Canadians wondering how best to pay for items in U.S. dollars as spring break comes on have several options, with savings on currency conversion all the more critical as the loonie hovers near 22-year lows.
Credit cards often offer the most sensible way to spend abroad, says Barry Choi, who runs the Money We Have personal finance and travel website.
They typically charge foreign transaction fees of about 2.5 per cent on each purchase — a cheaper option than those done via debit card or ATM.
“A lot of people don’t know about this fee because it’s baked right into the exchange. So when you get your statements, you just see the exchange rate. You don’t realize that fee is included,” Choi said.
However, multiple credit card providers offer fee-free transactions. These come via “travel cards,” including the Scotiabank Passport Visa Infinite card, Brim Mastercard and Home Trust Visa card. But they're best suited for business travellers and habitual tourists.
Some experts suggest opening a U.S. chequing account with a Canadian bank and then obtaining a U.S. credit card.
"That's the best way to pay for anything in the U.S.," said Amra Durakovic, a spokeswoman for travel agency Flight Centre Travel Group Canada.
On top of the transaction fee, out-of-country credit cards have a currency conversion rate — for converting the foreign purchase back to your home currency — that is marginally higher than the official “interbank” rate. But credit card companies typically offer the best consumer rates compared with ATMs or cash exchanges, experts say.
Often, customers are given a choice at the point of sale to pay in Canadian dollars or U.S. dollars.
“Always choose to be charged in the currency of the country you are in. You will pay high conversion rates and transaction fees if they convert to Canadian currency,” the federal government states on its travel website.
The Canadian dollar has been trading around 70 cents US since late November. As of Tuesday, a US$100 meal would cost more than $144 Canadian — plus fees.
The double whammy of inflation and currency conversion makes these considerations particularly important for U.S.-bound travellers, said Durakovic.
“I remember ordering a delicious, beautiful sushi bento box. It was US$50 for one person. So that's around C$70 for a bento box,” she said of a recent trip to New York City.
“What if you’re a family of four? It just becomes very much more expensive.”
Debit cards from traditional banks generally offer the second-best option abroad, with transaction fees of around 3.5 per cent. The least palatable payment method — cash withdrawn from ATMs in the U.S. — includes that same percentage plus a transaction fee of $3 to $5 by the Canadian institution, Choi said.
"And then the issuing bank itself — let's say it's Chase in the U.S. — they might charge you $3 to $5 US. So all of a sudden you're getting hit non-stop."
A few online financial institutions tout no-fee debit cards for foreign purchases and even no-fee ATM withdrawals. The online EQ Bank offers a prepaid card with both features, while one PC Financial card waives all foreign transaction fees. Other services such as Wise and Citibank can provide "multicurrency accounts" — specialized accounts that allow clients to pay in various currencies — with favourable exchange rates and no transaction fees.
For those venturing across the border or headed to a spot that takes payment in U.S. dollars, experts also recommend picking up some American cash at a cheap currency exchange office to avoid paying a premium elsewhere.
No matter what, try to steer clear of automated tellers and currency exchanges at airports and hotels, according to Richard Vanderlubbe, CEO of travel agency Tripcentral.ca. Cruises and casinos are notorious for their exorbitant ATM charges, he noted.
Scotiabank and Tangerine present something of an exception. They are part of the Global ATM Alliance, a network of big banks including Bank of America, France’s BNP Paribas and Germany’s Deutsche Bank that waive fees for ATM withdrawals from each other’s terminals in more than 30 countries and territories, from Australia to Spain and the U.S.
Large local banks likely have the lowest ATM charges, experts note.
Before heading off to the airport, travellers should check online to see if their bank and credit card provider suggests notifying them they’ll be out of the country. Of Canada’s Big Six banks, only National Bank still recommends travel notification. Travellers should also ensure their personal information is up to date in case their financial institution attempts to reach out about a suspicious transaction.
This report by The Canadian Press was first published March 4, 2025.
Christopher Reynolds, The Canadian Press
