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carrick on money

In banking and investing, competition sometimes brings lower costs for clients. A case study: Fees associated with using a credit card for expenses outside Canada.

Almost all credit cards add a fee of 2.5 per cent or so on top of the foreign exchange rate on purchases in a foreign currency. Some money-saving alternatives that have emerged include a growing number of credit cards and prepaid cards that don’t charge the 2.5 per cent fee, and an app called Wise that is best known as a way to transfer money to people in other countries.

The companies behind all of these payment options compete against the big banks and each other. I encourage you to take them for a test drive to, first, save money and, second, to help sustain healthy competition in the financial marketplace.

Wise is a UK-based operation with more than 16 million global customers. Wise offers Canadians what it refers to as a debit card in physical form, or you can load a digital version into Google Wallet and Apple Pay. Use the Wise app or website to transfer money from your regular bank chequing account, and then tap or insert your Wise card to pay for purchases. Outside the country, Wise will convert the purchase into Canadian dollars at an advantageous rate.

If you prefer, you can convert money in your Wise account to multiple foreign currencies any time you like. These funds are then available for purchases in these same currencies.

The appeal of Wise is that it offers foreign currency conversions at what’s known as the mid-market rate. Think of it like a wholesale rate that undercuts what you’d get as a retail bank client. Wise adds a fee averaging 0.65 per cent to your conversion, which is cheaper than the 2.5 per cent charged by most credit cards.

A card with no foreign transaction fees sounds cheaper, but Wise potentially offsets this with its competitive cost of converting currency.

I signed up for a Wise card recently. It took maybe 10 minutes to apply for an account, get it verified and then transfer in money from my usual chequing account. I used the card multiple times via Google Wallet on a recent trip to the United States and found it provided a highly competitive forex rate. The card was rejected twice out of 13 times I tried it, so have a backup.

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Q: Something you might want to research is the price of pork compared with beef. Despite inflation, pork prices have not increased all that much over the past few years. When there is a special on, I can still buy half loins at $1.99 per pound. Beef is another matter. Prices have in some instances doubled over the past few years. I have to assume the pork producers are still making a living from raising pigs. Are the beef producers shafting us with the cost of their products?

A: Here’s an explanation from Sylvain Charlebois, professor and researcher with Dalhousie University: Beef prices have risen because of droughts, while pork prices have fallen in price as a result of high inventories.

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More Rob Carrick and money coverage

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