Foreign currency exchange: traveller’s cheques or cash?

Foreign currency exchange: traveller’s cheques or cash?


*Updated April 2015

You’ve decided to go on vacation! The next step isn’t so easy, though: deciding whether doing a foreign currency exchange prior to travelling, using traveller’s cheques, or travelling with your credit card is best is often a struggle when planning trip details. Your financial situation and the type of currency you choose for your next trip depends on your destination, length of stay, and how comfortable you feel with the options.

If you’re looking to travel to a country that does not accept the Canadian or United States Dollar as a common currency, start with checking the foreign currency exchange rate: this tells you how much your Canadian dollar is worth in the local currency. You can find up-to-date exchange rates for your destination on the Bank of Canada’s website.

When to travel with cash:

Travelling with cash might be the easiest way; exchanging your currency prior to departure will save you money if you buy your foreign currency from your bank, rather than a small exchange centre found in destination. Travelling with cash also means you don’t need to worry about smaller amounts like tips, cab rides, or snacks; something that becomes more difficult when travelling with a VISA card or traveller’s cheques.

If you’re travelling to the Caribbean or an all-inclusive resort, we recommend travelling with several smaller bills – USD $1 or USD $5 for Caribbean resorts – to leave as tips for maids, bellboys, and bartenders. If you’re travelling Europe, travelling with both cash and a credit card may be helpful: larger purchases like city tours, or meals, can be put on your card, whereas cash can be used for attraction fees, snacks, tips, cabs, etc. While our travel agents recommend only exchanging as much money as you’ll need, because the return exchange rate often means you’ll lose some money, it’s also better to be safe than sorry on vacations like travelling to Europe where you’ll be using more cash than if visiting an all-inclusive.

Make sure you have enough cash, stored in a safe place separate from your days’ worth of money, for an emergency: to withdraw more money, or for extra expenses that might include an extra day in destination. If you’re without cash in destination, airports and many hotels have foreign currency exchange dates, though fees tend to be very high.

When to travel with traveller’s cheques:

Traveller’s cheques are not a widely accepted form of currency, but are an option in some destinations if you are not comfortable carrying cash or using your credit card. Carry traveller’s cheques in smaller denominations for ease of use. Most banks recommend you sign your cheques right away to help protect your money if they’re lost or stolen; most banks can replace a traveller’s cheque within 24 hours if you’ve kept your receipt (keep your receipts in a separate location from your cheques so they both don’t go missing!). If you’re looking to exchange your traveller’s cheque for local currency once in your destination country, make note that photo identification might be required and commission charges might be charged.

When to travel with your credit card:

If you’re travelling with your credit card, make sure you notify your credit card company before leaving the country to ensure your card is not frozen for suspicious activity, and to make sure your credit card will be accepted in that destination. Be sure to speak with your credit card company or bank about any charge fees – they might be cheaper than foreign currency exchange rates for cash.

If you’re going to travel with your credit card, it is also recommended to travel with some cash – exchanged before departing Canada. Using your credit or debit card to withdraw from an international ATM often results in very high fees and interest rates. Also note that some smaller cafes and shops in tourist-heavy areas will not accept credit cards; even major companies like VISA or Mastercard.

To be extra secure and safe while travelling, don’t keep all of your credit cards and cash in the same place, incase of theft.

Your best bet for your next trip, whether you’re planning a trip to Europe or to the Caribbean, might be to take a mix of local currency and your credit card for ample funds and the cheapest foreign currency exchange.

If you’re still not sure about how best to handle your money while travelling, we recommend speaking with your bank, credit card company, or by speaking with one of our experienced travel agents. For more on how to save money when travelling, read our agent’s tips. travel agents can be reached at 1-800-665-4981.