Canadian Currency - Exchange pre-trip or during trip?

It has been shown over and over and over that the cheapest way to obtain local currency is via a debit card at a bank owned ATM in the country. Don't know about Canadian sources for foreign currency but in the US you will pay roughly a 10% fee and it can be higher to obtain foreign currency. I doubt if the situation is much different in Canada.

The way to prove or disprove this is to go to you bank and see what the exchange rate will be obtaining currency in Canada. You credit and debit card will give an exchange rate within 1% of the interbank rate. The exchange rate is determine by the network supporting your card and not by the bank owning the ATM. Credit and debit cards networks operate internationally based on international exchange rates. Same for everybody.

Some credit and debit cards will add additional fees (generally currency conversion fee) BUT that is solely determined by your card issuer so ask them what they will add. Even with fees being added the ATM will still be cheaper.

Excellent information, thank you Frank!

The physical handling of paper such as currency is a cost to the banks. Loading an ATM cash machine with local currency is cheaper than having a bank handle retail quantities of FX. And the bank will want to make a profit on providing the FX currency service.

As a for example, some banks will charge $5 or more for a monthly paper statement. Does it cost $5 to print and mail a couple pages of paper?

We always pre-buy at home then top up once or twice at an ATM during a 3 week trip.

There is no official legally-enforced exchange rate. Each bank or exchange service can use whatever rate they want, usually different for buying and selling. The rate you see in the paper is the going rate between international bank transactions involving millions at at time, not a government-set rate.

My bank will sell euro or pounds at a premium of several percent over that published rate, as well as charge a $15 transaction fee. They have to, in order to cover costs and make money. When I ask the account manager at the bank about it she would insist its a "market rate".

The value of the CAD or USD against the Euro really has little to do with whether you should follow Rick's advice or not. It's all about what percentage you local currency exchanger charges compared to what a foreign ATM charge, and there is a great variation of these on each side of the Atlantic. If you exchange at a commercial exchange shop, such as you'll find at an airport on both continents, you'll pay too much. I have found the best rates I can get in Ottawa to be in the 1.5 to 2% range, which is comparable to the net charge at a European bank ATM. (I avoid free-standing ATMs, such as you'll see in bars or grocery stores, just I do at home, since they charge an additional fee.) I always pick up a few hundred euros, pounds, francs or whatever before I leave as buffer, and use bank ATMs as needed. They are ubiquitous, are almost always multilingual, and will also tell you if there is an additional fee over and above the bank's conversion charge. It's better to make a few larger withdrawals than many small ones. Of course, over a lengthy trip the exchange rate will fluctuate, but if you can predict beforehand whether you are going to gain or lose based on those fluctuations, then you should be investing in foreign currencies.

Thank you ... and to ottawanderer, this is pretty much my thinking as well. If the forecast is a huge dip in July, then I'm better off buying what I can now, for example. Somewhat difficult to forecast, of course. Banks annoy me, with their considerably higher exchange rates than the going stock exchange rate, not to mention their additional fees. But, what can you do, it is what it is. I'll pre-withdraw at home whatever my money belt can hold in GB and Euros, when the Cdn dollar is looking "better" (ha), and after that, hope for the best with regards to dollar value and exchange during my trip. Thanks!

Im not sure how much fluctuation there is from bank to bank in Canada. But the current rate that the banks SELL foreign currency will be higher than its actual value. That's how they make their money.

You can Google currency conversion (CDN$ - euro or GBP) to see the current rate. Then you should be able to look at your bank's current rate for selling these currencies. My bank website has a Travel Services section that has a foreign exchange currency converter that shows exactly what your CDN$ will buy, as well as their exchange rate. Compare these 2 rates to find the markup. In my case, right now, it shows the current CDN-$ - euro rate of 0.706 - 1.415. My bank is exchanging at 0.679 - 1.472. You do the math, but that's the markup if you buy cash at the bank counter. We've gotten slightly better rates when we exchange more than $1000 in a single transaction.

You would have to ask your bank what their foreign conversion fee is for each transaction, and any fees for using an ATM not associated with your bank. With our bank, we pay $5 for every ATM transaction outside Canada and the US. What exchange rate you get at the ATM depends on whose ATM it is. Those belonging to a bank will likely give a better rate than some non bank ones which can give terrible exchange rates.

This is getting too long. Bottom line, we try to prepay as much as possible before we begin. Then bring about €1000 in cash for small items. We use our credit card for larger items. And we use the ATMs sparingly, withdrawing the max allowable each time to reduce the number of transaction fees.

Why would you want to carry around large sums of money? That in itself is risky. Guessing what the exchange rate will be in July is simply speculating. You're going to pay a sizable premium for exchanging money ahead of time due to all the comments made by prior posters. And what if you withdraw too much? Then you'll have to exchange that money again, thus losing even more in the end. Rick's advice doesn't just apply to Americans....it doesn't matter where you are from and going to, it's still most effective to use an ATM machine on site. I have a (non-profit) credit union issued debit card and get charged 1% on each international withdrawal (no other fees) - it doesn't matter whether that withdrawal is in Italy, Turkey, Mexico, or Argentina. Granted there are a lot of Worried Nellies on this forum who take cash beforehand because they're worried they won't be able to find an ATM somewhere or that it won't work. On my many trips, this has yet to happen but of course people have different risk aversion. I've yet to take cash on any international trip because I refuse to get ripped off on the exchange rate. Yes, you will pay a huge premium for doing this...if it's worthwhile to you, go for it.

SJM. we always get some foreign currency to start with at Globex Exchange. Excellent rates and they do have several offices in BC. Check their rates.

If you can accurately forecast exchange rates, then you should quit your day job, and open a foreign exchange trading account. You can make millions and then go first class to Europe whenever you want.

Everyday or so, the ATMs of Europe are loaded with local currency. If you buy at a Canadian bank, they have to load the currency on an airplane, fly it to Canada, distribute it to the banks, which hold it until the off-hand chance that someone will walk in and want to buy some. Banks don't do anything for free, so they have to charge enough to make a profit.

SJM,

In my experience, you'll get a better deal by withdrawing larger amounts at bank ATM's in Europe. You didn't say which financial institutions you use, but they don't often keep a lot of foreign currency on hand, which means they have to order it and have it transported from a central bank. That all takes time and staff resources, and they do charge for that. Banks never provide that type of service for free.

My suggestion (and the method I've used on many trips) is to pack along a small amount of Pounds Sterling and Euro, perhaps €/£ 150 of each. That provides funds for meals during the trip, Taxi or Bus fares or whatever. After I'm settled at my first location, there's lots of time and no rush to find the nearest ATM.

I don't know anyone that uses a Money Belt stuffed full of foreign currency, as it's not the best way of transporting cash. In addition, if you have more than $10k in the Money Belt, you'll be subject to further scrutiny by CBSA when you depart (a hassle I don't wish to deal with, as I've seen what's happened to other travellers). I've noticed on trips over the past few years that CBSA officers usually appear at the departure gates while passengers are boarding, and if someone has more than $10k as valued in Canadian funds they will be pulled aside and questioned.

ATM's usually offer the least expensive Interbank rate for exchange, and I believe that will be your best value. You'll have to check with your financial institutions to determine what fees they charge for foreign ATM use. If you decide to use ATM's, I find it's a good idea to have at least two ATM cards, in case of a problem with your primary ATM card (I've had that happen). At least one credit card is also a good idea.

One other important point to mention with ATM's is that you'll have to be vigilant to avoid the Direct Currency Conversion (DCC) scam. If the ATM offers a choice between having the conversion done directly at the machine vs. at your home bank, always choose the latter option. This is an example of what a DCC transaction looks like. One of the regular posters here on the forum provided a good example of the difference in costs between the two, but I can't find the appropriate thread at the moment.

As always be sure to notify all your banks and credit card firms that you'll be travelling abroad, so they don't "freeze" your cards when they detect activity in a foreign country. You may also want to review your ATM withdrawal limits.

Hopefully these comments from "fellow Canadians" will help.

Looks like Canadian banks are more FX friendly than American (USA) banks. One test of the cost of FX is to compute what a given amount of FX, say EUR would cost in your domestic currency, then compute what you would get back if you reverse exchanged the FX back into domestic currency.

Using the American Bank of America as an example, buy 200 EUR in USD, then sell the 200 EUR back for USD:

https://www.bankofamerica.com/foreign-exchange/currency-converter.go
Buy 200 EUR
B of A sells at 1.1203 USD/EUR = $224.06 USD

https://www.bankofamerica.com/foreign-exchange/exchange-rates.go
Sell 200 EUR at 1.0027 USD/EUR = $200.54 USD

Difference for the round trip exchange = $224.06 - $200.54 = $23.52 USD

That said, if you want the peace of mind of not dealing with using an ATM cash machine on arrive, the higher cost may be a good value.

....What exchange rate you get at the ATM depends on whose ATM it is. ......

That is inaccurate. The exchange rate is determine by the network associated with the debit card or credit card - generally either Cirrus or Plus. The exchange rate will be within 1% of the interbank rate. It is possible that the owner of the ATM might add additional fees but the exchange rate is the same regardless. And those fees should be disclosed prior so you have the option of backing out of the transaction.

Thank you to all for the comments. I am aware of most of the points made. I do appreciate the note about the ATM currency conversion scam; I do believe I read that elsewhere as well. Duly noted, will not choose conversion at the ATM. It is very helpful to learn that foreign ATM conversion rates are better than what I'd get at my local bank. My main concern is what will my Cdn dollar be worth in July on my trip as opposed to now or purchasing before leaving. Could save a bit of money or lose it, but as one poster said, there is no way to know. I've been reading reputable forecasting sites for this short term window, but in the end, it's still a guess. I plan to bring a couple of ATM cards and a credit card as was mentioned - good to have back up! I guess I'll take a bit less cash than originally planned, certainly the Euros anyway.

SJM,

I never worry about the currency exchange rates, as they "are what they are" and a few dollars one way or the other is not going to make a huge difference in the holiday budget. Trying to figure out currency futures is a difficult game, even for those who do that on a regular basis.

Have a great trip!

This seems to be a regular discussion on this forum. For the purpose of information, here is my experience from my trip that ended on the 7th. I was traveling for 17 days including RS Greece. I obtained 200.00 euro from AAA before I left, the cost was $222.00. At a bank ATM in Athens I obtained 200.00 euro, the cost was $215.00. My peace of mind and not searching for an ATM at the airport is worth $7.00. And I never needed any additional cash.

While it is true that the least expensive way of getting local currency is from an ATM at your destination, it's always a good idea, in my opinion, to have some local currency in hand when you land. Getting a couple of hundred Euros from your local bank will cost you a little more, but it eliminates the hassle of trying to find a machine, the stress of hoping it works (they do occasionally malfunction), and doing it all while somewhat jet lagged. To us the small amount extra it cost to have money in hand when arriving is money well spent. Just an opinion.

It doesn't look like I can close this topic without deleting my original post. I just wanted to say thank you, and I don't need any additional comments ... some have not been related to my original post at all - but in any case, I have received enough answers and assistance. Thanks so much, topic can be closed now.

And so we say farewell .......