Let’s face it, the value of our dollar sucks, hovering in the low 70s-cent range (against the US greenback) and having recently dubiously descended to near 20-plus-year lows. Remember the heady days of 2011 when the loonie was actually worth $1.06 U.S?
Moreover, multiple surveys suggest that the limp loonie is a significant factor for Canadians when it comes to choosing where – and whether – to travel, and that for some, the currency-related costs of travelling to the U.S. are just as influential as tariffs and 51st state bluster in Canadians’ choice of destination.
As such, currency conversion is critical for Canadians still planning on travelling south of the border – or anywhere else for that matter.
With this in mind, several financial experts offer some commonsense tips to make the most of your international currency transactions:
Credit cards
Credit cards often offer the most sensible way to spend abroad since they typically charge foreign transaction fees of about 2.5% on each purchase – a cheaper option than those done via debit card or ATM, says Barry Choi, who runs the Money We Have personal finance and travel website.
“A lot of people don’t know about this fee because it’s baked right into the exchange. So, when you get your statements, you just see the exchange rate, you don’t realize that fee is included,” Choi said.
However, multiple credit card providers offer fee-free transactions. These come via “travel cards,” including the Scotiabank Passport Visa Infinite card, Brim Mastercard and Home Trust Visa card.
“Sometimes people think, ‘I’ll just get the US credit card from my bank and it’s a good value.’ But the problem is you have to pay (the balance) in US dollars,” Choi said.
Credit cards also have a currency conversion rate – for converting the purchase abroad back to your home currency – that is marginally higher than the official “interbank” rate. But credit card companies typically offer the best consumer rates compared with ATMs or cash exchanges, experts say.
Pay in local funds
Often, customers are given a choice at the point of sale to pay in Canadian dollars or US dollars.
“Always choose to be charged in the currency of the country you are in. You will pay high conversion rates and transaction fees if they convert to Canadian currency,” the federal government states on its travel website.
Debit cards
Debit cards from traditional banks generally offer the second-best option, with fees of around 3.5%. The least palatable payment method – cash withdrawn from ATMs in the US – includes that same percentage plus a transaction fee of US$3 to US$5, Choi said.
A few online financial institutions offer no-fee debit cards for foreign purchases and even no-fee ATM withdrawals.
Carry come some cash
For those venturing across the border or headed to a spot that takes payment in U.S. dollars, experts also recommend picking up some American cash at a cheap currency exchange office to avoid paying a premium elsewhere.
Avoid ATMs
No matter what, try to steer clear of automated tellers and currency exchanges at airports and hotels, advises Richard Vanderlubbe, CEO of Tripcentral.ca. Cruises and casinos are notorious for their exorbitant ATM charges, he noted.
Scotiabank and Tangerine present something of an exception. They are part of the Global ATM Alliance, a network of big banks including Bank of America, France’s BNP Paribas and Germany’s Deutsche Bank that waive fees for ATM withdrawals from each other’s terminals in more than 30 countries and territories, from Australia to Spain and the US.
Large local banks likely have the lowest ATM charges, experts note.
Before you go
Before heading off to the airport, travellers should check online to see if their bank and credit card provider suggests notifying them they’ll be out of the country. Of Canada’s Big Six banks, only National Bank still recommends travel notification. Travellers should also ensure their personal information is up to date in case their financial institution attempts to reach out about a suspicious transaction.
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