More bang for your buck

Winter 2008 CSANews Issue 69  |  Posted date : Dec 23, 2008.Back to list

How to convert currency without losing your shirt
They say that money makes the world go round. The only problem is, not everyone in the world uses the same kind of money.

For those who spend at least some of the winter abroad, that can be a problem. With the Canadian dollar dropping by approximately 20% after remaining at par with the U.S. dollar for much of 2008, getting the most bang for your Canuck buck when you're away from home has become an important issue.

How can you convert your currency without losing your shirt? Let's review some of the more common options, and discuss the pros and cons of each.

Exchange cash at a Canadian bank and bring it with you
Not really feasible for those spending several months overseas, but a good idea for short vacations or weekend trips, and for immediate use at your destination (for a taxi, for example). The exchange rate might not be the absolute best but, depending on your relationship with your bank, you might be able to negotiate the exchange commission.

Exchange cash at an overseas bank
A common-sense option. Again, you probably won't get the absolute best exchange rate, but the rate will usually be fair, and fees will be reasonable. Keep in mind, however, that governments sometimes set exchange rates in advance, forcing banks to stick to the set rate. This isn't an issue if you're travelling to the U.S., but it's something to keep in mind if you're visiting the developing world.

Access a Canadian bank account at foreign ATMs
An extremely convenient way to access foreign cash, particularly in countries with wide ATM coverage (the U.S., for example). Convenient doesn't always mean cheap, however; your home bank will likely charge a fee for the service and the overseas bank may as well. This fee is usually waived if the banks have a reciprocal withdrawal arrangement with each other—make sure to check with your bank back home before you go.

Bring traveller's cheques
Less common than they used to be, but still a good way to carry large amounts of currency safely, particularly for countries in which ATMs and credit cards are less than common. The downside: you'll be charged a commission when you buy your cheques, as well as when you cash them. Ouch.

Use credit cards for retail purchases
Because credit card companies make bulk currency purchases on the open market, the exchange rate on credit card purchases is usually very good. That said, many card companies charge conversion fees and other commissions on overseas purchases; check with your card company to be sure. In addition, there can often be a delay between the transaction date and the processing date. Not a big deal, but it can affect the exchange rate that you actually see on your statement.

Use the Snowbird Currency Exchange Program
An excellent way to exchange small amounts of money at good exchange rates. Once a month, The Canadian Snowbird Association makes bulk currency purchases at preferred exchange rates, passing on the savings to all participants. The program is extremely flexible; once enrolled, you can set up a regular transfer for the same sum every month without changing banks. You can also exchange any amount that you wish at any time. Talk about hassle-free! For more information, visit

Whatever strategy (or strategies) you choose, keep in mind that it's impossible for even a veteran currency trader to know what the exchange rate on the Canadian dollar will be a week, a month or a year from now. So don't obsess about it. By all means, shop around for the best exchange rate. But remember — the point of your visit is to relax and enjoy yourself, not to become an international financier.