What You Need to Know About Foreign Exchange

Year after year, we get the same questions. Whether it’s from travel journalists, our customers or you here reading this before your next trip, the same questions come back over and over again. So, we’ve decided to put them down here and answer them once and for all!

Is cash still needed?

To keep it simple, cash still has its place in the wallet of all travelers. While you can do pretty much anything without cash here in Canada, the reality is different as soon as you step outside the country. In fact, there are many potential risks of using credit cards abroad instead of local currency.Here are some important facts to keep in mind:

• Relying exclusively on credit cards can be dangerous for fraud; in some regions, skimming devices on ATMs or point-of-sale terminals can capture card information. 
• While major online payment systems are designed to minimize downtime, cybersecurity threats are also real. 
• Downtime payment processors occur several times per year and leave you with no payment method if you don’t have cash.
• It’s hard to know what exchange rate credit cards are used, and most people don’t know what fees are charged. (Is it a flat fee or some % - most cards charge 1-3%) (If they don’t display the rate and people are still willing to proceed with the transaction, you’re probably not getting an advantageous rate!)
• Some merchants offer to charge in your home currency instead of local. Always choose to pay in local currency to avoid extra fees. 
• ATM withdrawal with a credit card must be avoided because it’s considered a cash advance and can result in high fees and interest rates. 
• No limit… This is more psychological, but because people have significant credit limits, overspending might be tempting. Having some cash for your travel budget might be helpful when respecting your budget. We often see people shopping for the best currency rate and wanting to save 5$ at all costs but going on a two-week vacation with only 200$, relying on credit cards, and overspending then. 
• Some banks will block you credit/debit card if there is a sign of suspicious activity in your account, and it can be hard to replace the card if you are abroad.

Should people exchange their money in Canada or wait to exchange it abroad?

Exchanging currency before leaving Canada offers several key benefits that ensure a seamless travel experience, and ICE Currency is proud to make this process easy and convenient for travelers.

1. Save Precious Travel Time: When you buy your currency before departure, you avoid the hassle of searching for reliable currency exchange services abroad. Precious vacation time can be spent enjoying your trip instead of hunting down exchange offices, which may have limited operating hours or be far from your location.
2. Avoid Uncertain Exchange Rates and Fees: Using debit or credit cards abroad often comes with hidden charges, such as foreign transaction fees, dynamic currency conversion charges, or uncompetitive exchange rates set by the card provider. By purchasing your currency with ICE Currency, you eliminate surprises, ensuring you get convenience and the most value for your money. 
3. Cash Is Universally Accepted: While debit and credit cards are convenient, they are not universally accepted, especially in local markets, small shops, taxis, or rural areas. Cash on hand ensures you are prepared for all situations, including tipping, paying for transportation, or enjoying local experiences where cards may not be an option. The Canadian model of pay is not universal, so don’t assume that your favorite payment method will be accepted abroad.
4. Convenience and Peace of Mind: ICE Currency makes exchanging currency effortless with our extensive branch network across Canada, including major airports and city locations. Our website is user-friendly, and our locations offer convenience.

What additional fees should travelers know when exchanging currency or using credit cards internationally?

 When exchanging currency or using credit cards internationally, travelers should be aware of several potential fees that could affect the total cost of their transactions. 

These include:

Currency Exchange Fees: Currency exchange providers may charge a fee for exchanging money or offer a less favorable exchange rate than the market rate, effectively charging a hidden cost

Foreign Transaction Fees: Many credit card companies charge a foreign transaction fee (typically 1% to 3%) on purchases made abroad. This fee applies when you make a purchase in a foreign currency or when a foreign merchant processes your payment.

ATM Withdrawal Fees: Using your credit or debit card to withdraw cash from ATMs abroad often incurs fees. These fees may include a flat fee per withdrawal or a percentage of the transaction amount, and there might also be a foreign ATM fee charged by the bank that owns the ATM, in addition to fees from your home bank.

Dynamic Currency Conversion Fees: When using a credit card abroad, some merchants offer to convert the transaction into your home currency at the point of sale. This is called dynamic currency conversion. While it may seem convenient, it often comes with a poor exchange rate and an additional fee, typically between 1% to 3% of the transaction.

Credit Card Cash Advance Fees: If you use a credit card to withdraw cash abroad (a cash advance), this typically incurs a high interest rate, along with cash advance fees that can range from 3% to 5% of the withdrawn amount.

Are there specific times of year when the exchange rates are more favorable for Canadian travelers?

External factors, such as global events, the economy in general, and oil prices, impact currency fluctuations. Still, it’s hard to predict future rates. Some sources say it’s better to exchange off-season as some banks or FX companies increase their margins during high season; however, trying to predict the market is not realistic, and growing margins during busy seasons is not something we do at ICE, so there is no perfect time to buy.  When you need it, and if you choose to do business with us, you can pre-order online on Click & Collect to get our best rates. (Plus, you make sure the currency and the amount you want are waiting for you at the most convenient pickup point!) 

Your question is still unanswered?

Our contact center is a good option to answer any customer questions as there is no one formula. We can tailor an answer specifically for your needs.

Our cashiers are also trained to answer any FX queries.

Perhaps you can find some relevant info in one of these blogs:

Cash is king 
Why you should bring cash on your travel.

Small Fun facts on USA dollars
Some tips on USA dollars.

5 Common misconceptions about currency exchange
Basic knowledge that travelers should know about currency exchange.