Using currency conversion methods that charge a fee should be avoided whenever possible, unless the additional fee is reasonable and provides you with extra convenience. $5 per transaction) or a percentage fee (i.e. These fees can either take the form of a flat transaction fee (i.e. Some foreign exchange methods charge an additional fee on top of the spread that can significantly increasing your currency conversion cost. While the foreign exchange spread may vary from currency trader to currency trader and you can get better rates by shopping around, there is no way to entirely escape it, regardless of how or where you exchange currency. The difference between these two amounts is the “spread”, and is profit for the bank or foreign exchange company. This is because the exchange rates you see in the news are the Bank of Canada rates and the exchange rates you actually receive are retail rates. You’ve probably noticed that the exchange rate you see quoted in the news is always better than the rate you actually receive when exchanging currency, usually by a few cents or more. The difference between what a bank or foreign exchange service pays for a currency and what they charge you to buy it is often referred to as the “spread”. Understand Foreign Exchange Fees and CostsĮssentially, there are two types of costs associated with exchanging currency - the “Spread” and Fees: The Foreign Exchange “Spread”
While you can’t avoid foreign exchange fees entirely, you can minimize foreign exchange costs significantly by understanding how they work and following these tips, which can save you hundreds or even thousands of dollars every year. dollars to meet your living expenses, buy a vehicle or purchase a U.S. dollars, at some point you will inevitably have to convert your Canadian dollars to U.S. Currency conversion can be a big expense for Canadian snowbirds who spend a significant amount of time in the United States, depending on the current rate of exchange.
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