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Guide: Saving on foreign currency transactions

To the point Discover our tips for saving on foreign currency transactions, whether for cash withdrawals or card payments.

You live in Canada and use a credit card to pay for all your purchases. But what about when you leave the country, whether to the U.S. or elsewhere in the world?

Before we reveal the best solutions for saving money on foreign currency transactions, a quick reminder of the different possibilities.

Foreign currency transaction examples

There are three main ways to pay when you’re travelling:

  • Currency exchange at the exchange office
  • ATM cash withdrawals
  • Card payments

Let’s take a look at each method in detail, and see which techniques are best for avoiding paying more than you need to.

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Currency converter

To find out the official rates for the various currencies, visit the Bank of Canada website. Google has also integrated a currency converter into its search engine. For example, simply enter 1 CAD in USD to obtain the current US dollar rate.


Exchanging Canadian dollars at the exchange office

Exchanging Canadian dollars before you leave ensures that you’ll be able to pay virtually every merchant you meet… but it’s not the best technique for several reasons.

Avoid currency exchange at an airport. It’s a last-minute solution, and exchange offices know it: fees will be much higher, whether at your departure or arrival airport.

Inconvénient #1 : Les frais d’opérations de change

Whether in Canada or on arrival in the country you’re visiting, you can exchange your Canadian dollars for the local currency. As exchange office operations are very costly, this is the technique we recommend least.

This is known as an exchange fee or currency conversion: the exchange office sells you foreign currency in exchange for your Canadian dollars at the rate it wants. This rate will include hidden exchange charges .

By comparing it with the market rate, you can calculate the approximate cost of the operation, and how much you’ll be overcharged.

Example: the market rate to obtain 1 USD is 1.30 CAD. If the exchange office sells you the same 1 USD at 1.35 CAD, it will charge you a fee of 3.8%.

For a transaction worth USD 1,000, you’ll pay CAD 1,350. The exchange fee here is around CAD 50.

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Inconvénient #2 : Le risque inhérent au transport d’argent

If your wallet is stolen, there’s no recourse, unlike with credit cards!

Around the world, we are increasingly moving towards digital payment solutions. In some countries, cash is no longer accepted for services as basic as cabs.

However, it’s always a good idea to have some local money on hand when you travel to a foreign country.

Personally, for any destination in the world, I make sure I have the equivalent of 100 CAD in local currency, so I’m not caught unprepared… just long enough to be able to withdraw money once I’m there, but above all to pay with my credit cards. And I always bring along a few US$20 bills: no one will turn you down!

Money withdrawals abroad

There are two ways to withdraw money in another country:

  • With a debit card
  • With a credit card

Withdraw money abroad with a Canadian debit card

The debit card gives you direct access to the funds in your chequing or savings account.

Beware, however, of several aspects:

  • Your card network (Visa or Mastercard): some ATMs may refuse one of these networks.
  • Pre-set limits: your card issuer limits the amount you can withdraw per withdrawal and/or per week. Find out before you leave, and adjust the limits accordingly.
  • Fees: there will be several fees depending on your card:
    • Foreign exchange / currency conversion charges: a rate decided by your card issuer;
    • Withdrawal fees: fixed fees per withdrawal or variable fees depending on the amount withdrawn;
    • ATM fees: fixed fees charged by the ATM operator.
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Some debit cards are more advantageous than others for withdrawals abroad.

Scotia and Tangerine are members of Global Alliance, a group of banks that allow their customers to withdraw cash free of charge from partner bank ATMs. However, you will pay the rate dictated by the bank and will not be able to save on foreign currency conversion charges.

For example, holders of a Scotia or Tangerine debit card can make free withdrawals from Bank of America ATMs in the U.S. or BNP Paribas ATMs in France.

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Money withdrawal abroad with a Canadian credit card

The same warnings as debit card withdrawals apply to credit cards.

However, other, much heavier fees will be added, as the credit card is primarily a means of payment and not a means of cash withdrawal!

Issuers will then charge a cash-advance interest rate (between 20% and 30%) plus a withdrawal fee.

We therefore advise you not to withdraw money with your credit card unless you manage your balance well, i.e. make sure you have a credit balance before withdrawing and making future purchases with your credit card.

If you find yourself in an emergency situation and need to withdraw money from your credit card, we advise you to pay off your credit card in full immediately.

In fact, interest on cash advances starts to accrue as soon as you withdraw!

Some people recommend setting up a positive or credit balance on the credit card to avoid these fees.

However, this doesn’t always work: it will be case by case, depending on the institution. What’s more, if your card is ever defrauded, you run the risk of not being insured by the issuer for the “credit” portion.

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Withdraw money abroad and avoid conversion fees

If you’re a globetrotter or a professional on the move, currency conversion fees can quickly add up when withdrawing abroad. Fortunately, there are ways of minimizing these costs. Two notable options are the Wise card and the Wealthsimple Cash card.

WISE card

The Visa Debit Wise card is a reliable option for foreign currency withdrawals. Formerly known as Transferwise, Wise is an international money transfer service offering low fees on foreign currency withdrawals.

Once you have your Wise account and your Visa Debit card, you can add money to your account in Canadian dollars and make withdrawals or purchases in the currency of the country where you are located. Conversion fees are much lower than those of traditional credit cards. In France, for example, the fee is 0.53%, while in Morocco it is 1.53%.

Wealthsimple Cash card

Wealthsimple Cash is an all-in-one financial platform that combines a checking account, a high-interest savings account and a prepaid Mastercard. For travelers, this card is an excellent option for avoiding conversion charges on foreign currency expenses.

The Wealthsimple Cash Mastercard does not charge ATM withdrawal fees or conversion fees worldwide, with no monthly limits.

Card payments abroad

After withdrawals, let’s move on to payment with your debit and credit cards abroad. First, an important reminder:

ALWAYS choose to pay in local currency and not in Canadian dollars!

The exchange rate is free… and is always at a disadvantage compared with the rate charged by your bank.

Recently, in Greece, I noticed that if I chose to pay in Canadian dollars, the merchant charged me a 10% conversion fee. Whereas by choosing to pay in euros with my Scotiabank Passport™ Visa Infinite* Card, these fees were reduced to 0%!

Payments abroad with a Canadian debit card

As with withdrawals, foreign currency payments with a Canadian debit card will be impacted by preset limits and various fees.

However, this may save you from having to carry cash with you from Canada, which may reassure some people. However, we would prefer this alternative: to pay with a Canadian credit card.

Payments abroad with a Canadian credit card

Most Canadian credit cards will allow you to pay any foreign merchant directly.

However, each transaction is subject to different fees:

ATM Withdrawal Payments with the card
Cash advance fee % of the amount withdrawn and/or fixed fee in $
Foreign Exchange Fees Between 0 and 5% of the amount Between 0 and 5% of the amount
Visa/Mastercard Network Fees Between 0 and 2% of the amount Between 0 and 2% of the amount
Interest expense on cash advances Between 20% and 30% per year with no grace period
Interest expense on purchases Between 15% and 30% per year with grace period
ATM fees Between $0 and $10

Now let’s take the same table, with a $1,000 purchase or withdrawal with the most common Canadian credit card fees:

ATM Withdrawal Payments with the card
Cash advance fee 7,50 $
Foreign Exchange Fees 2,5 % = 25 $ 2,5 % = 25 $
Visa/Mastercard Network Fees 1 % = 10 $ 1 % = 10 $
Interest expense on cash advances 20 % = 17 $*
Interest expense on purchases -**
ATM fees $5
Total expenses per $1,000 47,50 $ à 64,50 $ $35

* Interest charges on cash advances apply from the time of withdrawal, without any grace period: to avoid them, pay off your credit card immediately!
**We take it for granted that you pay your credit card balance on time to avoid interest charges on purchases.

As you can see, for $1,000 withdrawn at an ATM with a credit card, you’ll pay between $45 and $65 in fees! If you make a transaction, the fee is $35.

The best no-conversion-fee credit cards

Amex Or Scotia Visa Passeport Scotia

Scotiabank Passport™ Visa Infinite* Card

With this welcome offer for the Scotiabank Passport™ Visa Infinite* Card, you earn up to 40,000 welcome bonus points (a $400 value) as well as a first-year annual fee waiver (a $150 value):

  • 30,000 points after just $1,000 in purchases
  • 10,000 points after $40,000 in annual purchases in the first year

Then, each year, if you make at least $40,000 in purchases on the card, you’ll earn an annual bonus of 10,000 points, a value of $100.

This offer expires on July 1, 2024. Don’t delay applying for this card, as the following offer will likely be less attractive!

With the Scotiabank Passport™ Visa Infinite* Card, you earn 3 points per dollar spent at Sobeys, IGA, Safeway, Foodland, FreshCo, Voilà by Sobeys, Voilà by IGA, Voilà by Safeway, Chalo! FreshCo, Thrifty Foods, IGA West, Les Marchés Tradition, Rachelle Béry and Co-Op.

You’ll also earn 2 points for every dollar you spend, including on foreign transactions, in the following categories:

  • Grocery purchases
  • Dining purchases
  • Entertainment
  • Transportation

The Scotiabank Passport™ Visa Infinite* Card is an excellent Visa credit card for this type of purchase.

You can redeem your points for any travel purchase at the rate of 1,000 points = $10 (flights, hotels, all-inclusive properties and even Airbnb). You can also use your points as cash back with Scene+, such as at your grocery store checkout at the same rate of 1,000 points = $10.

The Scotiabank Passport™ Visa Infinite* Card also offers:

  • no foreign transaction fee
  • 6 complimentary passes to airport VIP lounges
  • Premium insurance for your travels or purchases
  • Concierge services

We voted this credit card the Best No-FX Fee Credit Card of 2024. Knowing that the annual fee is waived in the first year, there’s never been a better time to get this credit card for your international travels over the next year!

Scotiabank Gold American Express® Card

The Scotiabank Gold American Express® Card only requires a $12,000 minimum income, making it accessible to as many people as possible.

For a limited time, you can earn up to 40,000 points in the first year, which is a $400 value on travel purchases, including Airbnb.

With the Scotiabank Gold American Express® Card, you earn 6 points per dollar spent at Sobeys, IGA, Safeway, Foodland, FreshCo, Voilà by Sobeys, Voilà by IGA, Voilà by Safeway, Chalo! FreshCo, Thrifty Foods, IGA West, Les Marchés Tradition, Rachelle Béry and Co-Op.

Also, you earn 5 points per dollar for:

  • grocery stores
  • Restaurants
  • Entertainment

And 3 points per dollar on gas, transit and streaming services purchases.

You can redeem your points on travel purchases (flights, hotels, all-inclusive and even Airbnb). You can also use your points as cash back rewards with Scene+.

The Scotiabank Gold American Express® Card also offers no foreign currency transaction fees, excellent travel and purchase insurance, concierge service and exclusive American Express benefits (Front of the Line Program).

Scotiabank Platinum American Express® Card

For a limited time, when you apply for the Scotiabank®* Platinum American Express® Card, you can earn up to 60,000 points. That’s a $600 value for travel purchases including Airbnb.

With the Scotiabank®* Platinum American Express® Card, you earn 2 points per dollar on all purchases. You can redeem your points on travel purchases (flights, hotels, all-inclusive and even Airbnb). And you can also use them for other rewards in the Scene+ program, such as cash back rewards.

Plus, with this card, you will not pay 2.5% foreign transaction fees on any foreign currency purchases, and you get ten complimentary visits to airport VIP lounges with the Priority Pass and Premium Plaza networks.

And you get excellent insurance for your travels or purchases, concierge service, and exclusive American Express Offers (American Express Invites Program).

The advantages of no-conversion-fee credit cards

Frais de conversion : 0 %!

Thanks to this advantage, you save 2.5% on each transaction.

In most cases, the exchange rate obtained will be very close to the official rate. In any case, it will be much more advantageous than the one from exchange agencies.

No transport of foreign currency

One of a traveller’s many fears: having your money stolen! As mentioned above, if your cash is stolen, you have absolutely no recourse. By using your credit card, you eliminate this risk.

Fraud insurance

Has your credit card been compromised and money taken from your account? No problem: you’re not responsible. Upon review, your credit card issuer will refund money improperly taken from your account.

Higher limits

Debit cards often restrict the number of withdrawals and payments you can make. This is not the case with a credit card: the limit will be whatever the bank gives you($5,000, $10, 000 or even more).

Earning reward points

Finally, a very important aspect for rewards point hunters: every transaction on your credit card will earn you points!

For the Scotiabank Gold American Express® Card, all foreign purchases earn 1 point per dollar. However, Canadian purchase categories are more attractive: up to 6 points per dollar. Points that you can then easily apply to your travel purchases.

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Bottom Line

As you can see, going abroad means anticipating your financial needs!

While the solution of paying with a credit card that doesn’t charge foreign currency conversion fees is ideal, other options shouldn’t be put aside, for all the reasons given above.

Come to discuss that topic in our Facebook Group!
4.8 Milesopedia Rating
Jean-Maximilien Voisine
Jean-Maximilien is an expert in Canada and France about Loyalty programs, Credit cards and Travel. He is the Founding President of Milesopedia.

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