EXCHANGE-RATE BASICS
Why a future overseas bill can change in your savings currency.
When a bill is fixed in one currency but your savings are in another, the amount needed from those savings can rise or fall before the due date. That uncertainty is exchange-rate risk.
Last reviewed: 18 September 2026
A simple example
Imagine a tuition instalment of EUR 10,000 due in six months while the family saves in GBP. The invoice remains EUR 10,000. If each pound buys fewer euros by the payment date, more pounds are needed; if each pound buys more euros, fewer are needed. The same principle applies to any supported pair of different currencies.
This example explains the direction of the risk. It is not a forecast, executable quote, or recommendation to transact at a particular time.
Reference rates and executable rates are different
| Term | What it means | What it does not mean |
|---|---|---|
| Indicative rate | A reference rate used to estimate a currency amount. | A guaranteed price available for a transfer. |
| Executable rate | A rate a provider is prepared to transact under stated terms. | A rate that necessarily excludes every fee or charge. |
| Total cost | The combined effect of the rate, provider fees, and relevant intermediary or recipient charges. | The transfer fee viewed in isolation. |
Two exchange-rate protection concepts
Fixed rate
A fixed-rate arrangement agrees the conversion rate for a defined future payment or schedule. It can make the required savings amount more predictable, but the agreed rate normally remains fixed if the market later becomes more favourable.
Protected floor
A protected-floor arrangement sets a minimum rate used to define the funding target while allowing a better applicable rate if one is available under the agreed terms. The protection, eligibility, cost, and method for determining the applicable rate must be clear.
Certarate calls its proposed versions Rate Lock and Rate Protect. They are not currently available. Read the full proposed service journey.
Questions to ask before relying on protection
- Which payment amount, currency, recipient, and dates are covered?
- Is the rate fixed, or is there a floor with possible improvement?
- How and when is any better applicable rate determined?
- What fees, funding deadlines, cancellation terms, and shortfall rules apply?
- What authorisation and safeguarding arrangements apply to the provider?
- When is the payment sent, and when is the recipient expected to receive it?
What the Certarate calculator does
The calculator estimates the savings amount for a future bill using an indicative reference rate and shows a separate proposed 0.5% setup fee. Rates refresh up to every 15 minutes and may still be old during market closures. The result does not lock a rate, hold money, or create a payment.
PLAN THE BILL BEFORE IT IS DUE