Fee schedule is one of the most important factors that traders need to consider when choosing their best crypto exchanges. Each platform employs different fee structures depending on their target customers, operation, and technology.
Anyone who has ever bought and sold coins and tokens knows that fees can eat into your profits, so calculating the best fee strategy is not redundant. This article will delve into typical fees that investors may incur when funding, trading, and withdrawing their funds and cryptocurrencies.
Deposit and Withdrawal Fees
Deposit Fees
Crypto exchanges can charge you a fee or not when you deposit funds into your account based on specific payment methods. For instance, as outlined in many CoinSpot reviews, you don’t need to pay any fee when you make instant deposits via POLi, PayID, or Direct Deposit (via OSKO). If you use Bpay or cards, you will have to pay 0.9% fee (for credit cards) or a 1.88% fee (for debit cards). Otherwise, for physical cash deposits at Blueshyft newsagents, the deposit fee is up to 2.5%. (Please refer to the CoinSpot Australia review for more details).
Moreover, consider options to deposit both fiat currency and cryptocurrency. Many exchanges do not support fiat money in your local currency, or the deposit process can be very inconvenient (such as Binance Australia, which is yet to re-enable bank transfer using the country’s native AUD).
Withdrawal Fees
Similarly, withdrawing funds from an exchange can also trigger fees, which vary based on the asset and the withdrawal methods you choose.
- Fiat Withdrawals: Some exchanges may offer fiat deposits but do not allow fiat withdrawals, so make sure you check your platform’s policy.
- Crypto Withdrawals: Withdrawals in cryptocurrency are usually subject to a fixed fee determined by the exchange, plus any applicable blockchain network fees. These fees can fluctuate depending on the blockchain network, and several factors such as network congestion or volumes. Note the network fees are extremely high for Bitcoin and Ether.
Transaction Fees
Crypto exchanges charge something whenever you make a transaction. The cost can be structured as a percentage of the trade amount or follow a tiered system where high-volume traders pay lower fees.
Typically, exchanges employ two main models:
- Maker-Taker Fee Model: This is the most common model. A “maker” is someone who provides liquidity to the market by selling cryptocurrency. A “taker” is someone who reduces liquidity by purchasing it. Generally, makers pay lower fees than takers, as they help maintain liquidity. For example, trading at Binance Australia with a trading volume of more than $1 million and less than $5 million incurs maker and taker fees of 0.09% and 0.1%.
- Flat Trading Fees: Some exchanges charge a flat fee for every trade, regardless of your role as a maker or taker. This model is simpler but may not be as cost-efficient for high-volume traders.
Feature-specific Fees
Typically, when talking about transaction fees, we consider fees for basic trading options, such as spot trading. However, there are multiple features for investors to choose, such as NFTs trading, margin trading, futures, and staking.
Let’s take CoinSpot and Kraken Australia as examples. You can further discover these two major Australian exchanges on CoinSpot review or Kraken review, but in this section, we only discuss their fees on particular features.
CoinSpot’s Instant Buy/Sell charges you 1% of your transactions, similar to the platform’s Recurring Buy, Take Profit, Stop Loss, and Limit Orders. Meanwhile, you’ll need to pay 1.5% for instant buy/sell and 2% for NFTs on Kraken Australia. You can get discounts if you use Kraken Pro.
Hidden Fees You May Not Know
Conversion fees
As mentioned, some platforms do not support fiat currency deposits and withdrawals, and if you need to convert between fiat currencies or different cryptocurrencies, you may be subject to conversion fees.
Spreads
Traders should also consider the spread – the difference between the bid (buy) and ask (sell) prices of an asset. Essentially, spread the difference between the highest price a buyer is willing to pay for an asset (the bid) and the lowest price a seller is willing to accept (the ask). When you place a market order to buy or sell an asset, you’re paying the ask price (if buying) or receiving the bid price (if selling). The exchange or market maker profits from the difference between these two prices.
Coinbase is a typical example of exchanges with spread policy. On Coinbase, fees can vary dramatically depending on how much you trade, market conditions, jurisdictional location, asset, payment method, and other costs. When you place simple buy and sell orders, Coinbase includes a spread in the quoted price. The spread is also included in the exchange rate when converting from one cryptocurrency to another.
Conclusion
Crypto exchange fees can significantly impact your profits, so it’s essential to understand the fee structure before selecting suitable platforms. Whether you’re using CoinSpot, Binance Australia, or any other exchange, thoroughly reviewing deposit, withdrawal, and transaction fees—as well as hidden costs—can help you manage your investments more effectively. For more detailed insights into these platforms, be sure to check out comprehensive CoinSpot reviews and similar resources.
Ultimately, understanding and calculating fees can make a big difference in your long-term success in cryptocurrency trading.
