What is best way to pay for things when traveling outside of Canada? This is a question I’m asked a lot. No one wants to pay extra bank fees or be stuck with no way to pay in a foreign country.
First, I always recommend taking a mix of payment methods. Some local currency – or the currency most accepted there – a debit card to withdraw more currency if you need it and a credit card.
Generally, a credit card is safer than cash, has more fraud protection than a debit card and you’ll get the best currency exchange rate.
For getting cash in the foreign currency prior to leaving Canada – your own bank will likely give you the best exchange rate.
And for larger amounts of cash you need to figure out which is the ‘weaker’ currency and exchange it in that country. So you should exchange your Canadian into Pesos in Mexico. You can do this at a bank or currency exchange store.
You may also want to withdraw cash from a bank machine using your ATM card since your bank will process it at the best exchange rate of the day.
For larger purchases I recommend using your credit card for several reasons – your bank will process it at the best exchange rate of the day.
In general, using a credit card provided an average savings of 5-8 percent on exchange rates when compared to those from the banks and about 15 percent savings when compared to the airport currency exchange locations. PLUS you have the added protection your credit card provides for the item purchased. And if you have a rewards credit card you get points.
However, this savings could mean nothing if your card has a foreign transaction fee. Call up your credit card company to find out.
And, before you go be sure to let your credit card company know about your travel plans…
…If not, those foreign charges could raise a red flag and your account could be frozen. Something you definitely don’t want to happen while you’re away. It’s also a good idea to take a second card with you. This will come in handy should your primary card not be accepted for some reason. Finally, make a list of the international toll-free numbers for your credit cards in case there’s a problem and you need to contact someone about your account.