It’s hard to manage your finances in two countries. You need two of everything, from chequing accounts to credit cards. Snowbirds need a U.S. bank account to take care of the bills at their condo. Canadian shoppers want easier ways to pay their Macy’s or J.C. Penney account after cross-border shopping sprees.
Opening an account at a U.S. bank is an option, but you might not be able to get a U.S. credit card because you don’t have a credit history. It’s also a hassle to get cash into those accounts because you either need a money order or have to cross the border, find a bank branch and deposit the cash.
Besides traditional Canadian snowbirds, there’s an increasing number of expatriates living and doing business in the U.S. who want more convenient banking access in both places.
Your credit choices come down to whether you want a: U.S. dollar credit card issued by a Canadian bank, a U.S. dollar credit card issued by a U.S. bank, or a Canadian-issued credit card that doesn’t charge foreign exchange fees. Let’s explore those three options.
Credit Cards with No Foreign Currency Conversion Fees
Trips to the U.S. and abroad also means dealing with foreign currency. You might think your credit card provider is doing you a favour by converting your foreign purchases back into Canadian dollars, but think again. Foreign currency conversion fees are often hidden within your credit card statement – blended in with the exchange rate so you don’t even notice you’re paying an extra 2.50% on your purchases. Don’t kid yourself – these charges add up in a big way.
Every major Canadian financial institution charges a 2.50% fee for foreign currency conversion on credit card transactions, a stiff penalty that cancels out any credit card rewards you might have earned for spending money on your trip.
So, what’s a traveller to do? Luckily, there are two great credit card options for Canadians who might look to save money on foreign travel as well as on items purchased online through foreign retailers.
Chase Card Services – a division of U.S. giant JPMorgan Chase but nothing more than a niche player in Canada – removed the currency conversion fee on its Amazon.ca Rewards Visa and Marriott Rewards Premier Visa. Customers using one of these cards will save the 2.50% foreign currency conversion fee when purchases are made in foreign currency.
Best suited for: Frequent travellers to the U.S. and abroad who want to avoid the 2.5% foreign exchange fee that most major credit card issuers charge.
Note: the Amazon.ca Rewards Visa Card from Chase is no longer accepting applications as of April 3, 2017.
U.S. Dollar Credit Cards Issued by Canadian Banks
Most Canadian banks and credit unions offer some form of U.S. dollar accounts. Some offer U.S. dollar credit cards, as well, which allow you to sidestep conversion rates and currency exchange service charges.
A U.S. dollar credit card is suitable for frequent travellers, cross-border shoppers, snowbirds, and online shoppers – basically, anyone who makes purchases in U.S. dollars on a regular basis. Any Canadian resident can apply, as the requirements for obtaining a U.S. dollar credit card are the same as for any other Canadian credit product. Customers avoid the foreign exchange fee (the extra 2.50% tacked onto regular exchange rates), as well, since they can pay off their card in USD or CAD – whatever is convenient and makes sense from a foreign exchange perspective.
Best suited for: Individuals or small business owners who want to keep U.S. purchases and statements separate from their day-day-day banking in Canada.
U.S. Credit Cards Issued by U.S. Banks
A U.S. credit card issued by a U.S. bank is a great way to ensure you can make purchases, pay bills, and get access to your money when you need it most. You can also avoid foreign transaction fees in the U.S. when you make spend and pay bills in the same currency.
In order to apply for a U.S. domicile card, Canadian residents must have an American address. These credit cards are issued based on the applicant’s credit history in the U.S.
Both RBC and TD Canada Trust now offer accounts that overcome these hurdles, pairing them with a U.S. dollar credit card. They let you pay U.S. bills online, use American ATMs without access fees and make it easy to transfer money among the accounts. Dealing with banks with operations on both sides of the border is an advantage because they’ll help you leverage your Canadian credit history to obtain a credit card, mortgage loan, or line of credit in the U.S.
If you plan on moving south for the long term, having a U.S. credit card issued by a U.S. bank is an excellent way to begin building your U.S. credit history.
Best suited for: Snowbirds, or those with broader ties to the U.S., who want to build and maintain U.S. credit history