Planning for currency conversion

What’s the most effective way to convert money for spending during our trip? Here are the options I considered:

  1. Bring Canadian dollars and convert to Philippine pesos at home
  2. Buy US dollars and convert them to Philippine pesos at home
  3. Buy Philippine pesos in Canada and bring them over (paying attention to import conditions)
  4. Use our credit cards as much as possible, and carry a smaller amount of cash (see options 1-3 for handling cash)

Based on the online rates of Toronto Dominion Bank (TD Bank) and the Bank of the Philippine Islands (BPI), it turns out that it’s cheaper to buy US dollars in Canada and convert the US dollars to pesos when we’re in the Philippines (option 2). That results in 3% more money than bringing CAD and converting to PHP in the Philippines (option 1), and 8% more than buying PHP in Canada (option 3). This is good to know, because we used to buy PHP here. TD buys back US dollars but not Philippine pesos, so that’s handy too.

Even better than the cash rates, though, are our credit card rates. MBNA Smart Cash seems to have a foreign currency surcharge of 2.5% or so over the spot foreign exchange rate. With 1% cashback, that results in around 2% more than option 3. We’ll probably tally up our expected cash expenses, convert enough to cover them, then use our cards for the rest. I’ll still check with MBNA to make sure there aren’t other fees to consider.

Your results may vary depending on the rates. It’s good to do the math! =)

  • http://www.jimsjournal.com Jim

    I generally found that plastic worked just fine. I would use credit cards for larger expenditures (hotel, rental car, some meals) and get local currency cash from bank ATMs for other expenditures. The ATMs generally gave good exchange rates. I would either find ATMs affiliated with a network that would not charge a fee or try to get a multi-day supply. That took care of a lot of IBM business trips (England, Norway, Austria, France, Mexico, Australia… oh, yeah, and Canada) — however, several years ago I changed to a job that no longer required international travel, so I am a bit out-of-date on exchange rates and transaction fees. I know that credit card companies have put surcharges on international currency conversion but I do not know if banks have added extra fees to international ATM transactions.

  • Pam

    Capital One has no transaction fee at all. Bank of America charges only 1% for charges made using their debit card.

  • http://kliq.in Christine

    Hi, Watch out for foreign transaction fees (everyone except for Capital One charges them) if you use a credit card. The simplest and most convenient thing for me is to arrive in the foreign country and withdraw from an ATM. The fee on this is just the normal ATM fee, and the exchange rate is the latest.

  • Ching

    Hi Sach – what I do: use credit cards for everything I can, bring a little local currency (emergency cash for phone card & airport transport), and get the rest of my local cash via ATM withdrawal. Bigger ATM withdrawals are better as you’ll get hit with a flat transaction fee each time; still the best rates.

    Don’t forget to ask friends. Often folks may have excess currency that they may want to swap at the interbank rate. For example – I’m happy to change USD to PHP for you if you like :)

  • http://sachachua.com Sacha Chua

    I hadn’t considered ATM withdrawals because I didn’t look into what their fee structures would be. Might be interesting, though! Mom’s offering to swap at the spot rate, so I guess we’ll just bring whatever we’ve got handy. <laugh>