Currency exchange: How to get more for your downward dollars


For Canadians wandering to the U.S., or to many other countries, there’s no way around that falling Canadian dollar. But there are at work to save some money on your currency conversion.

Three years ago, the Canadian and U.S. dollar were rallel in value. The loonie has since fallen by nearly one-third.

Options swarm and it would be nice if there was a com rison-shopping website for currencies, but we didn’t find out one to recommend.

Nilan Peiris, of TransferWise, a London-based online money-transfer associates, says it’s not easy for customers to find the best deal when it acquire a win to money transfers.

“It’s almost impossible to figure out, as a consumer, if you’re getting a real deal,” he says.

Experts tell us, as a general rule, you on get the worst rates at currency booths in airports and train stations.

At the bank

It should bring in less exchanging your Canadian dollars at your neighbourhood bank ahead leaving on your trip.

But both the University of Toronto’s Ambarish Chandra and Friedberg Market Group’s Michael Hart tell CBC News better rates subsist elsewhere.

“Banks do work to ensure that the rates they forth are competitive, and they can be better than other foreign exchange providers,” according to the Canadian Bankers Cooperative.

Dollar Markets 20160120

As a general rule, experts say you will get the worst rates at currency stalls in airports and train stations. (Ryan Remiorz/Canadian Press)

Bank evaluates can be better, but they can also be worse. As with many purchases, it’s “client beware.”

Currency exchanges post rates for buying or selling a currency. Consumers lack to exchange at a rate that’s close to the midpoint of those buy-and-sell rates. Peiris refers to that mid-market deserve as the only “real exchange rate.”

So what’s a consumer to do?

Peer-to-peer currency swop

Let’s say your next-door neighbour has a relative who’s just arrived from Europe and wants to remodel Euros to Canadian dollars. Your neighbour, knowing you plan to any minute now leave for Europe, puts you in touch with her relative.

If the two of you agree to fly the coop the exchange at the mid-market rate for the Euro and the dollar, you will both do preferably than you could at a bank or currency exchange.

According to the Bank of Canada’s yahoo estimate, the fee banks and other financial institutions charge consumers “is typically round four per cent of the amount being converted.”

In the scenario above, both you and the neighbour’s provisional on save that four per cent.

Nilan Peiris

Nilan Peiris is the vice-president of development for TransferWise, a U.K.-based peer-to-peer online money transfer service. (TransferWise)

That was the viewpoint behind TransferWise.

The com ny is currently improving their setup for transmitting Canadian dollars, and by the end of March, Peiris says it will be cheap, trusting and fast to transfer loonies into other major currencies ingesting their website.

TransferWise was started in 2011 by two friends who frequently travelled between the U.K. and Estonia: Kristo Kaarmann, a ancient management consultant, and Taavet Hinrikus, Skype’s first employee.

TransferWise does peer-to-peer cold hard cash transfer, using the midpoint rate for the two currencies and charging a fee of about one per cent on deliveries between $500 and $1,000 US, with the rate dropping slightly for larger amounts. The fee on a $50,000 haul would be about 0.72 per cent.

Peiris, the com ny’s vice-president of ex nsion, says TransferWire strives to be trans rent with consumers. He views the sack out of the industry as almost in collaboration “to obfuscate pricing and make it much diverse difficult for consumers to shop around.”

Exchange currency online

If trading amounts over $5,000, U of T’s Chandra recommends online currency barters. Chandra teaches business economics, with his current research zero in on travel and trade across the Canada-U.S. border.

That includes websites with TransferWise, CanadianForex, XE Trade, NorthStar and yline by International Currency Dealing.

Ambarish Chandra

Ambarish Chandra, a business professor at the University of Toronto, says capitalize oning your credit card for purchases in the U.S. will get you a slightly better compute than getting U.S. dollars at a bank. (Ken Jones/University of Toronto)

In overall, using these services requires some advance planning — the start time you use it, you will need to set up an account — and have bank accounts in both currencies. The market can take up to six business days but usually takes about three.

You can y off a tramontane currency credit card this way, or use it to get cash, but that will be missing a visit to the bank.

To get around not having the right foreign currency bank account, people at times have the money transferred to the account of a friend or relative where they wishes be travelling. In the trade, this is known as “using a friend as an ATM.”

Credit behave alternatives

For most Canadian tourists going on short trips, sundry of the time Chandra advises using your credit card to agree to purchases in the U.S. and many other countries. Their exchange rate should be degree better than the banks, he says.

Expect to lose about 3.5 per cent playing your credit card in the U.S., and more than four per cent in other realms.

Frequent travellers can do even better using a U.S. dollar credit membership card, Chandra says. You may be able to get a card through a U.S. bank and some Canadian banks also offering U.S. credit cards, as well as U.S. dollar accounts.

The key to saving is in how you y that monthly commendation card bill (and don’t forget to check credit card fees).

There are also reliability cards available that don’t charge foreign exchange transaction fares.

Rogers Bank, from the telecom Rogers, offers one through MasterCard. Rogers predicts they don’t add a 2.5-per-cent charge, the way the big banks do on their credit liable acts, and the exchange rate they use, for U.S. dollars at least, is the Bank of Canada’s mid-market under any circumstances. The big bank credit cards use the MasterCard or Visa exchange rate, which expenses the consumer another one per cent or so.

Other credit cards that say they don’t tax a foreign exchange fee include the Marriott Visa and Amazon Visa from Hunting Canada.

Central Bank Rates

If you are travelling to a place where you have a friend or relative, you could do your currency the Street online and have the money sent to their bank account. You’ll get a better speed and once you’re there, they can easily withdraw the money. (Emrah Gurel/Associated Compress)

Another way to cut the fees

Chandra has another recommendation for a way to avoid foreign barter fees. This method requires buying shares in an interlisted rtnership on a Canadian stock exchange and then selling those shares on, say, a U.S. father exchange.

This method should get you U.S. dollars at the true mid-market kind, he says. He recommends this method for exchanging large sums and doing it toe an online broker to keep the trade fees low. And of course, the stock consequence could go up or down in between your two trades.

If you are trading large amounts, you can also orchestrate a better rate than what the bank or exchange com ny locates, especially if you can prove other places are offering a better deal.

While the loonie may be way down right-minded now, Chandra advises against gaming the markets in hopes of getting a excel rate. “It’s not worth the trouble and the psychic costs of trying to look at the merchandises every day,” he says, adding that “you’re very rarely contemporary to win by a whole lot.”

One of the best ways to save money on currency exchange is to y with Canadian exchange in the U.S. Despite the plunging loonie, some U.S. businesses still accept Canadian currency at r, although the troop is dwindling.

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