Foreign Currency Issues
Posted on 08/05/2015
Anyone who has plans to travel out of country this summer or fall has probably been keeping a close eye on the value of the dollar and cringing every time they see it going down. We enjoyed good rates of exchange for a few years but the drop in value over the last few months makes purchasing of foreign currency more expensive.
The Canadian government website, www.travel.gc.ca, offers helpful information about converting currency for your trip.
“The currency exchange rate tells you how much your Canadian money is worth in the local currency. When you exchange your money, you are actually using it to buy or sell foreign currency at a specific price called the exchange rate. You can find the official exchange rate of the currency in the country you will be visiting by using the Bank of Canada’s online currency converter.
It pays to know your options when dealing with foreign exchange rates. There are a number of ways to manage your finances when you are abroad that will save you a lot of money in exchange fees.
If you want cash on hand before you leave Canada, you can buy foreign currency from your bank over the phone or online. It can be delivered to your local branch for pick up. Exchange rates at banks are slightly better than exchange rates elsewhere. You can also order currency before you leave on your trip from a number of websites that will ship it to your home within a couple of days.
If you need cash in an emergency, there are foreign exchange desks at airports and hotels that will exchange Canadian money for the local currency. Fees tend to be very high. Even those advertising no commissions may have hidden fees, making these desks the most expensive places to change money.
The currency black market forms part of the underground economy in a number of countries around the world. This illegal or parallel market in foreign exchange operates outside legal banking channels. In a currency black market, transactions are almost always in cash, since its participants don’t want to leave any evidence. If you are tempted to take advantage of the currency black market you should be aware that you will be participating in an illegal activity and you could be arrested.
Be aware of anyone approaching you on the street offering to exchange your money for a much better rate than a bank. Among typical money exchange scams are stealing your money in the process of counting and recounting a pile of bills or mixing your money with currency from another country with a much lower exchange rate. It is safer to go through an authorized agency or a bank.
Some shops, restaurants and ATMs abroad offer a service called Dynamic Currency Conversion. This means that when you pay by credit or debit card at a shop or restaurant or withdraw money from an ATM you are given the option of paying in the currency of the country you are in or having the transaction converted into Canadian currency. Always choose to be charged in the currency of the country you are in. Don’t let the credit card company or ATM do your currency conversion for you — you will pay much higher conversion rates and transaction fees if you do.”