Wednesday, May 1st, 2019
The money you carry with you when travelling, and how you get it, can make a big difference when it comes to managing your travel budget. These tips will help you get the most bang for your buck when you travel.
Getting the local currency cost effectively can be tricky. Your home bank may have reasonable rates, but if you're looking to get currency that's not common, there could be quite a bit of markup. Generally speaking, airports have some of the worst exchange rates, while currency exchange offices can have reasonable rates.
Using local automatic banking machines is convenient, but don't forget that your bank will likely charge you a 2.5%-3.5% fee, plus any flat ABM fees. No matter which exchange option you choose, check what the actual exchange rate is so you'll know if you're getting a deal or not.
Some credit cards don't charge fees on purchases made in a foreign currency, but the majority of them add a 2.5% fee on top of the exchange rate.
Credit cards are convenient, since you don't need to worry about physically exchanging money, but you need to consider that not every merchant accepts cards, so you'll still need to get some cash. One advantage of using credit cards is that if you're a victim of fraud, any unauthorized purchases will be waived.
When you pay with your credit card, and you're given the option to pay in the local currency or Canadian dollars, always choose the local currency.
By choosing the local currency, you pay the mid-market exchange rate plus any fees, whereas the Canadian dollar exchange rate is set by the merchant.
This is known as dynamic currency conversion, and although it's unlikely merchants will add a huge markup, picking the local currency gives you the best rate.
Depending on where you're travelling to, some merchants may accept foreign currencies. For example, many Caribbean countries accept U.S. or Canadian dollars, and countries in Europe that don't have the Euro as their official currency may still accept it.
This is convenient for travellers, but it's almost always cheaper to use the local currency. Think of this as the dynamic currency exchange rate when you pay with cash.
Wherever you travel to, it's important to look up local customs when it comes to money. For example, tipping isn't part of the culture in Japan, but in Egypt, restaurants expect a tip on top of the service charge that's already added to your bill.
In other countries such as Thailand and Turkey, bargaining for the best price is common at markets. There are even some places where meters aren't used for taxis, and you're expected to negotiate a price in advance, so it always pays to do some research before you travel.
Instead of worrying about the cheapest way to exchange your money, how about picking a destination where your Canadian dollars go much further?
It may cost you more than a thousand dollars to fly to Southeast Asia, but once you're there, you could spend less than $50 a day which would cover accommodations, meals, and attractions. If you go to Europe, countries such as Hungary and Poland are typically less expensive than France or Italy.
This article is provided for information purposes only. It isn’t meant to be relied upon as financial, tax or investment advice, makes no guarantees about future financial conditions or performance, and shouldn’t be considered a recommendation to buy or sell investments or financial products....Information contained in this article, including information related to interest rates, market conditions, tax rules, and other investment factors is subject to change without notice, and Tangerine Bank isn’t responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication, and Tangerine Bank doesn’t guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific financial, investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.