Of all the reasons to exchange one currency for another, an overseas vacation is perhaps the most exciting. If you need to exchange Canadian dollars into one or more currencies, it is important to be get the very best rate you can.
Planning a trip always takes time. Between airfare, hotels, local transportation and other bookings, you have plenty of logistics to figure out. You may assume that you can wait until the last minute to trade Canadian dollars for the foreign currency you need. You will almost certainly save money if you plan ahead and find a currency exchange with the best rates. We hope these money exchange tips have been useful as you plan for your next vacation.
If you are on the lookout for money exchange tips, we’ve put together a list of best practises to help you keep organized:
Tip #1: Build time into your plan
When it comes to foreign exchange, timing should be one of your top priorities. The better the exchange rate, the more money of a given currency you will receive for the same number of Canadian dollars. Building extra time into your plan will not only help you time the market to your advantage, but also give you the chance to explore the traders and institutions that offer the best rates.
Tip #2: Research your destination
Doing research is an important money exchange tip that you should keep in mind. Whether you plan to visit one country or many, do your research ahead of time to figure out which hotels can be paid for through a credit card. Try to estimate how much cash you might need for taxis, shopping and meals.
Do restaurants generally accept credit cards at your destination? Are you expected to tip hotel staff? Knowing these details will help you decide how much of each currency you need to have on hand.
Tip #3: Call the currency exchange
Not all currency traders carry all currencies. To avoid unnecessary trips and disappointment, call ahead to make sure the exchange company you have in mind has the currency you need. You may need to make a special order ahead of time to ensure your currency is in stock or you may need to order in advance from a bank.
Tip #4: Avoid airport currency exchange
In order to avoid getting caught without options, make sure you exchange your money well ahead of your departure date. Airport exchange offices are notorious for their steep exchange rates, leaving you paying more for every dollar you buy. In addition, they almost always charge a foreign exchange fee, an additional charge on top of your exchange.
Tip #5: Spread out your risk
If you build enough time into your travel plans, you may be able to spread out your foreign exchange risk. Say, for example, you’ve got a trip to Europe planned for the next year, but the Canadian dollar seems relatively low. You might do well to estimate the total number of Euros you’d like to have on hand, then buy them periodically over a number of months.
This way, if you purchase some while the dollar is low, but others when in it rises, you will effectively spread out your exchange risk. If you go this route, be sure you are not being charged additional foreign exchange fees for each transaction.
Tip #6: Shop bank rates
Just as you likely shop around for bank products such as GIC rates, insurance and others, you should ask around regarding exchange rates before you assume your bank will provide you with the best deal. Ask at the big Canadian banks and smaller credit unions to see if you can find a better exchange rate for your dollars.
Tip #7: Be ATM-ready
No matter how much you think through your travel plans and estimate local expenses, you can easily find yourself in a cash crunch while abroad. With this in mind, it is helpful to have an ATM plan, should you need local currency on the spot. Rather than trust any ATM machine, many of which could pin you with additional fees and charges, find out ahead of time if your bank has a network or international partner institutions. Knowing the brand you should be using abroad can save you from being charged steep international ATM fees.
Tip #8: Avoid over-exchanging
To save money in the long run, try to avoid over-exchanging your money. As currency conversion always comes at a cost, your goal should be to convert as infrequently as possible. In other words, rather than blindly guess how much foreign currency you’ll need for your trip, take the time to research everything from taxi fares to typical meal expenses, then apply your estimates over the duration of your trip.
If you end up with a slight shortfall, you can likely use your credit card to fill the gap. If you end up with money leftover when you return home, rather than convert it to Canadian dollars, save it for your next trip overseas.