quoted amount includes the fee.

Try a calculation

Open 80 GBP to USD or 100 USD to GBP. These use our latest common dated observations, so the results will differ from the invented teaching rate above.

Common questions

Should I round the rate first?

Keep the available precision until the final calculation. Rounding a rate too early can create a noticeable difference on a large amount.

Why does my result differ by a few cents?

Rounding rules, rate timing and fees can explain a small difference. A large difference is a reason to check the direction and whether both quotes cover the same total cost.

Source and further reading

European Central Bank: the role of exchange rates. Examples in this article use made-up rates for explanation, not current offers.