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Tuesday, November 29th 2022

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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 Vancouver, I often see VBCE branches, Charlie's Currency on Granville, and Gastown Currency Exchange, recommended as having the best rates. In Victoria, try Calforex.

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

      Has Jessica been here?
         Jessica on June 9th, 2018

      I found a better place in Richmond called Pyramid currency exchange, I always go there and always get the best rate, free parking and no line up.

      Has Lucky Strike been here?
         Lucky Strike on June 10th, 2018

      You can actually get a Fido/Rogers Mastercard which has zero annual fee and you get 3% back on foreign currency purchases, which minus the 2.5% exchange fee means you save 0.5% on all foreign currency purchases.

      (Note: The card earns reward points which can be redeemed for cash once per year which equals 3% back)

      Has Jennifer been here?
         Jennifer on June 10th, 2018

      Lucky, that one is mentioned in the article.

      Has Nigel been here?
         Nigel on June 30th, 2018

      You are missing a mention of the MasterCard offered by Brim:
      Also 0% foreign transaction fee and some interesting extra benefits.

      Has Chris_Myden been here?
         Chris_Myden on June 30th, 2018

      Hi Nigel,

      From what I understand the launch of the Brim card has never materialized and keeps being delayed month after month. The company itself is apparently fraught with issues. At this point it's essentially vaporware.

      Has Stephen been here?
         Stephen on July 1st, 2018

      Again, when travelling to the US I simply go to the checkout at Walmart ( or other grocers. At Walmart there is no fee and the exchange rate in competitive . I use my credit union debit card ( they auto charge to a linked cheque in acct ) that way there is no credit card fee . Sweet .
      Does anyone know of other countries where grocery store chains give cash advances and accept debit cards from Canada ?

      Bankrupt ATM s !! ????

      Has Ian MacDonell been here?
         Ian MacDonell on July 3rd, 2018

      Just to point out that "Tangerine" is owned by Scotiabank and so if you already have a Scotiabank card you can withdraw money from ATM's owned by Global Alliance banks without having an account with "Tangerine" as well. I ended up with an account with "Tangerine" when Scotiabank bought the business from ING. I fired them after some pretty stunning incompetence and serious privacy breaches.

      Has Frank been here?
         Frank on July 3rd, 2018

      Thanks for your blog which I send to lots of people I know & meet. Exchanging Canadian $'s at casinos such as the Silver Reef across the border who give an advantageous rate is another option. They expect you to gamble with it but don't enforce spending there. On the Tangerine topic in Manzanillo the card doesn't work at Scotiabank!! If you call before leaving Tangerine will refund any bank fees you incur. Keep up the great work.

      Has Mike been here?
         Mike on July 17th, 2018

      Can you please expand on your comment:

      "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..."?


      Has Chris Myden been here?
         Chris Myden on July 17th, 2018

      Hi Mike,

      One way it can backfire is that overpayment of credit cards can sometimes trigger fraud alerts or card cancellations from the credit card company. I think there are some schemes out there that criminals use involving credit card overpayment.

      But I would imagine it may only be an issue if you overpay your card numerous times, or overpay it by a lot.

      And some credit cards may have no problem with it at all. I mainly just want to make sure people don't consider it a good option unless they've really looked into it first.

      Has Craig P been here?
         Craig P on June 10th, 2019

      There’s a place with wicked rates downtown vancouver. Gastown Collectibles on pender st and Seymour st

      Has Rob T been here?
         Rob T on July 3rd, 2019

      Charlies Currency Exchange in Vancouver on Granville near Robson offers the best rates I've found for cash exchange and they carry quite a few currencies. It is good to call ahead to confirm they have enough of the currency you need.

      Has Chris Myden been here?
         Chris Myden on July 3rd, 2019

      Thanks Rob! I've heard that Charlie's is cash only.

      Has Don S. been here?
         Don S. on July 3rd, 2019

      Hi Chris:
      You touched on this but here's my 2 cents worth.

      I have used Brim for for about a year now. Their rates are the same as (maybe slightly better) XE.com (I check this rate every day). They give 1% back, which is nice. I also like how they email me a few minutes after a purchase to inform me that one was made (just in case I didn't make it).

      I'd give it a solid 8 of 10 (looses points on not being able to set up auto monthly payments from my bank account).

      Has June Wing been here?
         June Wing on July 4th, 2019

      On its website Rogers says it charges the 2.5% foreign currency commission.

      Has Chris Myden been here?
         Chris Myden on July 4th, 2019

      Hi June,

      The Rogers cards charge the 2.5% foreign exchange fee, but this fee is negated by the 3% or 4% back that you receive 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% to 1.5% back.

      Has Chris Myden been here?
         Chris Myden on July 16th, 2019

      Thanks Don - I think Brim is worth another look, now that they have their issues sorted out.

      Has Gili been here?
         Gili on December 17th, 2019

      Thanks for putting this page together. I got the Rogers World Elite card and the issue with it is a measly 500CAD daily withdrawal limit. Since they charge $5 for this, that's a 1% charge (at least). I have another World Elite Mastercard that allows me to draw out way more than that (if you have access to an ATM that will allow this). So, it works, but I wouldn't have it as my only card for overseas use. I asked if they could increase the limit and they said they are unable to change it. Consider adding the daily withdrawal limit for each card on this page, perhaps?

      Has Chris Myden been here?
         Chris Myden on December 30th, 2019

      Hi Gili,

      Just to clarify, you are withdrawing cash on your credit card, aka a cash advance?

      Personally, I would never recommend that anyone do this, due to the fact that credit cards immediately start charging you interest on cash advances. This will quickly outweigh any benefit that the card provides.

      Has Richard been here?
         Richard on February 10th, 2020

      I've been using the "Stack" MasterCard since last September. The app works great for loading the card and both ATM and POS seem to work well.

      Has Michael Foster been here?
         Michael Foster on March 4th, 2020

      Theres this place in downtown Vancouver, they accept debit too! www.gciexchange.com Gastown Currency Exchange

      They always have all currencies in stock so no need to wait!

      Has Samuel Moore been here?
         Samuel Moore on January 17th, 2021

      Wow, I didn't know that there are credit cards that don't charge foreign exchange fees at all. For sure these credit cards are hard to find so thanks for sharing, I'll try my luck and hopefully be able to get one. At the moment, I've always converted my money from CAD to USD and the other way around through this site https://www.knightsbridgefx.com/currency-exchange-london-ontario/ because they have always offered the best exchange rate that I could find online. Their rates are also lower than banks by 1% - 2% since they have less overhead fees than most traditional financial institutions which allows them to convert money without the need for inflated rates. I really wish I could get one of the cards listed in here so I could go cashless the next time I travel abroad.

      Has Darrenalura been here?
         Darrenalura on June 9th, 2021

      "When I originally commented I seem to have clicked on the -Notify me when new comments are added- checkbox and from now on whenever a comment is added I receive 4 emails with the exact same comment. Is there an easy method you can remove me from that service? Thanks a lot!"
      ????? ????????? ??? ??

    Comments are automatically closed 30 days after the post is made.

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