# Travelling to US - Can I Avoid Exchange Rate Fees?



## Maj34 (Oct 7, 2011)

Hey all. 

I'm traveling to the US next week for vacation and was just thinking about how I'm going to handle money while I'm there. 

I was going to head to the bank to take out some cash, but then I remembered that a typical Canadian bank charges you about 2% to do the conversion.

Can anyone tell me whether you will typically get charged a foreign fee on a MasterCard? I have an MBNA SmartCash Platinum card and I suspect there may be a few other people around here with the same card... 

I did the obligatory google search on this one of course - but what I got was a bunch of people saying "Sometimes you get charged, sometimes not. Sometimes you call in advance and they say 'No Fee' but then you get charged in the end... " 

I will call MBNA later today to ask them about this, but I'm just wondering if anyone has any personal experience with this..

Any other tips on saving money on the exchange rate transfer?

Thanks, 
M.


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## Plugging Along (Jan 3, 2011)

Most credit cards charge around 2.5-3%, same as the bank. TD charges 1.5 if you have select account or USD account.


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## Elbyron (Apr 3, 2009)

I can confirm that MBNA charges 2.5% for foreign currency transactions on all their credit cards. This is pretty typical for all credit cards, though there are a few exceptions, which you can see in this handy chart made by the Financial Consumer Agency of Canada.

Keep in mind that your SmartCash card will give you 1% back, so the overall cost is only 1.5% and is probably preferable to bank rates. My Capital One Aspire Travel card gives me 2% back so that negates most of the fee and so it would be my first choice, except I have another option available to me...

I work for a global company based in the U.S. which is traded on the NYSE. I participate in the employee stock purchase plan, so I periodically get to buy stocks at a discount, which I then sell with the proceeds coming in U.S. dollars. Rather than converting this "income" into CDN, I deposit it in a TD Borderless USD bank account and invest all but $3,000 in USD mutual funds. (The $3K is used to keep the account free.) The borderless account also includes a free USD Visa card, which I use for all USD online purchases or vacations in the U.S.. In many of the countries I travel to, many businesses either do not accept credit cards or they (illegally) charge a 3 - 5% fee for using a credit card. So I withdraw USD cash before leaving, and exchange it in the foreign country for the best rates - you can also exchange Canadian cash but it always seems to have worse rates even after accounting for the CAD/USD difference. Anyway, this setup works great for me but it's really only practical if you've got a source of USD, otherwise you'll end up paying for the conversion somewhere along the way. Actually I do technically pay for the conversion, as my ESPP withdrawals come out of my CDN pay and get converted to USD, but I don't consider it to be a cost of buying stuff in USD since I'd be buying the discounted stock regardless.


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## Eder (Feb 16, 2011)

I'm in the US very often so I opened a Wells Fargo account and use their debit card when down here. I fund it using canadianforex.com and get a rate that blows the banks away and they transfer to my Wells Fargo for free.


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## Maj34 (Oct 7, 2011)

Thanks all. It turns out I didn't have a chance to call; I lost my phone in the toilet this evening. Money down the drain for sure.  

At least I learned here I can use my MNBA card to get save 0.7% (I was previously going to go all cash and bank rate vs net MBNA rate is 2.2% vs 1.5%). I'm going to have to find a really good deal on a new toy to recoupe that loss.


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## Sampson (Apr 3, 2009)

I use a free TD Borderless account and associated USD Visa and convert CAD to USD using the 'gambit' - I'm converting enough to buy USD denominated investments that a little can go towards our US spending.


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## houska (Feb 6, 2010)

For the casual Canadian traveller, a good-rewards credit card (that offsets the forex fees by the rewards) is typically the best solution for foreign travel. However, make sure that if a merchant's payment system offers to bill your cc in your home currency (Cdn$) you do *not* take them up on their offer. The fees and rate built into that are invariably worse than the Visa/Mastercard rate - including markup - that will get applied by your bank if you just say "bill my acct in US$". I used to encounter this only in Asia (esp. China) but I recently faced it in a shop in Europe and a restaurant in New Mexico(!). Be vigilant about this, the prompts will try to make it sound like they're providing you with a great oppty to lock in a rate vs being at the vagaries of mysterious wheels within wheels of international finance. Don't believe it - if someone offers you the "convenience" or "certainty" of billing you in your home currency, you will pay for that "convenience" and "certainty" through the nose.

BTW, not as much of an issue for the U.S., but make sure your credit card is PIN-enabled. In many countries, signature-based cards have gone the way of the dodo and you will not be able to use them.

For cash needs, withdrawing at your bank for common foreign currencies (USD, Euro) tends to be best - in line with the rewards-offset credit card. However, beware of taking out too much, since converting it back adds a lot of frictional costs. For less common currencies, double check the offered rate to make sure you're not being dinged more than 2-3% (what you'll be penalized with ATMs and credit cards)

ATM withdrawals tend to have comparable conversion rates, but can ding you with an additional network fee. They are more cost effective if you look up ahead of time whether your Canadian bank has network agreements with banks in your country of origin that eliminate the fees, or even branch networks (e.g. BNS in Latam). And as long as you don't withdraw in small dribs and drabs, the network fee costs are annoying but don't blow the budget. Again, in particular if you convert at an airport at an ATM located just beside a currency exchange, you may need to jump through hoops to make sure the ATM does not do an (expensive) currency conversion for you - you want your cash to be converted by your home bank at the interbank rate (plus fees) not at whatever rate the ATM operator has cooked up.

Don't try in-store debit card payments using your Canadian card. They usually don't work, and I had a friend who tried it and worked, but got dinged with a mysterious $7 fee. Either use your CC or use real cash.

Airport currency exchanges tend to be the worst. Avoid them like the plague, except to convert dribs and drabs of some other foreign currency you no longer need into the local currency there (e.g. 2 weeks ago I landed in Sweden from Seoul and converted my remaining Korean Won into Swedish Kroner. The rate was quite bad but better than having useless Won in my pocket...)

All of this is for incidental travel. If you convert large quantities or travel somewhere regularly, then there are better solutions by setting yourself up with the right bank accounts at the right banks, converting via cross-listed stocks, etc. All great stuff (which I personally use, given I travel nearly every single week somewhere) but overkill for most folks....the time and effort to set them up is better spent reading up on your area of destination to have a great time.

(Realize this reply is broader than just U.S.)


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## iloverfd (Feb 6, 2012)

Elbyron said:


> ....this handy chart made by the Financial Consumer Agency of Canada.....


Thanks for the link.


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## Maj34 (Oct 7, 2011)

Wow houska. Thanks for the information! 

(It never ceases to amaze me: the quality of people, their posts and generosity on this site.)


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## fraser (May 15, 2010)

We maintain as US dollar bank account and a US dollar VISA card. We just got tired of paying 2.5-3 points on all transactions. Now, if we sell something in USD we deposit in out USD account. If we need to buy US dollars (or Euros or GBP) we go to a foreign exchange store. They typically sell and buy at MUCH better rates than the bank and they have a better selection of bill denominations.

Last time we bought $5,000. USD we saved $140. over what the bank charges by buying across the street at a currency exchange store.


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## houska (Feb 6, 2010)

fraser said:


> If we need to buy US dollars (or Euros or GBP) we go to a foreign exchange store. They typically sell and buy at MUCH better rates than the bank and they have a better selection of bill denominations.
> 
> Last time we bought $5,000. USD we saved $140. over what the bank charges by buying across the street at a currency exchange store.


Interesting, last time I looked into this the currency exchange store closest to me was worse than my bank. YMMV, and may depend on the dollar value. By the way, perhaps everyone except me knows it already, but one can see the current spot rate on ones' smart phone very easily by just googling "1 USD in CAD" (right now it says 1 U.S. dollar = 1.00329985 Canadian dollars) so you can see exactly how much you are being penalized while you're standing in front of the window...


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## Elbyron (Apr 3, 2009)

Google's search has a lot of handy utilities built into it. The currency conversion is often useful, though it doesn't work for every currency. The unit conversion tool is also very helpful, for example "24oz in ml" or "500 sq ft in sq m" or pretty much any other common units of measurement. You can even combine this with the calculator function: "(2^8 + 30*2/3) inches to cm".

Anyway, getting back to the topic, I wanted to comment on using airport currency exchanges. I've found that in some countries, the rates are government regulated and the exchanges must all charge the same rates and fees no matter where they are located. For these countries I often use the airport exchange, but I find trading US Dollars gets you better value than trading Canadian.
When I have leftover foreign cash, sometimes I'll trade it at an exchange in the next country, but they don't always accept it (Egypt wouldn't take my South African Rand). However, I've managed to sell leftover Rand and also Japanese Yen through Kijiji at the current market rate. You get an even better deal than the exchanges, while the buyer also saves a bit on the exchange.


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## AlexM1359 (May 19, 2015)

I would highly recommend using an online currency exchange company. Since they don't have high overhead costs they generally tend to undercut all of the competition, including some of the best bank offers.

There are a couple websites you can use to find online currency exchange companies like fxcompared.com and mycurrencytransfer.com. They will list all of the companies in your country that will exchange the currencies which you are looking for. Personally I've used KnightsbridgeFX here in Canada for exchanging to USD.


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## fraser (May 15, 2010)

We now use a Chase Bank Canada Visa card (Marriott flavour) for all of our out of country travel. One of the benefits of this card is that they do not charge the usual 2.5 percent uplift of foreign transactions that most other cards charge. 

We also use the card for cash advances. If we do a foreign ATM withdrawal our bank changes a high exchange rate-could be because they add about 2.5 percent. We load up this card with cash, ie a credit balance, and do cash advances when we travel. This avoids any interest charges BUT you have to be careful to always maintain a credit balance during the month in which you travel.

We travel often so the card saves us money. It is easy for us to calculate the savings because we either charge on this card or do cash advances. Last year we saved about $600 by using the card. We just returned from 5 weeks in Greece. We saved $120 by using this card instead of our regular bank issued Visa or bank ATM withdrawals.

We check the exchange rates from time to time on XE web site.


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## humble_pie (Jun 7, 2009)

Sampson said:


> I use a free TD Borderless account and associated USD Visa and convert CAD to USD using the 'gambit' - I'm converting enough to buy USD denominated investments that a little can go towards our US spending.



this is the platinum approach, of course.

but to do this the USD spender needs a brokerage account with both a CAD & a USD side plus a little experience with online order entry, preferably pair trading. 

he also needs a TD borderless. In a nearby message cmf member Eder says he has a Wells Fargo account with its USD credit card, so that would be a silver star way to go (not quite platinum yet, unless Eder is gambiting his currencies at a broker in order to pay no FX fee whatsoever.)

but the OP says she or he is going to the US on vacation for a week. I imagine the total expenditure might be less than $10k, which makes the tasks of opening & operating borderless & broker accounts a bit too complex, unless the OP is planning many of these 1-week outings to the US of A, or has other intermittent needs for USD.


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## james4beach (Nov 15, 2012)

As humble_pie alludes to, a key question is how frequently you will pay expenses in the US. If this is a one time trip, don't bother opening any new accounts. It's probably not worth the effort.

I zip back and forth all the time. I'm very happy with the TD Borderless account as well as the TD US Visa that comes as part of the package deal. The currency conversions are done through TDDI (brokerage) using gambits.


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## Sampson (Apr 3, 2009)

ah pie.... old thread and I think a lot has changed with the popularity of these credit cards that do not charge fees and accept charges from multiple currencies.

From a systemic viewpoint, there are lots of other reasons to go with the Big Green, and in our case, access to the low cost e-series funds for our children's RESPs was the underlying reason to take that approach. Many other banks also have low fee or now fee USD credit cards for customers who park cash, so more options now. The fact that TD doesn't auto-wash Gambit trades anyway makes this system a no-go for me except for the fact I'm also at RoyBank.

fits perfectly for me, but I think for most, the new credit cards are the way to go. In fact I have to read through some of those threads to see what they are all about...


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## humble_pie (Jun 7, 2009)

Sampson said:


> The fact that TD doesn't auto-wash Gambit trades anyway makes this system a no-go for me except for the fact I'm also at RoyBank




oh i hope u won't mind if i interject a fact? the TD has gone nuts about this urban myth that their former RRSP online gambit trading feature was ever tied to their auto-washing.

most of the new TD reps don't understand gambit trading so they repeat the above mystique. Thus the urban legend rolls on.

in reality, the 2 are 2 distinct & separate features. A TD client can work a currency arbitrage, aka a gambit trade, at any time. In non-registered accounts, the client has to phone a TD representative for the sell side. He has to phone to sell today, exactly as he has always had to phone to sell in non-reg'd accounts in the past.

meanwhile, the TD RRSPs & TFSAs have changed from monocurrency accounts to dual currency accounts. The old online capability to sell the sell side of a gambit pair online has now vanished. The newer dual currency build means that investors in registered accounts now have to phone for the sell side, just like clients working in non-reg'd.

today, once the USD proceeds are secured via a gambit trade, an investor is free to buy all manner of US securities, in both registered & non-registered accounts. You can see that these 2 operations - 1) gambit to obtain USD & 2) buy US security - actually have nothing to do with each other.

in the past, when TD offered only monocurrency RRSP accounts, the poor clients would have to shelter their new post-gambit US dollars by buying either a US security the same day (which would mop up the US dollars) or else the client would have to move his brand-new greenbacks into the US money market fund, to prevent the TD system from applying its overnight FX fee to the gambit proceeds.

before TD offered auto-washing, many TD clients used to do their own laundry. Exactly as above. The principle was exactly the same. All that happened with auto-wash is that the big green took over laundry duty.

but they still washed by hand. There was nothing automatic about it. Laundry was crisply done every night by a dedicated green team in the ottawa call centre, hand-scrubbing every applicable trade from that day into or out of TD's USD money market fund.

somehow, some not-very-knowledgeable person at TD got the idea that auto-washing meant instant online gambit trades & unfortunately, next thing one knew, the whole of the big green was subscribing to this urban myth ...


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## jargey3000 (Jan 25, 2011)

....lost your phone down the toilet ....???????


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## kcowan (Jul 1, 2010)

fraser said:


> We now use a Chase Bank Canada Visa card (Marriott flavour) for all of our out of country travel. One of the benefits of this card is that they do not charge the usual 2.5 percent uplift of foreign transactions that most other cards charge.


We use their amazon.ca version and did the same thing in southern Italy this month. Taking cash at the ATM costs 10% so we used it sparingly. Fortunately most stores and restaurants take the chip card.


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## Jaberwock (Aug 22, 2012)

I have a US dollar account at my bank, and an account at Interactive Brokers which I use for investment in the US stock market.

If I need to change CDN dollars to US, I transfer CDN dollars to the IB account (no cost). I then exchange the CDN dollars for US dollars at IB (commission is $2.50 flat rate on trades up to $25,000, I get spot market rates with no hidden fees). Then I transfer the money from IB to my US dollar account at no cost.

However, most of my travelling is outside of the US, so I often have to change other currencies and a US dollar credit card doesn't do much for me. Airport money changers are the most expensive place to change money, avoid them at all costs. Hotels and resorts also rip you off with poor exchange rates. Often, small local money change outlets will have decent rates on the US dollar, so carrying US dollars and changing them locally is an option if you don't mind carrying large sums of money around. Remember that sums over $10k have to be declared at customs, and the source may be questioned.

I try to use credit cards for purchases whenever possible while travelling. The 2.5% foreign exchange loss is offset by 2% rebate on purchases on my card. 

Withdrawing from foreign ATM's usually incurs a 2.5% hit on the exchange rate, and a $5 per transaction charge from your bank, and sometimes another charge from the foreign bank of up to $5.


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## Davis (Nov 11, 2014)

kcowan said:


> We use their amazon.ca version and did the same thing in southern Italy this month. Taking cash at the ATM costs 10% so we used it sparingly. Fortunately most stores and restaurants take the chip card.


I think you mean 1%, not 10%, and with a $5 minimum. https://www.chase.com/online/canada/document/Schd5Eng.pdf

This is considerably better than 2.5% foreign exchange, plus withdrawal fees on other cards or debit. Or am I missing something?


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## fraser (May 15, 2010)

We have used the Chase card without issues for both Visa transactions and cash advances in many parts of the world without issue.

Oddly enough, we have had a charge transaction refused. Always the same circumstance...when booking on line with a discount airline. When we have subsequently followed up with Chase they say they had no record of the issue. So it could be the vendor having an issue with Chase. Happened in Australia and Thailand (twice on same airline but accepted on another). It was a minor inconvenience since the fare was sub $100. and we always carry other cards. 

Another oddity with the card is twice we were not allowed access to our on line data. We assumed that this meant that our cc would not work either. Wrong...it worked. I suspect our on line access may have been blocked when we timed out trying to get access. So now we keep a running total of our credit balance and charges to ensure that we never get dinged for interest on ATM cash advances.

We pay $100. for the card but it comes with a free night at a Marriott hotel (which we always use) and points. Last time we used the points in Sydney, Aus....saved us $275. 

If you travel out of the country, or do foreign purchases, the Amazon or Marriott versions are well worth considering.


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## liquidfinance (Jan 28, 2011)

Amazon visa is a great card. 1% cashback and exchange at visa rates which I have found to be very very close to spot rates. But with the cash back it is a win win. Its even worth it for a cash advance assuming you pay the bill immediately or pre load the cash onto the account.


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## agent99 (Sep 11, 2013)

liquidfinance said:


> Amazon visa is a great card. 1% cashback and exchange at visa rates which I have found to be very very close to spot rates. But with the cash back it is a win win. Its even worth it for a cash advance assuming you pay the bill immediately or pre load the cash onto the account.


We use the Amazon Visa too. At first just for US visits, but now exclusively. 1% cashback on everything except Amazon.ca purchases where it is 2%. Use it as our ebay card too so no exchange charges on purchases.

Recently, we have a problem with it at Home Depot. For some reason Home Depots system won't accept the Amazon Visa. Each of course blames the other, so we had Home Depot manager call Chase while we were there. It was confirmed that the recently "upgradd" Home Depot system is not reading the Chase card properly. Doesn't capture the number on the back. My solution has been to shop at Lowes or Rona who most of same stuff plus Air Miles at Rona! Card works at both.


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## kcowan (Jul 1, 2010)

Davis said:


> I think you mean 1%, not 10%, and with a $5 minimum. https://www.chase.com/online/canada/document/Schd5Eng.pdf
> 
> This is considerably better than 2.5% foreign exchange, plus withdrawal fees on other cards or debit. Or am I missing something?


No, thanks for correcting me. 500 euros at the ATMs cost me about $7.48 as a charge to my account. No other fees at all.


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