Have you ever found yourself in a position where your jar of ‘spending money’ is full of foreign currency? If your travel money is currently in Pesos, and you need Euros, skip the Canadian dollar!
Every time a currency is exchanged, there is a loss in value. This “loss” is often called the spread on the rate. As an example, the spread on the USD at Currency Converters is currently 1.3%. So, when a client buys USD, they are paying 1.3% more than the market rate for that currency. When they sell the USD, they are collecting 1.3% less than what the currency is worth on the market.
No matter where you exchange currency, there is always a spread — we just guarantee that the spread or the loss at Currency Converters is smaller than you’ll find anywhere else.
Typical Currency Exchange Spread
The spread will vary from currency to currency and from business to business. The more obscure a currency, the larger the spread. As a point of comparison, the British Pound (which is less popular than the USD in Canada) has a spread of 3%. If a client were in a position where they had British Pounds and needed USD, the cheapest way would be to make this transaction go directly from the British Pound to the USD (where the “loss” would be 3%).
Banks and exchange companies in Canada don’t normally make this option available to clients — they force a transaction through the Canadian dollar which means that this client would have to go from GBP to Canadian dollar (losing 3%) and then from Canadian dollar to USD (losing an additional 1.3%). In addition to this “double loss”, if the client is doing this trade at a Canadian bank, the spreads will be wider than the 3% and 1.3% (banks have less competitive rates) — so, to be accurate, the loss on this type of trade would likely be closer to 7% than 4.3%.
Reducing Your Losses
Your wisest option would be to insist on a direct transaction from GBP to USD. Currency Converters offers this type of transaction to clients because we are committed to saving our clients as much money as possible. By converting directly from GBP to USD, our clients are facing only a 3 percent spread rather than a 4.3 (or 7!) percent spread.
An additional way to save money is to bring the domestic currency with you to your destination. Many travellers are advised to bring USD with them to any international destination, and to then convert from USD into the domestic currency while abroad. Converting to USD here has a cost, and then converting USD to foreign has an additional cost — whether you trade your currency in Canada or abroad, there is always a “spread” or “loss” on the trade. It is almost always cost effective to minimize the number of transactions that you need to do.
We want to save you money, let us help! Contact Currency Converters to buy foreign currency before your next trip.