Is it better to change British pounds to American dollars or whilst I’m in Canada change cad to American dollars my son is a Canadian resident

Question

Is it better to change British £ to American dollars Or cad to American dollars best rate ? As my son resides in Canada sbd we are travelling via the border

Answer 1

Neither. My recent experience was the best cash exchange was a rip-off compared to the exchange rate given by using a credit card with no extra exchange fee. There are very few places that 'cash-only' would be an issue.

Answer 2

If you are asking about currency exchanges in small amounts for a vacation, it shouldn't really matter so much about the forex rates but more about where you go to exchange. Banks generally will give you the best rates if you are a client of theirs and some even take less than a half percent profit. On the other hand places like travel agencies or in airports will have about a 20% spread which is a total rip off. My advice to you would just be to go to a bank and change pounds into USD so that there is only one transaction.

On the chance you are asking about FOREX, this really is not the place for it. P.S. 99% of people on the internet who pretend to know FOREX make extremely risk gambles and many lose money.

Answer 3

There is no Official Rate

Changing currency or Foreign Exchange is a loosely regulated over the counter business - it is up to each company or bank to choose what rate they are willing to buy and sell at. There is no official exchange rate. Rather, the quoted rates may be an average of various institutional rates.

Look at the Spreads

The small retail operations you might see at airports or touristy areas will be charging a spread - they will offer to buy currency at a lower rate than the current institutional rates and sell currency at a higher rate than the current institutional rates. You can actually calculate the spread by calculating the percentage difference between the buy and sell rate.

Some will even charge a fee for the privilege of changing currency on top of the spread.

International Institutions May be Better

How well connected your bank is to the global foreign exchange markets and how good a relationship you have with them may affect your rate. Part of that may be to do with how much money you are converting. I have had a relationship with a bank that was always consistently able to improve upon the Bloomberg rate (which is an often cited institutional benchmark). Yahoo, Google and Bloomberg should be able to provide a good approximation for the institutional rate.

Watch out for Double Conversions

However, typically, if you are in a particular country such as Canada, you are probably going to find the US Dollar to Canadian Dollar rate more competitive than the British Pound to US Dollar rate, as there will be more demand for this service. Some companies may not even be set up to do the direct conversion and instead do to conversions - first from British Pounds to Canadian Dollars, and then from Canadian Dollars to US Dollars, causing you to pay the spread twice.

Shop Around

To get the best rates, shop around and ask them the rate. Don't be misled into being told it will be done at the official rate - there isn't one.

Credit Cards without a Foreign Transaction Fee

If you are in a relatively developed country such as the United States, Canada or the UK, you can use a credit card for most transactions. Some credit cards offer transactions without the typical 3% foreign transaction fee. This way you do the transaction in the local currency, and then Mastercard or Visa or American express convert the currency at their institutional rate (they publish their rates on their web site), which is usually pretty good.

DCC Scams

You have to be wary however as there has been a recent influx of credit card payment terminals and software that detect based on your credit card number that your card was issued in another country and offers to convert the currency of the transaction at the terminal. Almost always these rates are worse than the institutional rates that your credit card company pays. This is called DCC (or "Direct Currency Conversion") and there are plenty of articles on the internet about DCC Scams. If you are in Canada, pay in Canadian Dollars, if you are in the US, pay in US dollars etc.