Using prepaid cards to minimize foreign exchange fees while travelling outside the country has worked well for me, and clearly for readers as well.
Every time I write about prepaid cards, I get a rush of queries from readers related to their own travel needs and experiences. After a May 28 newsletter on this topic, a reader asked about travelling in locations where cash was accepted and plastic was not. Prepaid cards are linked into the Mastercard and Visa networks – you load money on the card as needed and spend wherever electronic payments are accepted.
The prepaid cards I looked at were issued by EQ Bank, Wealthsimple and Wise, which is a global payments company based in the UK. The Wise card seems a good option for locations where you can find an ATM, but will end up paying often with cash. Wise recommends you load a foreign currency on your card electronically so you have a balance to draw from at the ATM. You’ll avoid foreign exchange fees doing this.
If you don’t have the currency preloaded on your card, Wise will convert the Canadian-dollar balance of your card into the relevant foreign currency at a wholesale rate. You’ll see the transaction fully documented in the Wise app or website.
You can withdraw money twice a month from a foreign ATM with a Wise card without fees, to a total of $350. More frequent withdrawals incur stiff fees – $1.50 a transaction plus 1.75 per cent of the withdrawal amount.
One more point about Wise that was shared by a reader: Travel with the physical card and the app. The card is useful in ATMs, while the app is handy where tap is accepted. Also, you can enter your Wise card like a Visa card in your Uber account.
Subscribe to Carrick on Money
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob’s personal finance reading list
A roundup of affordable cooling products like fans, lightweight sheets and something called a cooling towel. Anyone use these?
Stocks don’t provide big returns just because you need them
A money manager talks about the risks people take in their investing, and how they can backfire. Worth a read if you think you have this investing thing figured out.
A list of the 10 most visited countries. Offered as a way to highlight where to go – and not go – on your next vacation.
Living in Toronto on $62,000 a year
How a 23-year-old makes it work in an expensive city. To start, she has a roommate.
Podcast fans
Subscribe to Stress Test on Apple podcasts or Spotify.
Ask Rob
Q: With the tax increase for capital gains above $250,000, why not simply limit selling to stay below that threshold? Also, are dividend returns included in the $250,000?
A: Capital gains of $250,000 or less continue to be taxed with a 50 per cent inclusion rate; starting June 25, gains in excess of that amount have a 66.67 per cent inclusion rate. So, yes, limiting selling to stay below $250,000 makes sense. The issue for some people is that they will be selling investment properties and cottages – a one-time transaction that could very likely put them into the new higher tax zone. As for dividends paid by publicly traded companies, they are eligible for the dividend tax credit and not subject to the same rules as capital gains.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Tools and guides
Best apps for international money transfers.
In the social sphere
Social Media: An accountant on how to avoid becoming “car poor.”
Listen: Travel season is here – two economists look at how busy it will get out there.
Money-Free Zone: A message to the person who drove down the main street near where we live blasting Do It Again by Steely Dan at an outrageous volume level: Please come again, and feel free to play the rest of Can’t Buy a Thrill. Possibly the greatest soft rock album ever.
More PF from The Globe
– Leaving assets in a will or handing them over early? The new capital-gains tax could affect your wealth transfer
– EV rebates are nice. This is better
– Can you afford kids? It’s not just a money question – it depends on your lifestyle and priorities
– Some mortgage lenders apply tougher rules for 18-month parental leave
