Listen to our podcast episode on this topic, “How can you acquire foreign currency?”
When planning out your next trip or vacation to a foreign country it is important to consider that depending on the method of currency exchange that you opt for, there is quite a bit of variation in the tourist exchange rates that you will be offered.
Why Tourist Exchange Rates Vary
Tourist exchange rates typically vary due to the relationship you have with the place where you are exchanging your currency. If you are exchanging your cash in your local bank in Canada, prior to travelling overseas, chances are you will be awarded a more favourable exchange rate as the bank values your business and most likely has a sizeable reserve of the foreign currency in stock. If you decide to exchange your currency in a bank in a foreign country, or through a convenience store in a touristy area, it is much more likely that the tourist exchange rates that you will be offered will be marked up.
Tourist Exchange Rate Options
Exchanging Currency at Your Local Bank
By and large the best option is to exchange as much money for your trip as possible at your local personal bank prior to heading off to a foreign destination. Converting your cash at your local bank ensures that the value that you get back in foreign currency is respective to the current exchange rate, and that you are not marked up with extra fees.
Visiting Tourist Convenience Stores for Currency Exchange
In most world wide tourist hot spots, it is not uncommon to find corner stores that offer currency exchange to travellers. Since these businesses are not traditional well established banks it is almost always guaranteed that they will provide a very unfavourable exchange rate, and often times charge an exorbitant fee for converting your cash. Overall it would be best to try and avoid this option.
Using ATMs
When travelling to a foreign country it is almost certain that you will not be able to locate an ATM from your personal Canadian bank. As a result you will be subject to additional transaction fees much like when you use a different bank machine back home, or when you withdraw money from a generic convenience store ATM. Moreover depending on the country you are visiting, the premium placed on your withdrawal might be quite steep. If you feel that you do need to opt for this route, make sure that you only make large withdrawals in order to avoid multiple fees.
Bottom Line on Tourist Exchange Rates
The main takeaway when considering tourist exchange rates for your next trip is simply to plan out your actions ahead of time. It would most likely be beneficial to withdraw most of the foreign money that you believe you would need ahead of time, in order to avoid having to pay a premium for your cash exchange when you are stuck in a touristy area. As well it is always a good idea to keep your credit card handy when you believe you might exceed your budget, as it would help you avoid having to go to foreign ATMs to make your money withdrawals.
