Canadians wondering how best to pay for items in U.S. dollars amid spring break season 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.
“Sometimes people think, ‘I’ll just get the U.S. credit card from my bank and it’s a good value.’ But the problem is you have to pay (the balance) in U.S. dollars,” Choi said.
Credit cards also have a currency conversion rate — for converting the purchase abroad 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. That means a US$100 meal would now cost more than $144 Canadian — plus fees.
The double whammy of cost-of-living increases and currency conversion makes considerations around methods of payment particularly important for U.S.-bound travellers, said Amra Durakovic, a spokeswoman for travel agency Flight Centre Travel Group Canada.
“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, with 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 The least palatable payment method — cash withdrawn from ATMs in the U.S. — includes that same percentage plus a transaction fee of US$3 to US$5, Choi said.
A few online financial institutions offer no-fee debit cards for foreign purchases and even no-fee ATM withdrawals.
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 at airport kiosks.
This report by The Canadian Press was first published March 4, 2025.
