Credit cards to save on exchange fees
Credit cards often offer the most sensible way to spend abroad, says Barry Choi, who runs the Money We Have personal finance and travel website.
They typically charge foreign transaction fees of about 2.5% on each purchase—a cheaper option than those done via debit card or ATM.
“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 U.S. credit card from my bank and it’s a good value.’ But the problem is you have to pay (the balance) in U.S. dollars,” Choi said.
Save on foreign transaction fees with these credit cards
Should you convert to local currency when abroad?
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.
Often, customers are given a choice at the point of sale to pay in Canadian dollars or U.S. 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.