Canadians seeking advice on how to best manage their finances for spring break, especially when spending U.S. dollars, face pressing concerns amid the Canadian dollar's recent struggles, hovering at around 22-year lows. With the cost of purchasing U.S. currency significantly affected, experts urge travelers to carefully evaluate their options for currency conversion and payment.
During this travel season, many Canadians are questioning the most cost-effective methods to pay for expenses incurred across the border. Barry Choi, who operates the Money We Have personal finance and travel website, offers insight, arguing credit cards often represent the most sensible choice for foreign expenditures.
"They typically charge foreign transaction fees of about 2.5 percent on each purchase — making them a cheaper option than debit cards or ATM withdrawals," Choi explains. "A lot of people don’t know about this fee because it’s baked rightinto the exchange. So when you get your statements, you just see the exchange rate, you don’t realizethat fee is included.”
Yet, travelers should be aware there are credit card providers who offer fee-free options, particularly travel cards such as the Scotiabank Passport Visa Infinite card, the Brim Mastercard, and the Home Trust Visa card. These cards enable Canadians to avoid fees entirely, providing significant savings on overall purchase costs.
Choi advises against opting for U.S. credit cards through banks, cautioning, "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.” He emphasizes the importance of selecting the right payment methods when traveling.
Further complicate things, Choi notes, credit cards often use conversion rates slightly higher than the official "interbank" rate. Despite this, he claims credit card companies typically provide the best consumer rates compared to ATMs or cash exchanges, making them the optimal choice for savvy travelers.
When making purchases, customers often encounter the option to pay either in Canadian dollars or U.S. dollars. The federal government advises to always opt for transactions in the currency of the country. “Always choose to be charged in the currency of the country you arein. You will pay high conversion rates and transaction fees if they convert to Canadian currency,” the federal government's travel website states.
The situation has grown more pressing as the Canadian dollar remains around 70 cents U.S. since late November—this translates to considerable expenses when dining out. For example, it now costs more than $144 Canadian for what may have previously seemed like a standard $100 meal during travel.
To highlight these costs, Amra Durakovic, spokesperson for Flight Centre Travel Group Canada, vividly recalls her recent experience: "Iremember ordering a delicious, beautiful sushi bento box. It was US$50 for one person. Sothat’s around C$70 for a bento box. What if you’re a family of four? It just becomes very much more expensive.”
Meanwhile, traditional bank debit cards fall just behind credit cards on the payment effectiveness scale, but they still accrue fees of around 3.5 percent per transaction. Those who choose to withdraw cash from ATMs face additional challenges. According to Choi, ATM withdrawals incur the same 3.5 percent fee plus additional transaction costs ranging from US$3 to US$5. With these fees, it's apparent why many seek alternatives.
Fortunately, several online financial institutions provide no-fee debit cards for both foreign purchases and ATM withdrawals, which are worth considering for frequent travelers. Those planning to cross the border for spring break should look for ways to circumvent the high fees associated with currency conversion.
For those venturing across the border or heading to areas where U.S. dollars are necessary, experts recommend obtaining some American cash beforehand. By securing currency through less costly exchange offices, travelers avoid the inflated prices often seen at airport kiosks, ensuring they make the most of their vacation budget.
Overall, carefully evaluating the most economical payment methods is key for Canadians as they prepare for increased travel over spring break. With the exchange rates and the rising cost of living, avoiding unnecessary fees may significantly reduce expenses and allow for more enjoyable travel experiences.
This report by The Canadian Press was first published March 4, 2025.