Most people don’t realize it, but just about every credit card out there charges foreign exchange fees. Whenever we charge something in a foreign currency, we end up paying an additional 2.5% on top of the spread. What that means is you pay an extra 2.5% on top of the exchange rate when you make your purchases.
If we travel often or if we make regular purchases online in foreign currencies, these fees can add up to a small fortune over time. I don’t know about you, but I much prefer to spend that money on myself.
Fortunately in Canada, there are a few credit cards that have no foreign exchange fees. Each card has its pros and cons so here are the features to help you decide which card to pick up.
Home Trust Preferred Visa
Now that Chase has pulled all their credit cards from the Canadian market, the Home Trust Preferred Visa becomes the only no annual fee, no foreign transaction fee credit card on the market. The additional benefits of 1% cash-back on all spending with no limits and a free Roadside Assist membership are nice bonuses, but that’s not why people are signing up for this card. Saving on foreign transaction fees with no annual fee is reason enough to apply for the card. The downside is that this card not available to residents of Quebec.
Rogers Platinum Mastercard
You’re technically still paying the 2.5% foreign exchange fee with the Rogers Platinum Mastercard, but the 4% cash-back on all purchases made in a foreign currency essentially puts you up 1.5%. If you’re a regular Rogers customer, this is a pretty good card since you’ll earn 1.75% in cash-back on all purchases which can be applied to your monthly bill. The annual fee of $29 is waived and so is every annual fee as long as you have your monthly services bill is set up as a pre-authorized payment. As an incentive to sign up, you get $25 in cash-back rewards when you charge your first purchase within 3 months of receiving your card.
Similar to the Rogers Platinum Mastercard, the Fido Mastercard charges the 2.5% foreign exchange fee, but comes with 4% cash-back on all purchases made in foreign currency. You only get 1.5% in regular cash-back rewards earned, but there is never an annual fee. $25 in cash-back rewards will be applied to your account when you charge your first purchase within 3 months of receiving your card and another $25 is offered if you set up your Fido bill for pre-authorized payments within 3 months of getting your card.
(Partially) offset the foreign exchange fee
Paying that foreign transaction fee hurts, but there are a few credit cards that can offset (or partially offset) those fees based on the type of purchase you’re making.
Many credit cards offer a set cash back or rewards amount which is based on merchant categories such as groceries, gas, and restaurants. Each network (Visa, MasterCard, American Express, etc.) has different category codes, as well as rules and exceptions by region. But, the idea is that you can still earn your multipliers even when you’re overseas. Here are some of the best travel credit cards that will help you reduce your foreign transaction fees while travelling:
Scotiabank Gold American Express
The Scotiabank Gold American Express gives you a 4% return on gas, groceries, entertainment, and restaurants so you end up ahead by 1.5% when you factor in the 2.5% conversion fee. You earn 1% on all other purchases which will help offset that conversion fee.
If you travel often, then applying for one of these cards is a must. The Home Trust Preferred Visa is great for those who want a card with no foreign transaction fees and no annual fee. If you’re a Rogers or Fido customer, getting one of their branded cards can be quite valuable as they offer a pretty good cash-back return with the potential of no annual fee.
If you’re looking for a card that suits your day-to-day needs but still offsets the fee, the Scotiabank Gold American Express card is a great choice. For more credit cards, check out the credit card comparison tool to find out which card is best for you.
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- How To Avoid Credit Card Foreign Transaction Fees When Travelling Abroad