[Solved] - Interactive Brokers Currency Conversion vs Transferwise - Where did I go wrong?

[pigpenguin]

Hi,

I'm new to investing so please forgive what I assume is a dumb question. In short, I can't get IB's currency calc to make sense and show them to be overpaying me by $468 USD. I doubt this is the case so I'm wondering where I went wrong in my maths or what I've misunderstood? Could someone in the forum point out my mistake?

To set context, I've newly created an account with Interactive Brokers, loaded it with roughly $60K AUD and would like to convert this into USD in order to buy VWRD. I've read that IB provides one of the cheapest ways to convert currency and decided to do the maths, understand the calculation and compare it to TransferWise.

Put simply...

- IB quotes that $60,030.00 AUD converts to $46,199.09 AUD with an FX rate of 0.7696 (OK)
- My starting balance of USD was $87.22 USD therefore in my head my final balance should be $46,286.31 USD
- However, IB shows my final balance as being $46,755.14USD i.e. $468USD higher than my calculation...

While I'm all for free money I don't get it and assume I've done something wrong in the calculation? Can someone please help clarify? My issue is that at my calculated amount, I believe TransferWise to be better value for money while with IB's calc they are, even if I don't think the numbers add up. As a result it will ultimately influence how I convert money in future.

Thanks in advance.

[krasnall]

What was the time of day when you checked it? I found some unfavorable rates out of typical market hours when trying to use convert currency feature with IB.

[megabad]

Yeah, curious what time you pulled these numbers. Basically just looks like there is a difference between stated rate and actual market at the time. Transfer wise is definitely easier if you don’t mind paying 100x+ the cost to exchange.

[glorat]

Since TransferWise is offering a guaranteed FX rate for 36rs, you can be pretty sure they've chosen a rate they can guarantee won't lose them money during the next hours. I.e. a big big/ask spread to protect themselves

IB's bid/ask spread is market rate - less than 0.01% off mid

Best guess is that IB has a display glitch or the market moved. I'm sure once the trade is executed all the numbers will line up. If you want to prove this, open up a paper trading account with them and make the trade.

[pigpenguin]

I did the trade with Interactive Brokers and as you say everything lined up.

I think this error comes when you preview the FX trade rather than just submitting the bid.

Thanks for all your help - thought I was going a little crazy.