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What is the best way to exchange money or pay for things in a different currency?

What is the best way to exchange money or pay for things in a different currency?

When you travel, you have many different options when it comes to exchanging money or paying for things in a different currency.

While there are many options, I can guarantee you one thing, any time you exchange money or pay for things in a different currency, *someone* is taking a minimum of 2.5% of every transaction from you as a foreign exchange fee.

They are taking this fee in at least one of two ways:

* an obvious fee that they tell you about upfront

and / or

* a hidden fee, by using an inflated exchange rate that is worse than today's 'real' exchange rate

Inflated exchange rates - the hidden fee

A lot of people aren't aware of the hidden fee. For example, if today's 'real' exchange rate between Canadian and U.S. dollars is 1.30, they are definitely charging you an inflated rate of 1.33 - and pocketing the 2.5% difference as a fee for themselves.

Unless you actually look at your receipt or credit card statement, and compare the exchange rate they used, against the 'real' exchange rate from a currency exchange site (like XE.com) - you will have no idea about this hidden fee.

And by *they* I mean every bank, currency exchange center, ATM machine, and credit card in the world. They all want their 2.5% fee from you.

It's potentially going to get even more expensive for Canadians. As of May 1st - TD became the first bank to increase this hidden fee from 2.5% to 3.5% for ATM withdrawals in other countries.

Increasing the foreign exchange fee for credit cards may be next. The other Canadian banks are watching TD to see if they should do the same.

Ways you can exchange money - from worst to best

Method Obvious Fee Inflated Exchange Rate
Airport exchange kiosk        
Your bank at home    
Good independent currency exchange place at home
ATM in a different country
Prepaid reloadable cards
Credit cards (99% of them)
'No foreign exchange fee'
credit cards (rare)

Yes, there is one way to avoid both the obvious fee *and* the inflated exchange rate - with a 'No Foreign Exchange Fee' credit card

'No foreign exchange fee' credit cards are cards that charge you today's real, uninflated exchange rate - and with no other fees, they are the only way to truly buy something in a different currency without paying one cent in fees (hidden or obvious), provided you pay your credit card bill on time.

Personally, my money strategy when going on a trip usually looks like this:

- exchange *some* currency at a good, independent currency exchange place at home. In Calgary, I often see Calforex branches recommended as having the best rates (downtown and Chinook Centre). Another one that is often recommended is Canex Forex in Eau Claire.

Note however, that if the country you're going to visit uses an exotic currency (anything beyond dollars, pesos, or euros) - it may be better to wait until you get there. Exotic currencies can often be a rip-off to buy in Canada.

- while traveling, I pay for everything I possibly can with a 'no foreign exchange fee' credit card

- for everything else that absolutely requires cash as payment, I use the currency I exchanged at home. When that runs out, I withdraw some more from the ATM in the foreign country.

The key with ATM withdrawals is to find that balance, where you're making as few ATM withdrawals as possible, but without walking around with a ton of cash. I also need to time that final ATM withdrawal so I don't end up with too much foreign currency at the end of the trip.

So what are the best 'no foreign exchange fee' credit cards?

This type of credit card is fairly rare. Out of the hundreds of credit card options available to Canadians, only a handful of cards use the true, uninflated exchange rate at the time of purchase.

The 5 best 'no foreign exchange fee' credit cards

Card My Thoughts
Home Trust Preferred Visa

Home Trust Preferred Visa

No annual fee, and charges you the real exchange rate.

Update: With significant downgrades coming to the Rogers line of cards in June 2020, the Home Trust Preferred Visa is actually, once again, perhaps the most attractive no-foreign exchange fee card.

There are a few other perks such as roadside assistance and car rental collision insurance included for free.

You can find more detailed info about my experience with the Home Trust Visa in this blog post.

Apply now

Brim Financial Mastercard

Brim Financial

No annual fee, charges the real exchange rate, and comes with free access to Boingo Wi-Fi hotspots around the world (airplanes, airports, etc).

Apply now

Scotiabank Passport Visa Infinite

Scotiabank Passport Visa Infinite

Charges the real exchange rate, and comes with perks such as 6 airport lounge passes per year, and all kinds of insurance coverage: travel medical, trip cancellation / interruption, delayed / lost baggage, and flight delay.

You can also earn Scotia Rewards points.

But, it has a $139 annual fee. To justify the annual fee, this card is the best option if you think you might have a decent level of transactions in foreign currencies, or value the included lounge passes, or the insurance.

3 lounge passes alone would typically cost more than the annual fee.

Currently, you can earn a bonus of 40,000 Scotia Rewards points after making $1000 worth of purchases in your first 3 months.
Apply now

Rogers Platinum Mastercard

Rogers Platinum Mastercard

Update: With significant downgrades coming in June 2020, the Rogers line of credit cards has become somewhat useless for purchasing things in foreign currencies (except perhaps $USD). Focus on one of the cards above.

There's also the Fido Mastercard, which is essentially the exact same card.

Apply now

Rogers World
Elite Mastercard

Rogers World Elite Mastercard

Update: With significant downgrades coming in June 2020, the Rogers line of credit cards has become somewhat useless for purchasing things in foreign currencies (except perhaps $USD). Focus on one of the cards above.

Apply now

There are a few other 'no foreign exchange fee' credit cards available to Canadians, but I don't consider them as attractive as the 4 cards listed above. They are...

  • HSBC World Elite Mastercard
  • Scotiabank Gold American Express

  • Other tips for exchanging money or paying for things while traveling

    Is there any way to avoid paying high fees when making ATM withdrawals in other countries?

    All banks will charge the hidden fee (inflated exchange rate) but Tangerine / Scotiabank is the one bank that won't charge the additional obvious fee, if you withdraw from an ATM in the Global Alliance.

    ATMs in the Global Alliance include: Bank of America in the U.S., Scotiabank in Mexico, Caribbean, Central America or South America, and Deutsche Bank in Europe.

    You can find a complete list of ATMs in the Global Alliance here.

    There's also the Stack card (see below), which avoids the hidden foreign exchange fee, but you are still charged the obvious fee.

    Are there any prepaid or reloadable credit cards that avoid foreign exchange fees?

    Virtually all prepaid or reloadable credit cards are charging you the hidden fee (inflated exchange rate), and even worse, they usually have additional obvious fees. You are better off using a no foreign exchange fee credit card.

    But there is one option that truly does avoid both the hidden and obvious fees:
    The Stack Reloadable Mastercard.

    You install the free app, and within a few weeks they send you a reloadable Mastercard that you can load with funds from a variety of sources (no fees for loading).

    When you make standard purchases with the Stack Mastercard, there are absolutely no foreign exchange fees, hidden or otherwise.

    When you withdraw cash from an ATM, you avoid the hidden foreign exchange fees (inflated exchange rates), but you are still charged the obvious fee by the ATM provider.

    There's also the Revolut card which behaves the same way.

    What about withdrawing cash using my credit card?

    This is generally a bad idea. Most credit cards consider this a cash advance, and start charging you interest immediately.

    Yes, there are sometimes ways around the interest charge, by overpaying your credit card first, but this can still be a bad idea for other reasons, and you'll still be charged a cash advance fee.

    If the machine asks, choose to be charged in the currency of the country you're in

    When you're in another country, and the debit or credit machine asks if you would like to be charged in your home currency (Canadian dollars) - do *not* select this option.

    It may seem like a good idea, but what's really happening when you select that option is that the machine's provider is determining the exchange rate when calculating the amount you will be charged in $CAD.

    I guarantee that this will be an even more inflated exchange rate than the one that Visa or Mastercard uses.

    What you want to do is select the option to be charged in the currency of the country you're in, and let Visa or Mastercard use their typical 2.5% inflated exchange rate.

    Beware: I have heard that with some machines, if you use the tap method to pay, you may not even be asked, and it will automatically charge you in $CAD, with the terrible exchange rate.

    Is there a way to avoid foreign exchange fees when sending an international money transfer?

    You may want to look into TransferWise.

    They use the real exchange rate, without the hidden 2.5% markup. There is still an obvious fee (small percentage and fixed fee) but they are transparent about it.

    What currency should I bring to Cuba to convert to Cuban pesos ?

    Definitely Canadian. Definitely not $USD. The exchange rates are set by the government and should be the same everywhere.

    You can't buy Cuban Pesos outside of Cuba.

    What currency should I use in Mexico?

    Pesos are the best currency to use in Mexico. Not $USD. Convert some Canadian dollars to Pesos before you go, or when you get there.

    When using the ATMs in Mexico, choose the legitimate bank ATMs. Not the street ATMs.

    SUMMARY: The best way to withdraw cash or pay for things in a foreign currency, depending on your goal

    The chart below is a summary of all the different options presented in this article.

    The options above the grey lines are what I personally feel to be the best options.

    STACK MastercardRevolut CardTangerineSTACK MastercardRevolut CardRogers World Elite MastercardRogers Platinum MastercardBrim FinancialHome Trust Preferred VisaScotiabank Passport Visa InfiniteTransferwise

    Jump to: The 4 best 'no foreign exchange fee' credit cards

    Jump to: Ways you can exchange money - from worst to best

    Jump to: Top of this article

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    16 Responses to "What is the best way to exchange money or pay for things in a different currency?"

      Has WT been here?
         WT on June 13th, 2018

      Thanks for this!

      Has Asi been here?
         Asi on June 13th, 2018

      Is it better to exchange usd in Canada or exchange when we get to U.S?

      Has Chris Myden been here?
         Chris Myden on June 13th, 2018

      WT: No problem!

      Asi: I would say that assuming you exchange your money in Canada at a place with the best exchange rates (such as Calforex in Calgary), it's unlikely you'd do much better exchanging it in the U.S.

      The story can be different for more exotic currencies, where you might be better off waiting until you get to the destination to exchange.

      But for $USD, being so common, the rates here in Canada (at competitive exchange places) are about as good as it gets.

      Has Spence been here?
         Spence on June 28th, 2018

      Thanks for this! Not sure how I missed the original post but just ordered the Scotiabank card. Just an FYI that the 25,000 point offer looks like it ends on June 30th, so all applications have to be submitted by then to qualify for the offer. Just in time for our trip to Florida in July!

      Has Maria been here?
         Maria on July 4th, 2018

      Great information.
      Guess I have more of a ?

      I heard going through the Canadian Snowbirds association currency, To have them deposit monies $ to your US account you get a better rate as well. For people whom go to the US for six months out of the year. Have you heard of this?

      Has Julia been here?
         Julia on July 9th, 2018

      Thank you for the great post. What's your opinion on getting Japanese Yen? Should I buy it in Calgary or in Japan?
      Thanks again

      Has Chris Myden been here?
         Chris Myden on July 9th, 2018

      Hi Julia,

      I would think Japanese Yen would be common enough that a place like Calforex could offer pretty competitive exchange rates. Not sure about local banks.

      When you try the order form on the Calforex website, it shows what they're using as the exchange rate.

      When I compared it against today's 'true' exchange rate from XE.com - it seems pretty competitive.

      What you can do is see how much, say, 25,000 Yen would cost using XE.com

      Let's say the XE.com calculator shows 25,000 Yen equaling 295 Canadian.

      I would then multiply 295 by 1.025, and add another $6, for a pretty good idea of the best you can probably hope for, at a good exchange place in either Japan or Canada, or from an ATM withdrawal in Japan.

      So in this case, 295 x 1.025 would be $302. And then add $6. So $308 Canadian being the best total price one could realistically achieve to purchase 25,000 yen at today's rates.

      You can then call Calforex and ask how much 25,000 Yen would be, and see if it's close to that number. Each branch sets their own rates.

      Has Chris Myden been here?
         Chris Myden on July 9th, 2018

      Hi Maria,

      I can't say I had heard of the Canadian Snowbird currency exchange program, but I took a look and it seems legitimate. My best guess is that being a not for profit organization, it probably is a bit better rate than the banks usually give.

      If you go to this link it shows what their current exchange rates are:


      You can compare that against the live rates from XE.com - if you add 0.025 to the live rate, and the Snowbirds are below that number, it's a very competitive rate.

      For example, today's live rate on XE.com is 1.31. Adding 0.025 to that, we get 1.33. And the Snowbirds are claiming to offer 1.327.

      Has Colleen been here?
         Colleen on July 9th, 2018

      Thanks for the info and websites, Chris! I used to go to Global Exchange and buy currency when the exchange rates were good, but GE does not exist any more. Doesn't Calforex want a high minimum transaction? In my research I found that AMA offers a not bad price to purchase. I am not a member though so can't use it.

      Has Panorama been here?
         Panorama on October 18th, 2018

      There are a couple of other options available for CAD to USD (and vice versa) conversions that avoid the FX fee.

      1) Get a Royal Bank account (CAD)
      2) Get a Royal Bank account (USD)
      3) Get an account with RBC Bank Georgia (USD) through Royal Bank (note that RBC Bank Georgia is an actual American bank domiciled in the USA)
      4) Link these accounts together on your online profile which Royal Bank can help you to do

      To exchange from CAD to USD without the FX fee, transfer online from Royal Bank CAD account (obtained in Step 1) to RBC Bank Georgia account (obtained in Step 3). If you want to withdraw this USD in Canada as cash prior to travelling, you can transfer from RBC Bank Georgia to your Royal Bank USD account obtained in Step 2.

      * Note that you should not transfer from Royal Bank CAD to the Royal Bank USD account as that will have the FX fee.

      To exchange USD to CAD, transfer from RBC Bank Georgia to Royal Bank CAD. Again, do NOT transfer from Royal Bank USD to Royal Bank CAD as that will have the FX fee.

      Another way to avoid FX fees is to use "Norbert's Gambit", which is, in essence, using the stock markets to convert currencies. This is handy for larger sums.

      I also have the Home Trust preferred card for purchases in currencies that are not CAD or USD and I like the cashback, roadside assistance, and no annual fees.

      I use all three of the above techniques to avoid the FX fees like the plague.

      Hope you all find these suggestions helpful.

      Has Luke been here?
         Luke on November 4th, 2018

      The Cheapest way I've found to change money to the Philippines is to remit it. It costs me $10 for however much I want to send, and I can pick it up when I land. There's a way to remit it to a certain place, but if you have a close Filipino friend or loved one, you can send it to their bank. That's what we do when we travel, as my fiancé is Filipina. Exchange rate is equal (or sometimes better) than XE, and if you're changing $1000 it only equals 1% you're paying.

      Has Lynda Quin been here?
         Lynda Quin on June 11th, 2019

      Tried to use my new Scotia bank Passport when I was in the Philippines and NO ATM will give you any money..called Scotia bank ..they said it should..but it doesn't! Purchases are OK with the card..

      Has Christina  been here?
         Christina on October 27th, 2019

      Hello Chris,
      Can you double check your information on the Rogers cards? It appears they have a few of 2.5% of the transaction amount after conversion to Canadian dollars. Thank you.

      Has Christina  been here?
         Christina on October 27th, 2019

      **Fee. Not few.

      Has Chris Myden been here?
         Chris Myden on October 27th, 2019

      Hi Christina,

      The Rogers cards are a little different in that they charge the 2.5% foreign exchange fee, but this fee is more than negated by the 3-4% back that you receive back when making a purchase in a foreign currency.

      Another way to think of it is a 0% foreign exchange fee and an additional 0.5% or 1% back.

      Has Christina been here?
         Christina on October 27th, 2019

      Thank you for your response Chris. Much appreciated!

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