In the rush of packing and preparing for your vacation, it’s easy to forget how to best pay abroad. But in times of high inflation, questions about which cards to use, how much local cash to withdraw, and which currency conversion services to avoid are especially valuable.
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The best case scenario is using a credit card, said Hayley Berg, senior economist at Montreal-based travel data company Hopper.
They are not accepted at every roadside stand or backwoods pub, but they are widely available in most countries, especially in cities and other popular tourist destinations.
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Every credit card purchase comes with a foreign transaction fee, typically around 2.5 percent. Ultimately, that can weigh on the wallet, but it’s lower than most ATM and debit card fees, Berg said. If a $76 bistro bill is converted to $100 – which was the case on Thursday – the customer would be charged $102.50.
Several credit card providers offer fee-free international transactions. These come via ‘travel cards’, including the Scotiabank Passport Visa Infinite Card, the HSBC World Elite Mastercard and the Brim Mastercard.
“Usually people just take what they have. It’s only when you travel a lot that it will add up,” said Richard Vanderlubbe, CEO of travel agency Tripcentral.ca, which only recommends travel maps for business travelers and ordinary tourists.
Credit cards also have a currency conversion rate – for converting a purchase abroad back into your home currency – that is slightly higher than the official “interbank” rate. But credit card companies typically offer the best consumer rates compared to ATMs or currency exchanges, he said.
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At the point of sale, customers often have the choice of paying in Canadian dollars or in the local currency.
“Always opt for billing in the currency of the country you are in. They pay high conversion rates and transaction fees when converted to Canadian currency,” the federal government explains on its travel website.
But cash also plays a role.
“They need cash for cabs, for tips, maybe for a coffee and croissant cafe,” said Jill Wykes, editor of Snowbird Advisor, an online resource for Canadians wintering abroad.
Just don’t take too much with you. Cards are safer “than walking around with a lot of cash in your pocket,” she noted.
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Before leaving, Berg suggests ordering foreign invoices from your bank, which you can pick up at the branch within a few days.
“Many European destinations rely more on paper or coin money than we do in North America,” she said.
You don’t need three weeks’ worth of pesos, pounds or greenbacks, just enough to last a few days and avoid “all those nickel-and-dime charges” from repeated ATM visits, Vanderlubbe said. It’s also a costly hassle to convert foreign coins into Canadian currency once you’re back on home soil.
After credit cards, ATMs usually offer the best rate, which again is lower than a direct cash exchange. However, in addition to the conversion fee — often between one and three percent — withdrawals will likely include an ATM fee of around $3 to $6, as well as a fee from your bank for using an ATM outside of their network.
An exception are Scotiabank and Tangerine. They are part of the Global ATM Alliance, a network of major banks including France’s BNP Paribas and Germany’s Deutsche Bank, which waive ATM withdrawal fees at each other’s terminals in more than 30 countries and territories, from Australia to Spain .
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In any case, try to avoid ATMs and exchange offices at airports and hotels, Vanderlubbe warned.
“When you’re on a cruise, when you go to a casino, all of a sudden the ATMs are horrendous,” he said. “You pay for convenience.”
Big local banks probably have the lowest ATM fees, he added.
Before heading to the airport, travelers should check online to see if their bank and credit card issuer recommend notifying them when they leave the country. Of Canada’s Big Six banks, only the National Bank still recommends travel advice. Travelers should also make sure their personal information is up to date in case their financial institution tries to reach them about a suspicious transaction.
“The worst thing you do is you get somewhere and you can’t use your card,” Vanderlubbe said.
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