Is it better to pay in local currency or card currency?
When you’re traveling, using credit or debit cards to pay for things and make cash withdrawals is convenient and offers safety benefits compared to carrying around lots of cash. Depending on the card you pick and how you use it, spending with a card could also keep down your overall costs by helping you get a good exchange rate and low transaction fees.
This guide walks through things to consider when using a card overseas, and how to decide when to pay in local currency – plus we’ll cover some low-cost cards for international travel, so you can do more with your money when you’re away from home.
Key points: Pay in local currency or CAD?
Dynamic currency conversion can mean you spend more if you choose to pay in CAD overseas
Paying in CAD to make an ATM withdrawal abroad can mean you spend more in the end, thanks to unexpected fees and a bad exchange rate
Some debit and credit cards also charge foreign transaction fees which can push up the costs of spending abroad
Getting a card from a bank or specialist alternative which has no foreign transaction fee can reduce the amount you spend in the end
Specialist providers like Wise allow customers to hold foreign currency balances to instantly convert and spend as needed
Choosing a travel card with no foreign transaction fees can keep the costs of spending in foreign currencies down. Specialist travel cards like the Wise card don’t have foreign transaction fees and offer mid-market rates for currency exchange. This can mean your foreign currency spending costs less overall.
Paying in local currency vs card currency
When you pay for things, or make cash withdrawals, overseas, you might be offered the choice to pay in CAD or the local currency wherever you are.
If you pay in the local currency in your destination, your credit or debit card will usually set the exchange rate you get to convert your costs back to CAD. The card issuer will also control any fees you pay, such as a foreign transaction fee.
If you agree to pay in CAD it works differently. The merchant or the ATM operator is free to set the exchange rate being applied, and may also add fees. These costs come on top of any charges your card issuer or bank makes.
Here’s a quick summary of some key points when it comes to paying in local currency vs paying in Canadian dollars:
| Paying in local currency | Paying in home currency |
|---|---|
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Most Canadian banks only allow you to hold a balance in CAD, but when you spend your card can convert your dollars to the required currency instantly. It’s pretty common to find a foreign transaction fee is applied when this happens.
Specific low cost travel cards can help you get around this issue, by letting you hold a balance in foreign currencies which you can then spend with no additional charge to pay.
Providers like Wise let you add money in CAD and convert it to the currency you need for spending either in advance or at the point of payment. You’ll often find you get the mid-market exchange rate with low or no fees, as well as the convenience of managing your money right from your phone.
Benefits of paying in local currency
Your card issuer or bank can decide the exchange rate used, which is often reasonably fair
If you pick a card with low or no foreign transaction fee you can keep down overall costs
You can use your card to pay in local currency at an ATM whenever you need cash
Some specialist providers like Wise let you hold a foreign currency balance which you can spend with no extra fees when you have enough balance
If you have a multi-currency balance facility you can lock in good exchange rates when you see them, to build your travel budget
Many card issuers let you get instant transaction notifications on your phone so you can see what you’ve spent
Should I pay in local currency or CAD on credit card?
If you use a credit card to pay for things overseas, or when you’re shopping online and paying in a foreign currency, you may find you need to pay a foreign transaction fee. Not all banks and card issuers have foreign transaction fees, but where they apply they can push up the costs of your foreign currency spending by around 2.5%.
To keep the costs of spending as low as possible when using a credit card overseas, look out for a card which has no foreign transaction fee, and then choose to pay in the local currency wherever you are. That way the card will convert your spending back to CAD for billing using the network exchange rate – which is usually pretty fair.
American Express has no foreign transaction fees for Canadian customers, but it’s worth bearing in mind that its network isn’t always as popular overseas as it is at home. Looking out for a no foreign transaction fee credit card issued on Visa or Mastercard may mean your overseas spending is easier. Some banks may issue no foreign transaction fee cards on Visa and Mastercard, but you might need to pay an annual fee. As an alternative, consider using a debit card with no foreign transaction fee. More on that next.
Should I pay in local currency or CAD on a debit card?
Using a debit card can work out to be cheaper than using a credit card in many cases as you won’t need to pay interest, and there’s generally no cash advance fee to worry about either.
However, it’s still pretty common to find that debit cards come with a foreign transaction fee, which will put up the costs when you spend and withdraw in foreign currencies by around 2.5-3%. This fee might apply on cards issued by major banks like RBC and Scotiabank, for example.
It is still possible to find debit cards which don’t have a foreign transaction fee to pay. Using a no-foreign transaction fee card and paying in the local currency wherever you are is usually the cheapest option available.
We’ve got a quick overview of some low cost travel cards from both banks and specialist alternatives coming up in a moment. You might want to consider options like Wise or KOHO which can all help you manage your money digitally with relatively low costs.
3 Travel cards to keep the costs down abroad
Using a dedicated travel card which has been designed for international travelers is a smart way to manage your money internationally with lower overall fees. Here we’ve featured a quick overview of 2 specialist providers – Wise and KOHO, and one Canadian bank – Scotiabank. We’ve got a little more detail about each coming up in just a moment to help you decide if any might fit your needs.
| Features | Wise card | KOHO card | Scotiabank Gold American Express card |
|---|---|---|---|
| International transaction fees | No Wise foreign transaction fee, currency conversion costs from 0.48 | No KOHO foreign transaction fee on the Extra and Everything plans, there is a 1.5% foreign transaction fee on the Essential plan | No foreign transaction fee |
| International ATM withdrawal fees | No fee to make 2 withdrawals/month to value of 350 CAD – low charges after that | 1 free international withdrawal a month on the Extra and Everything plans, $2-3 out-of-network fee after that | 7.50 CAD withdrawal fee at non-Canadian banks |
| Maintenance fees | None | 9 CAD – 19 CAD/month for Extra and Everything plans | 120 CAD per year |
| Exchange rates | Mid-market rate | Mastercard rate | American Express network, rate includes a markup |
| International coverage | Globally supported for payment and withdrawals | Globally supported for payment and withdrawals | Globally supported for payment and withdrawals |
*Details correct at time of writing – 24th January 2025
Wise card
You can open a Wise account online or in the Wise app and order your Wise card for a low, one time fee.
Add money in Canadian dollars and you can either decide to convert to the currency you need to spend when you travel right away, or to just let the card convert what you may and make withdrawals.
In either case you get the mid-market exchange rate, low, transparent fees, and no ongoing or maintenance costs.
Hold and exchange 40+ currencies with the mid-market rate
Free to spend a currency you hold if you have enough balance for the transaction, with some free ATM withdrawals every month
Autoconvert technology to switch at point of payment if you don’t have the required currency
| Wise card pros | Wise card cons |
|---|---|
✅ No ongoing fees or minimum balance ✅ Issued on Visa and Mastercard networks for global acceptance ✅ Spend in 150+ countries, and hold balances in 40+ currencies ✅ Some free ATM withdrawals monthly | ❌ Currency conversion fees from 0.48 ❌ Card delivery can take 14 days |
Learn more on Wise card review, and How to use Wise card abroad.
KOHO card
KOHO has three different account tiers which lets you pick the one which best suits your personal preferences and needs.
You can get an Essential plan with no ongoing charges, but this comes with a 1.5% foreign transaction fee, or you can upgrade to the Extra or Everything plans which feature no foreign transaction fees.
KOHO also offers one free international ATM withdrawal per month on the Extra and Everything plans, after which a $2–$3 out-of-network fee applies.
No foreign transaction fee on Extra and Everything plans
1 free international ATM withdrawal monthly with Extra and Everything plans
Earn interest ranging from 2.5%-4% on your entire balance depending on your chosen plan
| KOHO card pros | KOHO card cons |
|---|---|
✅Three different account options available ✅ Fee-free foreign transactions on premium plans ✅ One free monthly international ATM withdrawal on premium plans ✅ Earn interest on your balance | ❌ Monthly fees of $9–$19 for Extra and Everything plans ❌ 1.5% foreign transaction fee on the Essential plan |
Learn more: KOHO card international fees
Scotiabank Gold American Express card
Issued on the American Express network, the Scotiabank Gold American Express Card is a credit card with no foreign transaction fees, allowing you to save 2.5% on purchases made in foreign currencies.
The card also comes with additional benefits, like earning Scene+ points on eligible purchases, airport lounge access and Amex offers, making it a great option for those who want rewards while spending abroad. However, there is a $120 annual fee, and ATM withdrawals at non-Canadian banks come with a $7.50 fee.
No foreign transaction fees, but the exchange rate includes a markup up
Additional benefits, including Scene+ points on eligible purchases and travel perks
120 CAD annual fee and 7.50 CAD fee for ATM withdrawals outside of Canada.
| Scotiabank Gold American Express card pros | Scotiabank Gold American Express card cons |
|---|---|
✅ No foreign transaction fees ✅ Interest free grace period on purchases ✅Travel perks, including airport lounge access and concierge services ✅ Earn up to 6X Scene+ points on eligible grocery, dining, and entertainment purchases | ❌ 120 CAD annual fee ❌ 7.50 CAD fee for international ATM withdrawals |
5 types of international transaction fees to know
Spending overseas or in foreign currencies with your debit or credit card can come with some extra fees compared to domestic use. Getting familiar with your card’s terms and conditions is the best way to make sure you don’t run into any surprise costs.
Look out particularly for the following:
Foreign transaction fees: Where foreign transaction fees apply, they’re added to every transaction which is made using a foreign currency, in person and online. Foreign transaction fees can commonly be around 2.5%, but there are some alternative options including no-foreign transaction fee credit cards, and low cost travel cards from services like Wise.
Currency conversion fees: When you spend in a foreign currency, the cost of your transaction needs to be converted back to CAD to be billed to your account. The exchange rate used for this might be set by your card issuer, or bank, or by the merchant you’re spending with. You might find that the exchange rate includes a currency conversion fee, which is a percentage cost added for every transaction.
Dynamic currency conversion: Dynamic currency conversion is when you agree to pay in CAD when you’re abroad. This can mean paying hidden fees and getting a poor exchange rate, as you hand control of the transaction to the merchant or ATM operator rather than your bank. While your bank will make some efforts to keep its customers happy, a foreign merchant is less likely to worry, which can mean extra costs creep in.
International POS fees: Some cards charge extra when you pay for things in stores overseas. This can be in the form of a foreign transaction fee which we touched on earlier, or could be an international POS fee – check your account fee schedule to make sure you’re clear on what your foreign currency spending will cost you.
International ATM fees: In addition to any foreign transaction fee that applies, you may also need to pay an international ATM fee when you make cash withdrawals abroad. This is likely to be a fixed fee from your bank – and the ATM operator might also add their own fixed fees here, too.
Conclusion: Is it better to pay in the local currency with a credit card abroad?
Overseas spending is cheaper if you use a low cost debit or credit card which skips the foreign transaction fee, and if you always pay in the local currency wherever you are. If you agree to pay in CAD you may find that you get a poor exchange rate and end up paying extra fees too, as the merchant or ATM can choose how to process the transaction rather than your bank or card issuer.
Paying in the local currency is usually the cheapest option, whenever you travel
Choosing a debit or credit card with no foreign transaction fee can keep costs down
Some cards also have no overseas ATM charge which helps when cash is needed
Weigh up any other fees you may need to pay when using a card – such as an annual cost, or a foreign transaction fee – before you pick the one for you
Consider getting a low cost travel card from Wise if you’re looking for a debit card for cheaper international spending. If you prefer to spend with a credit card, weigh up the options for products like American Express– which have no foreign transaction fees – or a card from a bank like Scotiabank which can waive the foreign transaction fee but will come with annual charges.
FAQs: Paying in local currency vs card currency
Should I pay in pesos or dollars with a credit card?
If you’re overseas you’ll want to pay with the local currency wherever you are – so if you’re on a trip to Mexico, spending in pesos makes sense. You might find that a merchant asks if you’d prefer to be billed in CAD, but this is usually a more expensive option because of dynamic currency conversion.
Look out for credit cards which don’t have foreign transaction fees, pay in the local currency wherever you are, and clear down your card bills as quickly as possible to keep the costs down overall.
Related article: Advantages and disadvantages of using a credit card abroad
Is it better to pay in euros or dollars when traveling in Europe?
If you’re in the Eurozone, paying in euros is the best option. Bear in mind though, that there are actually lots of other currencies used in Europe, such as the British pound of the Polish zloty. Spend the local currency wherever you are to avoid unnecessary fees and poor exchange rates.