Virtually every bank and credit card issuer card in Canada charges a 2.5 per cent fee to convert your foreign purchases back into Canadian dollars. It’s an insidious fee, often hidden within your credit card statement and blended in with the exchange rate so you don’t even notice.
While seemingly benign, a 2.5 per cent foreign currency conversion fee represents a significant cost to those who frequently travel to the U.S. or abroad, or who shop online in U.S. dollars and other foreign currencies.
Savvy credit card users can avoid these sneaky fees by holding one of these “no foreign currency conversion fee” cards.
The No Fee, No Frills Option: Home Trust Preferred Visa Card
Home Trust is a subsidiary of Home Capital Group and offers a no-annual-fee, cashback card that does not charge foreign currency conversion fees.
The Home Trust Preferred Visa Card gives users 1 per cent cash back on every purchase, with no limit to their total rewards and no restrictions on where they earn rewards. Customers also get a Roadside Assist membership at no extra charge.
All foreign purchases are converted at the spot rate set by Visa without any additional charges.
Interested applicants should be aware that applications for the Home Trust Preferred Visa Card may take two to four weeks to be approved.
The Perks and Points Option: Scotia Passport Visa Infinite Card
Scotiabank became the first major Canadian financial institution to offer a no-foreign-transaction-fee credit card earlier this year when it launched the Scotia Passport Visa Infinite Card.
Cardholders earn two Scotia Rewards Points for every dollar spent on groceries, dining, entertainment purchases, and daily transit purchases, plus one point on all other purchases.
In addition to not being charged a foreign currency conversion markup on foreign currency purchases online or outside of Canada, this card also offers airport lounge access with a complimentary Priority Pass membership and six free visits per year.
This card does charge an annual fee of $139 and successful applicants must have a minimum annual income of $60,000 or a minimum household income of $100,000 to qualify for the card.
The “It’s Complicated” Option: Fido MasterCard by Rogers
One other credit card option available to Canadians looking to save on foreign currency conversion fees is the Fido MasterCard by Rogers Bank.
While this card does charge the standard 2.5 per cent markup on purchases made in a foreign currency, it also pays a healthy 3 per cent cashback on those purchases to negate the fee and then some.
Not just limited to Rogers or Fido customers, this card comes with no annual fee and pays 1.25 per cent cash back on Canadian dollar purchases.
Fido customers do get added perks, with 2 per cent in unlimited cashback rewards on Fido products and services charged to the card. Customers can also put their cashback rewards towards their monthly Fido bill or save them up for other Fido accessories.
Finally, successful applicants will get a $25 cashback bonus when they make their first purchase within three months of card ownership.
Consider the number of credit card users that go out of their way to earn an additional 1 or 2 per cent worth of cash back or travel rewards on their spending. Yet Canadians spend billions each year travelling to the U.S. and abroad, plus billions more shopping online at foreign retailers, unknowingly paying hidden fees each time they do so and negating any rewards advantage in the process.
That’s why, if you do plan to make significant purchases in U.S. dollars, or other foreign currencies, then it’s wise to carry a credit card that does not mark up the cost of those purchases by 2.5 per cent.
Robb Engen is a Lethbridge, Alta.-based writer and a freelance contributor for the Star. He blogs at Boomer & Echo. Reach him at firstname.lastname@example.org.