How Much Do Banks Charge for Currency Exchange in Canada?

Banks in Canada can charge around 2.5% for foreign currency conversion, especially when you use a card in another currency.

You may also pay through the exchange rate itself. Banks can offer a rate that is less favourable than the market rate. This means the true cost of exchanging money is not always shown as a separate fee.

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How Do Banks Charge for Currency Exchange?

There are two main ways you can pay for currency conversion.

The first is a foreign currency conversion fee. A common example is 2.5% of the converted transaction amount.

The second is the exchange rate spread. The rate offered by a financial institution may be different from the market exchange rate. The difference creates an additional cost for you.

This is why a currency exchange can cost more even when there is no obvious service fee.

How Much Is a 2.5% Currency Conversion Fee?

Suppose you make a foreign purchase worth C$1,000 after the currency is converted.

A 2.5% conversion fee would be:

$1,000 × 2.5% = $25

Your total cost would be approximately $1,025.

The exchange rate used for the original conversion can also affect what you ultimately pay.

Do Banks Charge a Fee to Exchange Cash?

They may.

When you exchange physical Canadian dollars for another currency, a bank may not show a separate percentage fee. Instead, much of the cost can be included in the exchange rate it offers.

You will usually see a buy rate and a sell rate. The difference between those rates is part of how currency exchange providers cover their costs.

Check how much foreign currency you will actually receive before completing the exchange.

Does KOHO Charge Foreign Exchange Fees?

It depends on your KOHO plan.

KOHO normally charges 1.5% on non-Canadian transactions when an FX fee applies. This is lower than the 2% to 3% that many cards charge.

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This can make a difference if you travel frequently or regularly make purchases in foreign currencies.

How Can You Pay Less for Currency Exchange?

Start by looking at the total cost instead of just the advertised fee.

Check:

• The exchange rate you are receiving

• The foreign currency conversion fee

• ATM fees

• Whether your card charges an FX fee

• Whether the merchant offers to charge you in Canadian dollars

When travelling, you may also be asked whether you want to pay in Canadian dollars or the local currency. Paying in the local currency can help you avoid a merchant's own currency conversion rate.

The important thing is to check both the exchange rate and the fee. A service advertised as having no exchange fee can still cost more if the rate itself is less favourable.