How To Avoid Credit Card Foreign Transaction Fees When Travelling Abroad

by Barry Choi November 15, 2017 / 7 Comments

Did you know most credit cards charge a foreign transaction fee? You may have not noticed it since your statement automatically factors in that fee when posting charges to your account, but trust us, you’re getting dinged every time.

Here’s how it works: When you make a purchase in a foreign currency, it’s converted into Canadian or U.S. dollars (depending on the card) before being charged to your card, with a foreign transaction fee charged on top of that — most Canadian credit cards charge 2.5%.

Paying 2.5% may not sound like a big deal, but those fees add up. The good news is, there are a few ways to avoid those foreign transaction fees without much additional work on your end.

Find a card with no foreign transaction fees

There used to be quite a few Canadian credit cards with no foreign transaction fees, but now that CHASE has pulled out of the country, Canadians are left with limited choices. Currently, there are two cards that have no foreign transaction fees, the Home Trust Preferred Visa and the Scotiabank Passport Visa Infinite Card.

Home Trust Preferred Visa

  • No annual fee
  • No foreign exchange fee charged on purchases abroad
  • Earn 1% cash back on all purchases, with no limit on the amount you can earn

With no annual fee and no foreign exchange fee, the Home Trust Preferred Visa card is a great choice for occasional travellers. With the additional benefits of 1% cash-back on all spending with no limits and a free Roadside Assist membership, you can’t go wrong. The downside is that this card not available to residents of Quebec. Its is also worth noting that card is limited to 10 authorized transactions per day.

Scotiabank Passport Visa Infinite


  • Earn 25,000 bonus points (value: $250) when you make $1,000 in everyday purchases in the first 3 months
  • No foreign exchange fee charged on purchases abroad
  • Earn 2 points per dollar on groceries, restaurants, entertainment, and travel
  • Earn 1 point per dollar on all other eligible purchases
  • Enjoy complimentary Priority Pass™ membership, plus 6 free visits per year from the date of enrolment.
  • Annual fee: $139

The Scotiabank Passport Visa Infinite is a more robust offering, perfect for those that travel regularly. With no foreign exchange fee combined with a spending bonus of 25,000 bonus points ($250 value) and 6 free visits per year to Priority Pass lounges worldwide, this card is a great choice for an all-in-one travel card.

Withdraw cash once you arrive

If you need cash, using local ATMs is almost the cheapest option. You’ll still pay the 2.5% foreign transaction fee, but that’s usually still cheaper than exchanging your money at a bank back home or at a currency exchange office.

Keep in mind that any ATM you use may have a one-time withdrawal fee. If that’s the case, max out your daily limit when getting cash so you can reduce the amount of times you pay that fee. Alternatively, some banks will waive that one-time fee if you’re using an ATM that’s part of your bank’s network or if you have a premium chequing account with your bank.

Use a credit card that offsets (or partially offsets) the 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.

Rewards credit cards offer a set 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 abroad. Here are some of the best rewards credit cards that will help you reduce your foreign transaction fees while travelling:

Scotiabank Gold American Express

Scotiabank Gold American Express

  • Annual fee: $99
  • Earn 4 Scotia Rewards points per dollar on gas, groceries, entertainment, and restaurants; earn 1 point per dollar on all other purchases
  • Access to Priority Pass airport lounges worldwide
  • Complimentary concierge services

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.

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  • Senior

    the cobalt card says that you earn 5x on expenses made “IN CANADA” though… so no offsetting there

    • Ratehub

      Hello,

      Thanks for your comment! Categories are determined based on merchant category codes, and each country will have different codes. For example, in Canada a restaurant would be coded as place to eat, therefore netting you 5x the points. In France, it may not be coded as a place to eat, so you wouldn’t be getting the 5x multiplier. American Express Canada can only guarantee points based on Canadian merchant category codes, but that doesn’t mean that you won’t earn them overseas.

      • Senior

        Hello,

        According to the rep I had on the phone, no extra points will be awarded for purchases outside Canada

        • Ratehub

          Thanks for your reply! We are going to verify this on our end as well and update here once we get confirmation. Thanks for your feedback 🙂

        • Ratehub

          @disqus_EPTkogU8Fd:disqus Thanks for feedback! You are correct – we’ve removed the Cobalt card as it is not a good option for traveling abroad.

          Thanks again for your feedback!

          • @disqus_EPTkogU8Fd:disqus is correct about the wording but the points are actually awarded the same way for purchases in Canada and abroad. Basically, Amex knowingly disseminates false information. For more details, please go to http://blog.rewardscanada.ca/2017/10/are-american-express-cobalt-card.html.

          • Senior

            Thanks for this. I’ll trust the experience of other users and try the card then as I’m spending most of my time outside Canada and most of my expenses are on restaurants!