There are lots of web sites that show currency exchange rates. For example, this site shows that today 1 USD is worth 0.984850 CAD (Canadian). I exchanged currency in Québec a few days ago and the rate was more like 0.93 (I looked at three different exchanges and all had rates within a penny of this). Going the other direction the same exchange agency would give a much better rate if you were buying USD with CAD, closer to the quote above. My conclusion is that the currency exchanges are biased against visiting foreigners. This is contrary to the advice I have heard many times that you get a better rate at your destination vs. at home before you leave.
My understanding is that the quotes you see are based on bank-to-bank rates, but how do I find out what the average rates are at public currency exchanges where I will be traveling?
The exchange rate you see on-line is the actual exchange rate. The rate offered by currency exchanges includes their profit margin for exchanging your currency. They can charge whatever they want, but it’s typically only an extra couple of percent(ish).
Depending on where you exchange the currency, I find exchange rates all over the map. Usually a 5% difference with the official rate is a reasonable deal, 10% is not so good. I’ve seen it as bad as a 15-20% difference in tourist-heavy parts of Central Europe.
To get the best rate, use plastic. Here’s Visa’s exchange rates. (I believe Visa & Mastercard have standardized exchange rates, no matter the bank, but I’m not 100% sure. There’s a little more to this in a second.) Today’s Visa rate for CAD->USD is $1.015285. According to XE.com, the current rate is $1.01597. Pretty close.
HOWEVER, most banks will charge you a 1-2% foreign exchange fee, plus any out-of-network ATM costs (if you’re using an ATM.) Still, in most cases, plastic is the best solution, unless you only need to convert a relatively small amount of cash for day-to-day transactions.
In addition to charging for providing the service, a currency exchange may also skew the rate to account for risk that the held currency will devalue before they can unload it. If one currency is consistently dropping, then they will skew their exchange rate so as not to take a loss, and also to discourage exchange of currency they would prefer not to hold. Conversely, they may offer more attractive rates for currency expected to improve.
I’ve always done well withdrawing directly from my bank at a foreign ATM. My bank pays the ATM fees or me anyway, and I wind up with a decent exchange rate without extras tacked on. Credit Cards suck for foreign exchange. I only use those if I have to or the purchase is for business (which will be reimbursed). I’ve taken cash out at an ATM in Paris, walked to my hotel and paid cash for the room.
Typically, the rule that I followed, when exchanging at a kiosk and having no further information about exchange rates, and no other banks/kiosks to compare it to, is that if the spread between selling and buying USD was more than 10% (calculated off the lower number), I’d be wary about exchanging. For example, in Hungary, the rate is 190. If I see sell dolars for 180, and buy for 200, I’m a little wary, but it’s within the realm of reasonable. If I see sell 160 and buy 200 (or even more), then something is skewed, and I move onward.
That rule works for most of the places I’ve visited, but that’s only really for checking if you’re totally getting ripped off. It’s not really a good system for knowing if you’re being shaved off an extra 1 or 2 percent.
(ETA: actually, I have buy and sell reversed up there.)
I have usually just used my credit card, and I have been using ATMs for years with good results to get pocket cash while traveling over the last several years in Egypt, France, Italy, Canada. This time I needed 1200 CAD to pay for a condo rental and that is more than I can withdraw from at ATM in one day, so I needed to bring USD and exchange it.
BTW in Canada this week I have encountered three ATMs where I cannot use my bank’s debit card to get cash. I don’t know why. One possibility is that it doesn’t extend to the network my bank (BoA) is on; the other is that it may require a card with a chip (which apparently is quite common outside the US but I haven’t seen it within the US yet).
I have been receiving replacement chip cards for my magstripe ones since about January, but I have yet to see a Canadian ATM that uses them. From experience, about 20% of merchants are chip-ready (but still can swipe magnetic cards). Many others have the chip-capable hand-held terminals, but their POS (both acronyms) software does not yet handle chip so they require your to swipe.
yeah, Visa typically charges about 3% exchange. Similarly, withdrawing $200US at an ATM cost me $203.05 when the exchange rate was somewhere around $1.02, so about 3% premium again. (no recall on ATM fee, it did not even warn me about one…)