# To decrease spread cost with a currency account in exchange of currencies

I have bank accounts in Nordea Norway and Nordea Finland. I pay now about 2.5% spread fee in moving NOK from Nordea Norway to Nordea Finland in EUR. No other fees apply because moved between the same person.

I trying to decrease the 2.5% spread. I got a hint that use a currency account, registered in Norway for NOK and EUR. I have not get a clear answer from Nordea if this decreases the 2.5% spread cost. My transactions are less than 40 kEUR at once so I cannot the benefits of economics of scale.

How can a currency account decrease the costs of exchanging currencies?

Your only other option is to use an online FX broker. Whether they can beat your bank's spread or not will depend on the amount of the transaction and the currency pair involved. You're fine with EUR but NOK is a less frequently traded currency so spreads are never going to be as tight as e.g. USD/EUR.

See my answer here about FX brokers; xe.com would be a good place to start. That question refers to some other options too which I haven't tried myself but may be worth comparing.

UKForex accepted Finland as the place of residency.

Some data about the spread costs at different amounts of selling Norwegian Krones so the constants a and b are euro-values:

``````// 50000 NOK
>>> a = 6665.35
>>> b = 6787.60
>>> ave = (a+b)/2
>>> diff = b-a
>>> diff / ave
0.018174452443516106
// 5000 NOK
>>> a = 656.7
>>> b = 678.76
>>> ave = (a+b)/2
>>> diff = b-a
>>> diff / ave
0.03303730549773103 // too high spread cost, since at the regular bank 2.5%
// 20000 NOK
>>> a = 2659.76
>>> b = 2715.04
>>> ave = (a+b)/2
>>> diff = b-a
>>> diff / ave
0.02057006772345008
// 10000 NOK
>>> a = 1322.60
>>> b = 1356.75534
>>> ave = (a+b)/2
>>> diff = b-a
>>> diff / ave
0.025495192436849397
// We are near the critical point
// 100 000 NOK
>>> a = 13539.95
>>> b = 13567.5534
>>> ave = (a+b)/2
>>> diff = b-2
>>> diff = b-a
>>> diff / ave
0.002036587404799511
``````

The critical point is in exchanging 11000 NOK to EUR in UKForex when the spread cost gets less than 2.5%. The spread cost is excellent, 0.2%, when chancing 100 kNOK to euros.

Python 2.7.9 Function `count.currency.rate.py`

``````# 2000 euro 26.6.2017
# python count.currency.rate.py 18870.75 18908.76
# Output: Currency exchange expense: 0.00201220185227
#
# For https://money.stackexchange.com/a/20277/1627

import sys

a1 = float( sys.argv[1] )
b1 = float( sys.argv[2] )

def count.currency.rate(a=a1, b=b1):
# a google currency rate, b destination currency rate; or reverse
ave = (a+b)/2
diff = abs(b-a)
result = diff/ave
print("Currency exchange expense: %s" % result)

if __name__ == "__main__":
count.currency.rate(a1, b1)
``````