After having our world turned upside down with COVID we’re all due for a vacation. With flights booked- we’re ready to hit the road except… What’s the best currency option for travellers?
This is an issue I would always run into. I used to never quite know whether I was getting the best deal on exchange rates. When you consider that Canadians spend thousands on travel- a percent saved here or there can add up. Luckily, here is the ultimate guide to currency options for travellers. This can save you hundreds in currency fees!
Understanding Foreign Exchange and Associated Fees
Um, where’s my rate?
You’ve probably noticed how news broadcasts will have a quoted rate but when we go to exchange our money we never quite get that deal. The reason for this is because the news will quote the Bank of Canada exchange rate while, in the real world, we get the retail rate. Exchange offices make a bit of profit on this difference.
The famous “spread” and fees
Another way exchanges make their profit is by quoting a higher rate to sell and a lower rate to buy. The difference between the buy and sell rate is called a “spread”. So what they’re really doing is buying the currency at a low price and selling at a higher price. Buy low sell high anyone? Also, we’re sometimes charged an exchange fee of 2.5 percent of the transaction. Keep reading so you can find out how to avoid these pesky fees!
Beating the system- Top 3 ways to avoid exchange fees
(1) No-Exchange-Fee Credit Cards
This is my favourite way to avoid exchange fees: Using the Scotia Passport VISA Infinite or Scotia Gold AMEX. I love this option because I can spend in a foreign currency while paying my bill at home in Canadian dollars AND avoid the 2.5 percent exchange fee. I’ve been using the Scotia Passport VISA as my only credit card for three years now and love it. You can read my review here. Use my referral link to sign up for the Scotia Passport VISA here and get up to $350 towards travel.
(2) Using pre-paid zero-fee cards
This option is the best if you’re travelling to a country where most things are paid in cash. The best pre-paid card out there is the STACK Mastercard and app. You simply load the card with money via etransfer or at a Canada Post outlet and then spend away. The main benefit of this card, over a credit card, is that you can withdraw cash abroad without paying the exchange fee or interest. The only thing to be mindful of is that ATM’s usually charge a fee for the convenience of taking cash out. If you don’t feel like paying the fee… read on.
(3) How to use an ATM without paying ANY fees
Here is the ultimate way to take local currency without paying any fees: signing up with a bank that has a presence in the country that you are visiting. For example, my favourite place to visit is Mexico City. Scotiabank has a big presence there so I signed up a few years ago and haven’t looked back. Now, when I go to Mexico I find a Scotia ATM (using the app or just asking a local) and put my Canadian card in to get Mexican pesos. That easy! If you want to do the same, simply find look for the country you like to visit in the table below and find the corresponding bank. Tech tip: Use ctrl+F or command+F (max users) on your keyboard and type the country you like to visit.
|TD Bank||North America: Canada, USA, Mexico |
Europe: The Netherlands, Ireland, Luxembourg,
Asia & Pacific: Hong Kong, Republic of Korea,
People’s Republic of China, Singapore, India
|BMO||North America: Canada, Mexico |
Europe: England, Ireland, Switzerland, Germany
Asia & Pacific: Australia, People’s Republic of China,
Taiwan, Hong Kong, Singapore, India
Central & South America: Brazil
|Scotiabank||North America: Canada, Mexico, USA|
Europe & Middle East: Ireland, United Kingdom
Carribean: Antigua and Barbuda, Aruba, The Bahamas,
Barbados, British Virgin Islands, Cayman Island, Dominica,
Dominican Republic, Grenada, Jamaica, Netherlands
Antilles, St. Lucia, St. Kitts and Nevis, St. Maarten, St.
Vincent and the Grenadines, Trinidad and Tobago, Turks
and Caico Island
Asia & Pacific: Australia, People’s Republic of China,
Hong Kong, India, Republic of Korea, Malaysia,
Central & South America: Belize, Brazil, Chile, Colombia,
Costa Rica, Guyana, Panama, Peru, Venezuela
|RBC||North America: Canada, USA|
Europe: Amsterdam, Brussels, Dublin, Edinburgh,
Frankfurt, Guernsey, Jersey, Lausanne, London, Lugano,
Luxembourg, Madrid, Milan, Paris, Zurich
Carribean: Antigua, Aruba, Bahamas,Turks & Caicos
Islands, Barbados, Bonaire, Cayman Islands, Curacao,
Dominica, Grenada, Montserrat, Nevis, Saba, St. Kitts, St.
Lucia, St. Maarten, St. Vincent and the Grenadines, Trinidad,
Asia & Pacific: People’s Republic of China, Hong Kong,
|CIBC||North America: Canada, USA|
Europe: United Kingdom
Asia & Pacific: Australia, Hong Kong,
Central & South America: Colombia
|HSBC||North America: Canada, Bermuda, Mexico, USA|
Europe: Republic of Armenia, Austria, Belgium, Channel
Islands, Guernsey, Jersey, Czech Republic, France, Germany,
Greece, Ireland, Isle of Man, Israel, Italy, Luxembourg,
Malta, Monaco, Netherlands, Poland, Portugal, Russia,
Spain, Sweden, Switzerland, United Kingdom
Africa & Middle East: Algeria, Bahrain, Egypt, Kuwait,
Lebanon, Libya, Mauritius, Nigeria, Oman, Qatar, Saudi
Arabia, South Africa, United Arab Emirates
Asia & Pacific: Australia, Bangladesh, Brunei Darussalam,
People’s Republic of China, Hong Kong, India, Indonesia,
Japan, Republic of Korea, Macau, Malaysia, New Zealand,
Pakistan, Philippines, Singapore, Sri Lanka, Taiwan,
Central & South America: Argentina, Brazil, Chile,
What about all other ways to save fees?
The options above are my top 3 and intended for all the speed readers out there. That being said, there are other currency options for travellers that might fit your needs a bit better.
Foreign Exchange Offices
Considering old-school options, huh? I like it. The main thing to remember with exchange offices is that you get a convenient way to grab or get rid of your foreign currency. Remember that you always pay for convenience one way or another. But, you can avoid getting ripped off by following these tips:
Look for an exchange office where the spread is less than 2.5 percent and where they don’t charge any fees.
Avoid the “desperately need some cash now” situation by using two out of my top three options above when travelling. That way, you have a bit of time to compare rates at different exchange offices.
Finally, compare rates at different exchange offices with the rates at the airport before making a decision
Online or App Foreign Exchange
In theory, this should be the best option because apps don’t need a huge network of ATM’s or offices around the city. However, we just saw how there is a lot of money to be made in the foreign exchange game. In this case, it seems like the online players like to keep their margins high. The price savings of an online exchange app are non existent. But, this might be the best solution if you want to transfer money to a relative in another country. The biggest issue with this option is that you need a bank account in Canada and a bank account in the other country.
I’ve deliberately included this option as last. The main reason is because, similar to exchange offices, the banks will charge for convenience (through a higher rate or spread). Again, this option would work if you absolutely need physical cash. If that’s the case, the best thing to do is to take 5 minutes to google rates at the banks with exchange offices. For example, you can search “ USD to CAD TD Bank rate” and then search USD to CAD RBC rate”. Finally, compare all your bank options and go with the highest exchange.
With all of these options, I stand by my top 3 because of their ease of use, convenience and low cost compared to all others. With a bit of prep time signing up for one of the top 3 options, you’ll be on your way to a zero-fee travelling bonanza!Um,