Since the Canadian dollar remains valued at about US$0.75, it’s understandable that Canadian travellers pay more and more attention to the exchange rate. They often spend thousands of dollars during their vacation abroad. Any savings on the exchange rate can be major savings. Here are some tips to help you save money in that regard rate when you travel.
1-Shop around for your rate
Take a few minutes to find the best exchange rate. This tip may seem obvious, but many travellers head right to their bank without even looking at the rates offered elsewhere. Generally, banks establish their rate based on the rate listed by the Bank of Canada, to which they usually add a margin of 2% to 4%. With that kind of a variation, the two minutes it takes to examine other rates will turn into a quick reward. As such, we’ve simplified the task even further: At the end of this article, we’ve included a list of links to the largest financial institutions.
2-Places to avoid
You won’t be surprised to learn that airports, tourist sites and hotels are the main places to avoid. People in those locations know that you need money quickly, and readily take advantage of that situation by setting much higher rates than the ones you would find elsewhere. Bank machines should be avoided, too. You will be charged extensive fees to obtain local currency, in addition to the regular fees. So be prepared: avoid exchanging your money at the last minute!
Compared to banks, who sometimes try to hide their exchange fees, credit card companies are usually quite transparent in that regard. Generally, the rate for credit cards is about 2.5%; it depends on the card you own. You can find out your rate quickly with a simple phone call. If you travel frequently, you may want to consider a credit card that offers discounts, or a card with which you will not be charged fees on currency exchanges. Cards like the Amazon Rewards Visa offer discounts and don’t have any currency exchange fees.
4- Put money aside
You have probably realized that preparation is without a doubt the best method for saving on the exchange rate. This next tip isn’t an exception to the rule. By regularly depositing money into an account in the targeted currency, you can avoid the inconveniences created by sudden changes in the value of the Canadian dollar. No one can predict the future, but if you periodically transfer money into such an account, you will divide up the risk while saving money. If the dollar rises, you will benefit from it through your subsequent deposits. As well, if the dollar weakens, what you already have saved will have been exchanged at the best rate possible. Naturally, the ease with which you can open this kind of account depends on the currency you want. You should not have any problems with common currencies, such as the US dollar, the yen, the pound sterling, or the euro.
5-Use the buying power
Some groups, such as the Canadian Snowbird Association, offer better exchange rates than banks because they exchange large sums of money. You can, therefore, benefit from the buying power of this kind of group.
Institutions like Knightsbridge FX also offer advantageous exchange rates for larger sums of money.
Is it really worth it?
Naturally, these tips are more useful for travellers spending larger amounts of money abroad. If you travel frequently or are leaving the country for more than a few days, it is important to plan the financial aspect of your trip. You should consider opening a bank account and signing up for a credit card with which you will not be charged exchange fees. If you are an occasional traveller, take a few minutes to find the best exchange rate so as to make the most out of your trip.
Do you have any tips to share with us?