It’s always a good idea to have some local currency when travelling, for street food, miscellaneous expenditures, tips, etc. Some people go to currency exchange shops to take money out before their trip, or to a bank. Others have it delivered via a special service, or take it out locally. So what is the best way to take money out for a trip?
To figure this out, we’ll play with a hypothetical. Let’s say I’m taking a trip to France. I want to have 100 Euros for my trip. How much will the 100 Euros cost me in Canadian dollars, depending on the venue of exchange?
Bank of Canada: 100€ = $143.43CAD
Currency Exchange Shop in Canada
Kingmark: 100€ = $145.50CAD
Travelex: 100€ = $158.91CAD
Accurate: 100€ = $145.94CAD
Average Currency Exchange Shop: 100€ = $150.11CAD
Bank Exchange Rate
TD Canada Trust: 100€ = $147.08CAD
RBC Royal Bank: 100€ = $148.98CAD
Scotiabank: 100€ = $148.49CAD
Average Bank Exchange Rate: 100€ = $148.18CAD
Credit Card/Debit Exchange Rate
Visa Spot Rate with 2.5% currency fee + typical $5.00 foreign ATM fee: 100€ = $152.46CAD
Visa Spot Rate without currency fee (i.e. Chase Amazon/Marriott Visa) + typical $5.00 foreign ATM fee: 100€ = $148.86
MasterCard Spot Rate with 2.5% currency fee + typical $5.00 foreign ATM fee: 100€ = $152.14CAD
Average Bank Exchange Rate: 100€ = $151.15CAD
What do we notice? At the 100€ rate, it’s way cheaper to order foreign currency from a bank (TD is the cheapest) prior to travel. Travelex, which is a very popular exchange service, is by far the most expensive option.
With the $5.00 ATM fee on debit/credit withdrawals, at the 100€ rate, it doesn’t make sense to even use the no-forex Chase Amazon/Marriott card. However, if we increase the amount, say to 500€, it is cheaper:
Visa Spot Rate + typical $5.00 foreign ATM fee: 500€ = $724.32CAD
TD Canada Trust: 500€ = $735.40
Honestly, I’m surprised by this. I always thought it was way better to use my Chase Amazon Visa at a foreign ATM for cash withdrawals. But frankly, with the Δ between the Visa Spot Rate + $5.00 Foreign ATM fee vs. TD Canada Trust being only $11.08 at a relatively large withdrawal of 500€ (this doesn’t even consider a possible domestically originating ATM surcharge), I’d go for TD Canada Trust just to have the assurance of having cash on my person and not risk ATM rejections.
I don’t usually take that much cash out for a trip, and 500€ is definitely my upper limit. The more cash you need, the more it makes sense to use a Chase Amazon/Marriott visa (ONLY if you’re taking the money out at one go – you’ll pay the $5.00 ATM fee for each withdrawal… plus you’d be paying interest without a grace period, though you can avoid this by over-paying your card). Considering I often need cash on arrival for entry purposes, and it’s nice to skip having to find an ATM at the airport, I think I’ll probably be using TD Canada Trust for my future foreign exchange needs.