I recently got back from a quick trip to New Orleans, where I test drove three solutions to a problem you may not know you have while travelling.
When you use the vast majority of credit cards for purchases outside the country, you pay a foreign transaction fee that typically amounts to 2.5 per cent of the Canadian-dollar cost of your purchase. On a total of $5,000 in transactions, that’s $125 in fees that produce no value.
A small but growing number of credit cards include no foreign transaction fees among the perks they offer, but I’m not much interested in them because I already have credit cards I like and don’t want to add any more.
For me, the better way to avoid foreign transaction fees is to carry one of the new generation of prepaid cards that don’t add foreign transaction fees while travelling. Your purchase is converted from foreign currencies into Canadian dollars at a competitive rate, and that’s it.
I’ve written about these cards before – among the issuers are EQ Bank, Wealthsimple and Wise. In NOLA, I tried all three with great results.
I have prepaid cards from all three, and brought them with me. But I never touched them once because I loaded each on Google Pay on my phone and accessed my accounts that way. I’ll take Google Pay any day over handling cards. For most transactions, my phone is my wallet now.
Before I left on vacation, I loaded money on each card. With EQ, I transferred money from a linked savings account to the card. With Wealthsimple and Wise, I initiated a transfer of a small three-figure amount from my regular chequing account. The money was shown on my cards pretty close to immediately.
I used the Wise card to buy tacos and margaritas at an outdoor restaurant called Barracuda in NOLA’s Algiers Point area. The charge was $41.54, which became $56.88 after at 28-cent conversion fee and an exchange rate where a U.S. dollar was pegged at $1.3624 Canadian. That’s very close to the wholesale rates shown on various forex websites. The tacos were surprisingly great, but then all food in NOLA is.
The Wealthsimple card flawlessly paid for breakfast one morning at a chill neighbourhood spot called Horn’s Eatery. The one oddity, and it seems to be an issue with tap hardware in the U.S., is that the cost of the meal and the tip were charged separately.
The EQ card paid for sundry purchases, including coffee at a café with a pirate motif. Very par for the course in NOLA, a city where nothing is routine or boring. Both EQ and Wealthsimple report using the Mastercard spot rate for currency conversions with no premium added.
Summer holidays are still about five or more weeks away. If you’re heading outside the country, that’s plenty of time to set up a prepaid account and get to know how it works. As for my wife and I, we are vacationing in Newfoundland and Labrador this summer.
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Rob’s personal finance reading list
As I’m writing this, the Canadian bond market is down for the year to date. This follows a decent gain in 2023 and losses in both 2022 and 2021. Bonds should come into their own when interest rates fall, though. Here’s a list of three bond exchange-traded funds to help capitalize.
Eight signs you’re being hacked
Watch for these signals that someone may be trying to steal your identity. One way to stay on top of this sort of thing is check your banks and credit card accounts frequently for unauthorized activity.
This year will mark the 60th anniversary of the Tim Hortons chain. Tell me you haven’t spent some money at Tim’s at some point in your life. I’m not a fan of the coffee, but the chocolate lava cookies they had recently were darned fine and the birthday cake Timbits are pretty good, too.
Their dog has a toy subscription.
A mom on the mystifying way her adult kids live their lives, including their spending habits. One has a dog with a toy subscription. “Every month a box is delivered to him containing a variety of stuffed animals, treats and rubber toys.”
Ask Rob
Q: My 25-year-old granddaughter has to manage her RRSP contributions, just over $10,000. What would you suggest for her?
A: Something quick, easy and effective is to use a robo-adviser. You get a fully diversified portfolio of exchange-traded funds managed for you at low cost. Here’s a link to the latest Globe and Mail robo-adviser guide.
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
A guide to credit cards for people with a low income.
In the social sphere
Social Media: How should the U.S. political outlook affect your investing?
Listen: An episode of Vox’s Today Explained podcast looks at “Amazon’s garbage book factory” – low-cost copycats of books by and about well known people.
Money-Free Zone: For all dogs with a toy subscription, Lucky Dog by Nick Lowe. Incidentally, Lowe is touring Canada right next month. My wife and I have tickets to see him perform with Ron Sexsmith in Ottawa.
More PF from The Globe
– Buying groceries at Shoppers Drug Mart? You’ll pay a buck more for those chickpeas
– Bare trusts and the UHT: How tax rules meant for crooks and global elites ensnared thousands of Canadians
– Private credit funds are pitched as safe and stable, but investors aren’t getting anything special for the high risk and fees
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