Interactive Brokers has the lowest currency conversion costs of all the investment accounts we cover. But, given that every broker tends to have a slightly different fee structure, the answer to this is going to depend on several factors including how often you trade international stocks and the size of your trades.
If you are trading large amounts (i.e. more than £20,000 per trade), it could be worth going with a broker that offers scaled FX charges such as Hargreaves Lansdown or AJ Bell. If you are making small trades, it could be worth opting for a platform such as IG or Freetrade, which offer lower flat fees.
Why do you get charged FX fees when buying international stocks?
When you buy or sell international stocks like Apple and Amazon, you typically have to pay foreign exchange (FX) fees. So, if you’re interested in investing in these types of stocks, it’s important to find a broker that offers low FX charges.
Here, we are going to look at which investment accounts have the best foreign exchange charges. Whether you’re an experienced investor or just starting out, this guide should help you reduce your FX fees and pocket more of your investment gains.
Foreign exchange fees are charged when you buy or sell international stocks because you have to exchange your domestic currency (GBP for UK investors) for the foreign currency in which the stock is denominated (USD, EUR, AUD etc.). Usually, brokers charge a fee for this service.
FX fees and charges can vary depending on several factors though. These include:
- The investment platform you’re using – different brokers have different fee structures.
- The size of the trade – larger transactions sometimes incur lower percentage FX fees.
- Your account type – your account type (retail, professional, individual, corporate, etc.) may influence the FX fees charged.
Why are foreign exchange charges important when buying foreign stocks?
If you’re planning to buy and sell international stocks, it’s important to do some research into platforms’ foreign exchange charges. That’s because these fees can be substantial. Today, some UK investment platforms charge FX fees of 1.5%. On a £10,000 trade, that translates to a fee of £150, which is significant.
The impact of FX fees on your overall returns is likely to depend on how frequently you are trading international stocks, however. If you regularly trade international stocks, fees can quickly add up. On the other hand, if you only trade international stocks occasionally, FX fees are probably not going to have a major impact on your returns.
A comparison of UK investment platforms’ FX charges
The table below shows some of the biggest investment platforms in the UK and their FX charges. Note that every platform has a different commission structure so it’s worth looking at their trading commissions as well as their FX fees when looking for the platforms with the lowest charges. You can find more information on these fees here.
| Broker | FX charge |
| Hargreaves Lansdown | 0.25% – 1.00% |
| AJ Bell | 0.25% – 0.75% |
| Interactive Investor | 0.25% – 1.50% |
| Saxo | Spot fx mid-price plus/minus 0.25% |
| IG | 0.50% |
| Interactive Brokers | 0.03% |
| eToro | 0.75% |
| Freetrade | 0.39% – 0.99% |
| Trading212 | Spot fx rate plus/minus 0.15% |
Which platforms have scaled FX charges?
Several brokers today offer scaled FX charges. These include:
Hargreaves Lansdown
Hargreaves Lansdown’s FX charges are as follows:
| Value of trade | FX charge |
| First £5,000 | 1.00% |
| Next £5,000 | 0.75% |
| Next £10,000 | 0.50% |
| Over £20,000 | 0.25% |
Note that with Hargreaves Lansdown, there are no FX charges for trades placed online within a Junior ISA.
Interactive Investor
Interactive Investor’s FX charges are as follows:
| Value of trade | FX charge |
| Up to £24,999.99 | 1.50% |
| £25,000 to £49,999.99 | 1.25% |
| £50,000 to £99,999.99 | 1.00% |
| £100,000 to £599,999.99 | 0.50% |
| £600,000 or more | 0.25% |
AJ Bell
AJ Bell’s FX charges are as follows:
| Value of trade | FX charge |
| First £10,000 | 0.75% |
| Next £10,000 | 0.50% |
| Value over £20,000 | 0.25% |
Which platforms have flat FX charges?
A number of brokers have flat FX charges. These include:
- Interactive Brokers – 0.03%
- Saxo – 0.25%
- IG – 0.50%
- eToro – 0.75%
Note that Saxo and Interactive Brokers also charge commissions based on the number of shares traded. For example, on US stock trades, Saxo charges $0.015 per share (minimum of $1) while Interactive Brokers charges $0.0035. So, while these platforms offer low FX charges, they may not necessarily be the cheapest overall.
Do any brokers offer plans with lower FX charges?
One broker that has a plan with lower FX charges is Freetrade. With its Basic plan, FX charges are 0.99%. However, with its Plus plan, FX charges are only 0.39%.
Based in London, Edward is a distinguished investment writer with an extensive client portfolio comprising a diverse array of prominent financial services firms across the globe. With over 15 years of hands-on experience in private wealth management and institutional asset management, both in the UK and Australia, he possesses a profound understanding of the finance industry.
Before establishing himself as a writer, Edward earned a Commerce degree from the prestigious University of Melbourne. Complementing his academic background, he holds the esteemed Investment Management Certificate (IMC) and is a proud holder of the Chartered Financial Analyst (CFA) qualification.
Widely recognized as a sought-after investment expert, Edward’s insightful perspectives and analyses have been featured on sites such as BlackRock, Credit Suisse, WisdomTree, Motley Fool, eToro, and CMC Markets, among others.
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