Travel Tip: Avoid Foreign Transaction Fees On Your Canadian Credit Card
Many Canadians are in for a nasty surprise after a trip abroad. The bad news is most Canadian credit card companies add a 2.5%-3% foreign transaction fee to each purchase that cardholders make outside the country. The good news is that a select few credit cards in Canada, like the Home Trust Preferred Visa, Scotiabank Passport™ Visa Infinite* Card, and Rogers World Elite Mastercard make up for or waive the fee so that you’re not charged at all.
Unlike the United States, where credit card issuers are increasingly abandoning foreign transaction fees altogether, FX fees usually represent too large a part of Canadian credit card companies’ income streams for them to walk away from. The fact is, Canadians travel out of Canada a lot more often than Americans travel out of the United States, so it’s easier for an American issuer to give up on FX fees than for a Canadian issuer. For a quick comparison: 30% of Americans have a passport, compared to 70% of Canadians.
Why You Want a No Foreign Transaction Fee Credit Card
So what’s the big deal about a credit card that subsidizes foreign transaction fees? Well, the savings can be huge for some Canadian customers, especially:
- Snowbirds who winter in the south
- People who shop across the border regularly or shop online
- Those who use their credit card to make business purchases from U.S. vendors.
Think about it. If you use your credit card while wintering in the United States, you could easily rack up $10,000 – $20,000 in credit card charges. That’s $250 to $500 in foreign exchange fees going to the credit card companies. Not to mention it also wipes away the 1-2% in rewards you thought you were earning.
Aside from that, using a credit card that subsidizes or waives your foreign transaction fee is actually cheaper than exchanging currencies at the bank, or at a boutique foreign exchange bureau – which routinely cost anywhere from 1%-3% to exchange your money. Debit and out-of-country ATM cash withdrawals are no better, each typically charging a foreign exchange fee of 2.5% or more.
Best No Foreign Transaction Fees Credit Cards in Canada
|Credit Card||Annual Fees||Min personal income required||Special Card Feature||Card Review|
|Scotiabank Passport™ Visa Infinite* Card||$139||$60000||Premium rewards||Read More|
|Home Trust Preferred Visa||$0||$15000||1% cash back on foreign transactions||Read More|
|Rogers World Elite Mastercard||$0||$80000||1.5% cash back on foreign transactions||Read More|
|Meridian Visa* Infinite Travel Rewards||$99 ||$60000||0.5% cash back on foreign transactions||Read More|
Scotiabank Passport™ Visa Infinite* Card
The best of the bunch is the Scotiabank Passport™ Visa Infinite* Card. Though accompanied by an annual fee of $139, it not only waives foreign transaction fees, but also offers greater rewards potential, better perks and stronger protections as well. You’ll pay % fees for purchasing online or abroad in a foreign currency and will earn 2 Scotia Rewards points for each $1 spent on groceries, dining out, or entertainment. 1 point per $1 spent is earned elsewhere.
Additionally, travellers who frequently face layovers will appreciate the card’s 6 free VIP airport lounge passes given each year. They’ll also like the travel protections that accompany the card, including travel medical, trip interruption and cancellation, and rental car damage coverage as well. Furthermore, an introductory bonus of 35000 Scotia Rewards points for spending $1,000 in the first three months puts the card another step ahead of competitors.
Home Trust Preferred Visa
One card that offers relief from foreign transaction fees is the Home Trust Preferred Visa Card. Aside from waiving the 0% foreign transaction fee option, this credit card also gives Canadians 1% cash back on all purchases, without any limits on how much cash back you can earn or where you can earn it, as well as travel perks like roadside assistance, auto rental collision and loss damage insurance auto insurance, and liability insurance.
Rogers World Elite Mastercard
Credit cards can help travellers avoid foreign transaction fees by matching any fees with an equal amount of cash back, or more. The latter is true with the impressive Rogers World Elite Mastercard, which is like the Platinum Plus card but accompanied by better perks and superior cash back rates. In exchange, applicants must meet a higher annual income and credit requirement (though the card still has no annual fee). With the World Elite card, cardholders will receive 4% cash back for their purchases in a foreign currency, and 1.75% cash back for any purchases made in Canadian dollars. Furthermore, spending on Rogers-related goods and services earns a 2% cashback rate.
The World Elite beats the Platinum Mastercard by 1.00%, netting 1.50% cash back on foreign purchases (after the fee) instead of 0.50%. Cardholders will also get a comprehensive insurance package that includes collision damage coverage for rental vehicles, and trip interruption, trip cancellation, and emergency travel medical insurance. This is an excellent deal for no annual fee, but applicants need to show $80,000 in annual income or $150,000 in household income.
Meridian Visa* Infinite Travel Rewards Card
Strictly speaking, the Meridian Visa* Infinite Travel Rewards card isn’t a no-foreign-currency-fee card, because you will technically be charged a 2.5% fee on your foreign currency purchases. However, you’ll also earn 3 travel reward points for every $1 you spend in a foreign currency. Because the points are worth $0.01 each, you’ll end up earning more in travel rewards points for your foreign currency spend than you’ll lose in foreign transaction fees.
You can redeem your travel rewards points whenever you’d like for flights, cruises, hotel stays, events, merchandise, or gift cards. The Meridian Visa Infinite Travel Rewards card also supports you when you travel, with emergency health care coverage, trip cancellation and interruption insurance, baggage insurance, common carrier accident protection, a 24/7 travel assistance hotline, and auto rental loss and collision insurance.
You’ll also find some other rare perks bundled into the card—the Intergenerational Insurance Coverage extends travel insurance coverage to include grandchildren travelling with their grandparents, and your mobile devices are protected with up to $1,000 of mobile device insurance. The Meridian Visa Infinite Travel Rewards card also offers price protection, which reimburses you when you charge an item to the card only to find it retailed for a lower price within 60 days of purchase (up to $100 or the price difference, whichever is lower).
Rogers Platinum Mastercard
Another excellent option is The Rogers Platinum Mastercard which now gives you 3% cashback rewards on all purchases in a foreign currency and 1.25% cashback rewards on all other purchases – one of the richest flat cashback rewards rates for a no annual fee card in Canada.
Rogers Mastercard’s foreign transaction subsidy is structured differently than the Home Trust Preferred Visa Card’s fee waiver, but still offers significant value. Rogers offers 3% cashback rewards on purchases in a foreign currency, but charges 2.5% in foreign transaction fees – the net cashback rewards rate is thus 3% – 2.5% FX fee = 0.5% in net cashback rewards.
Comparison of Canadian Credit Card Foreign Transactions Fees
|Credit Card||Foreign Transaction Fee Offer||Notable Benefits||Annual Fee||Apply for Card|
|Home Trust Preferred Visa||0% fee||1% cash back||$0||Apply Now|
|Rogers®Platinum Mastercard®||2.5% fee||3% cash back||$0||Apply Now|
|Scotiabank Passport™ Visa Infinite* Card||0% fee||2 pts / $1 on selected categories|
1 pt / $1 on the rest
|Tangerine Money-Back Credit Card||2.5% fee||2% cash back on 2-3 purchase categories||$0||Apply Now|
|Scotiabank Gold American Express Card||0% fee||15,000 bonus pts||$120||Apply Now|
|BMO World Elite MasterCard||2.5% fee||35,000 bonus pts, annual fee waiver||$150||Apply Now|
|Meridian Visa* Infinite Travel Rewards||0% fee||3 pts / $1 on foreign purchases for a net cash back rate of 0.5%||$99||Apply Now|
By the way, for those who think they’re avoiding foreign transaction fees by having a U.S. Dollar credit card, unless you earn American dollars, you’re not avoiding anything. Ultimately, you’ll have to pay your U.S. Dollar credit card bill in U.S. dollars, and you’ll have to convert your Canadian dollars to U.S. dollars at the bank to do so. At that point the bank will charge you its 1%-3% foreign exchange surcharge.
Hopefully more Canadian credit card issuers that don’t have a large share of their spend in foreign purchases, or an established foreign exchange business, will step up to the plate and waive their foreign transaction fees.
Perhaps some of the more niche issuers like President’s Choice, Walmart, or Canadian Tire can shake things up a little bit the way Rogers, Home Trust and Scotia have. But as of right now though, Rogers, Home Trust and Scotia are three of the only games in town, and they’re offering Canadians a SUPERLATIVE opportunity. Just not enough of us know about it.
*American Express is not responsible for maintaining or monitoring the accuracy of information on this website. For full details and current product information click the Apply link.