There is no doubt about it, traveling is a great way to explore the world (or even just our neighbours down south), learn about different cultures, and relax. However, usually one thing always dampens the mood and it is unfortunately, the currency exchange fees. When you are away from our home and native land of Canada, you get dinged a load of money whenever you withdraw money from your bank (should you find an ATM that allows you to use your debit card), whenever you use your credit card to purchase something, and even when you exchange Canadian dollars into the currency of the country you are in. There's no way about it, we will get dinged when we exchange money. There are, however, some ways in which we can get dinged a little less.
Here are some considerations for you next time you travel outside of Canada, on how to save money on those pesky currency exchange fees.
Get a U.S. Dollar Credit Card
One option to avoid the standard 2.5% currency exchange fee with every credit card transaction (it's blended into the exchange rate when you see it on your credit card statement) is to get a U.S. Dollar Credit Card. Of course, this will not work outside of the United States (even in Canada) as you will be charged the 2.5% currency exchange rate. However, since Canadians frequent our neighbours down south so much, this might be a good idea.
With the U.S. Dollar Credit Card, you will not get charged the 2.5% currency exchange. Credit cards through Chase Bank Canada do not have the 2.5% currency exchange fees. Toronto Star advocates that the only thing that you will pay is the exchange rate. Some examples are the credit card is the Amazon credit card and the Sears credit card. With the Amazon credit card, you can earn money towards Amazon purchases and also you get $20 cash back towards Amazon purchases when you enrol.
Nonetheless, using your credit card may still be a better option than say, exchanging your money at the airport. Of course, this is not the case if you use your credit card for cash advances and the sort.
Avoid Exchanging Money at Certain Places
The airport, the hotels, and places like Travelex are not great places to exchange your money. Although it looks like a good idea, they usually charge an arm and a leg and the rates are not good at all. For example, Million Miles Secrets Blogs says that the Travelex fee is $9.95 per transaction if you convert less than $500 in the currency you are exchanging. If you are exchanging small amounts of currency, this can really add up. It is important to remember that the $9.95 fee is on top of the terrible exchange rate that they give you, too.
Do Not Press "OK" to Canadian Currency on your Purchase
One of the trickiest ways in which they bombard you with the currency exchange fee is when some retailers do their own exchange. Oftentimes, the fees here are exorbitant and more than what your credit card company will charge you. Therefore, when you are paying and you see a "The retailer can change the currency for you" "$53.40 CDN, ok?" (or something similar) say no and just let your credit card company do the currency exchange for you instead.
According to Yahoo Finance, this is labelled Dynamic Currency Conversion and there are a lot of hidden fees to it. You will likely be double "currency exchanged" and it can even add up to 10% of the purchase price in fees!
So next time, just say "no" even though it looks convenient. It's not.
Exchange Money Before you Go
The best currency exchange rates are found at the Exchange Centres, though not all of them may have the money available in your currency (depending on where you are going). Therefore, exchange some money before you head to your destination country, and you can always exchange more money when you get to your destination (not at the airport, of course). The bullion and currency exchange shop in my city has better rates than the banks.
Another reason to exchange before you go is the $5 charge each time you use your debit card at a foreign ATM.
Photo credit: Laura
Bargainmoosers, how do you save money on currency exchange fees?