The Optimal Setup to Spend Canadian Dollars Abroad

I've traveled to over 20 countries, opened over 30 credit cards, and had bank accounts with all five of the big banks as well as a handful smaller ones. I love optimizing my banking products to get as much out of them as I can. This is the optimal setup for spending money abroad for Canadians.

Summary

1. Pay with a credit card whenever possible.
   • Best card for foreign purchases: Wealthsimple Visa Infinite
     • My referral link for an additional $20
   • Solid alternative: Scotiabank Passport Visa Infinite
     • My referral link for an additional $150
2. Withdraw cash from an ATM when you arrive at your destination.
   • Best account for ATM withdrawals: Wealthsimple Chequing
     • My referral link for an additional $20
   • Equally as good backup account: EQ Bank Card
     • My referral link for an additional $20
3. Carry multiple backup cards and some USD.

Credit Cards

Visa and MasterCard offer the best exchange rate possible (see Exchange Rate Comparison bellow). Plus you will be earning rewards and have strong purchase protection in cases of fraud. For these reasons you will want to use a credit card whenever possible.

Almost all cards in Canada charge a 2.5% fee on foreign currency transactions (FX fee). If you plan on spending over $5000 dollars per year in foreign currencies or can get the annual fee waived then the following cards are amazing value. Otherwise you are probably better off using whatever card you already have since the annual fee would eat all your savings.

Wealthsimple Visa Infinite (WS VI)

• Product page
• My referral link for an additional $20

As of writing this Wealthsimple have yet to open public applications to the card, but they held a big event last week announcing it and have created a public wait list. I've had beta access to this card since December and it is objectively a top three card in Canada and by far the best card for foreign purchases.

Why This Card

• No foreign exchange (FX) fee
• 2% cash back (CB)
• No annual fee (AF) with a WS balance of $100k or a monthly direct deposit of over $4000

Other Benefits

• App based 2-FA: it's embarrassing that other banks don't offer this, but in our case this comes in extra handy incase you're unable to receive SMS messages while abroad
• Monthly deposits of cash back: I'm a big fan of points so I was really surprised how nice it feels to see cash back instantly deposited into your account every month
• Amazing phone support: this may only apply to premium clients, but the few times I've had to call in my call has been answered in under a minute and with no menus to traverse

Word of Caution

I'm concerned this card is a bit too good to be true. A fintech launching a 2% CB no AF card? We already went through this with Brim who ended up adding a 2.5% FX fee after a few years. WS have already increased the minimum direct deposit amount from $2k to $4k. And I'd be surprised if they're able to generate enough revenue from their other services to justify waiving the AF for account balances of $100k. I'm going to enjoy it while it lasts, but I won't be surprised to see this card nerfed to garbage in the next few years.

Scotiabank Passport Visa Infinite (Passport VI)

• Product page
• My referral link for an additional $150

If you'd rather deal with an established bank instead of fintech or want insurance coverage, then you should consider this card. There is usually a solid sign up bonus making it worth opening even if just for the first year.

Why This Card

• No foreign exchange fee
• 1% (almost) cash back: while technically Scene points, these can be redeemed for a statement credit against any travel purchases which makes them effectively cash back

Secondary benefits

• 6 lounge passes: personally I find the lounges to range from fine to garbage, so I wouldn't put much value to them, but it's still a nice bonus.
• Transaction notifications: you can enable notifications which will instantly show you how much your foreign purchases ended up being in CAD. Super convenient to keep track of spending.
• Insurance: major weakness of the WS VI is the lack of any travel insurance, if this is something you care about then this card might be better for you.

Additional Tips

• If you want to redeem your points but don't have any travel purchases on the card you can book a refundable hotel, apply the points, and then refund the hotel. This effectively makes the points straight cash back. Look up the refundable hotel trick for more details.
• The sign up bonus fine print mentions that you're ineligible for the bonus if you've held the card in the last 2 years, but I suggest you should give it a shot anyways.
• If you add an authorized user (no fee) you should be able to add their card to the Visa Lounge app for an additional 6 passes. I've read this is hit or miss, but I've had a good experience.

Cash

You'll always want to carry some cash just incase your cards are declined or the place is cash only. However cash isn't meant to be your primary payment method. See This Probably Isn't For You If You Need Lots of Cash.

You'll want to withdraw cash from an ATM when you arrive at your destination. I highly recommend doing some research beforehand, but a general rule of thumb is go for one of the big banks. Any card will work, but unless you have a premium account your bank will most likely charge you $5. And even with a premium account you will be paying a 2.5% foreign exchange fee. To avoid this I recommend opening the following two cards.

WealthSimple Chequing and EQ Bank Card

• Wealthsimple Chequing
  • My referral link for an additional $20
• EQ Bank Card
  • My referral link for an additional $20

For our purposes these cards are the same. They're both prepaid MasterCards with no foreign exchange fee and no ATM fees. It's really a no brainer to open both of them since they don't require a credit check and are free. That way you can have a backup if one of them is declined or you lose one.

WS offers 1% cash back and EQ 0.5% on all purchases, however I would advise against using them for purchases since it's harder to get your money back in fraud cases.

Further Details

If you're not convinced or have further questions read on.

Exchange Rate Comparison

Visa and MasterCard take a cut of all transactions which is why they are able to (almost) always offer the best exchange rate. As you can see bellow the only option even close is Wise, but it would require you to have a bank account in your destination country to take full advantage of.

Alternative Bank Products

Wise

I've used wise to transfer money to a foreign bank account when I needed cash to pay rent. The exchange rate isn't as good as Visa or MasterCard, but if you have access to a foreign bank account and need to get large sums of money the convenience is worth the small spread. However for travel this is probably not an option for you.

Wise Card

I've had this card for years, but have yet to use it. I still carry it as a backup, but it's just objectively worse then the EQ and WS card since it limits you to only two free ATM withdrawals.

Canada Based USD Cards

I've heard that if you have a premium account with RBC you can get a solid exchange rate on CAD/USD, but have not tested it myself. There are probably some use cases for these accounts if you're frequently dealing with USD, but I don't think it applies to regular travel.

Additional Tips

This Probably Isn't For You If You Need Lots of Cash

From my experience I would say it's safe to assume that you will be able to pull $CA 200-300 per day from an ATM in most countries. If you are planning to do some major shopping where paying by card isn't an option you will most likely need to look for an alternative way to get cash.

Check ATM Fees and Limits before you go

The biggest blocker to this strategy is local ATM fees. In Vietnam I was paying almost exclusively in cash. This was fine since VP Bank doesn't charge any fees for withdrawals and has reasonably high limits. However I've ran into issues in South America where all ATMs charge fees upwards of $CA 5 and have low withdrawal limits. This really hurts the exchange rate so if this applies to your destination you might want to consider alternatives. Unfortunately there's not a great way to get up to date information on ATM fees and limits. Wise has a page, but I believe it's restricted to holders of their card. I usually rely on old Reddit and Trip Advisor threads. You can also check some crowd sourced lists like this.

Always decline paying in CAD

Sometimes the ATM or payment terminal will present you with the option to pay in CAD instead of the local currency. ALWAYS pay in the local currency. Even if the card you're using charges you a FX fee, it is almost certainly going to be lower.

Use Apple Pay or Insert the Card

I've found that your chances of being declined go from lowest when you insert your card to highest when you tap your card. Apple Pay gives you to convenience of tapping with (from my experience) a far lower chance of being declined then tapping the actual card.

Check Country Restriction

EQ and WS provide lists of countries where the cards will not work. If you are traveling to any of these countries you will most likely need to bring USD cash with you. Be sure that it is USD, while you can get away with CAD cash in countries like Cuba the exchange rate will be laughably bad.

Always Have Backup Cards

There is always a chance that your bank will decide that they no longer want to provide you the privilege of spending your money for whatever reason. Back before Brim added an FX fee and became a worthless pile of garbage I was using the card daily for months abroad when suddenly it decided to decline every transaction. Even after calling in and being told that the issue was resolved the card would still decline almost every transaction. I'm a bit paranoid so I travel with over ten payment methods from different financial institutions so the chances of them all not working are close to zero. You don't need to be that extreme, but I would recommend at least three credit cards and two debit cards for ATM withdrawals.

Look Up Local Payment Methods

Some countries have skipped adoption of credit card terminals and gone with QR code mobile payments. In China credit card acceptance is very poor, but if you setup WeChat or AliPay you can effectively use your credit card to pay for everything. While in Thailand I was able to use about 90% card, but I've heard they also have some sort of QR code payment system. You should look up if your destination has something similar.

Check Cash on Hand Entry Requirements

I recently learnt that technically you need to have 10,000 Baht (~$CA 420) on you when entering Thailand. From first hand experience I can tell you this is not strictly enforced, however it's worth checking if there is a similar requirement for your destination. In any case you should have some USD on you for emergencies.

DO NOT USE CREDIT CARDS IF YOU ARE NOT A CREDIT CARD PERSON

Please for the love of god if you aren't able to pay the balance in full every month do not use a credit card. They are literally free money if you use them correctly, but this is obviously subsidized by the people paying +20% interest. If you are one of these people it's over. Close the cards and pay off the balance. Know your limitations and stick to cash or prepaid cards like WS and EQ.