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Canada’s Best No Foreign Transaction Fee Credits Cards in 2020
After returning home from a trip abroad or shopping online with international merchants, many Canadians are surprised to see a 2.5% foreign transaction fee on their credit card statement for each foreign purchase. The credit card company provides notice of this fee in their credit card agreement, but they’re easy to miss or forget about as time goes by.
Are there any credit cards that don’t charge a foreign transaction fee?
There sure are. We recommend the following three credit cards:
Scotiabank Passport® Visa Infinite - $139 annual fee
Boasting no foreign transaction fees, the Scotiabank Passport® Visa Infinite is one of the best travel cards on the market. Not only does it have a comprehensive suite of travel insurance, but cardholders also enjoy complimentary airport lounge access. The rewards are generous too, with 2x Scotia Rewards® points on every $1 you spend on groceries, dining, entertainment and daily transit, and 35,000 bonus points (worth $350) available in the first year.
Scotiabank®* Gold American Express® Card - $120 annual fee
This card has some similarities to the Scotiabank Passport® Visa Infinite, in that there are no foreign transaction fees, and it also has good travel insurance coverage. It actually earns points at a faster rate that the aforementioned card, boasting 5 points for every $1 spent on groceries, dining and entertainment, and 3 points for every $1 spent on gas, daily transit and select streaming services. It doesn’t have quite as many travel perks, and being an Amex rather than a Visa card, it is not accepted in as many places, but it is still an excellent option.
Home Trust Preferred Visa – no annual fee
This humble card doesn’t have as many perks as the two offerings from Scotiabank, but it still rewards your purchases with 1% cash back, gives you roadside assistance at no extra cost, and has no foreign currency fees. For no annual fee, what more do you want? If you don’t travel much, but are tired of paying foreign transaction fees on your online purchases, this is may be the card for you.
What is a foreign transaction fee?
When you pay for something with a credit card outside of Canada, whether it’s a good or a service, in person or online, the credit card issuer will apply two charges: one is the currency exchange rate, and the other is a fee for administration costs related to handling a foreign transaction.
How much does a credit card issuer charge for a foreign transaction fee?
The foreign transaction fee on a consumer card is usually between 2.5 to 3% of each foreign transaction amount, converted to Canadian currency.
How does Visa apply foreign transaction fees?
After you make a foreign purchase, the merchant’s financial institution is charged both an International Service Assessment (ISA) fee and a Visa International Acquirer Fee (IAF). Your card issuer (financial institution) authorizes the transaction and is also charged assessment fees by Visa and these are passed on to you. You will see this on your Visa credit card statement as an International Transaction (TXN) fee and it is separate from any applicable currency exchange fee for the transaction.
How does Mastercard apply foreign transaction fees?
Mastercard charges financial institutions in the same way by charging the merchant’s financial institution and the cardholder’s financial institution. The fees vary according to country and type of merchant.
Unlike Visa, the fee appears on statements as a cross-border TXN, not International TXN.
How is the foreign transaction fee applied by financial institutions?
Here’s an example of a foreign currency transaction, courtesy of the Financial Consumer Agency of Canada:
Suppose you made a €1,000 purchase with your credit card and the exchange rate is 1.42% to convert euros directly to Canadian dollars. Your credit card agreement shows a conversion charge of 2.5%.
After your financial institution converts your €1,000 purchase to Canadian dollars, it will cost $1,420. The 2.5% foreign currency conversion charge is applied to the $1,420 for a fee of $35.50. The total amount of your purchase is $1,455.50 in Canadian dollars.
How is the foreign transaction fee applied to foreign cash advances?
A foreign currency conversion charge may also apply to a foreign cash advance. Like all cash advances, you will be charged interest from the day you take the cash advance until you repay the amount in full. The interest rate on foreign cash advances is typically higher than in Canada.
Why isn’t my refund the same amount as my purchase out of the country?
Currency rates change on daily basis. If you return something you bought with foreign currency, the refund may be less than your original purchase amount.
Why should I get a no foreign transaction fee credit card?
If you travel frequently, or make a lot of purchases online from foreign merchants, you should consider a no foreign transaction fee credit card. The amount you save in foreign transaction fees will probably exceed the annual fee.
Is a U.S. dollar credit card better than Canadian dollar credit cards with no foreign transaction fee?
Some people use U.S. Dollar Credit Cards to avoid the foreign transaction fee. But all purchases made in U.S. dollars will require you to pay in U.S. funds. This means either converting your Canadian dollars to pay your statement balance, or opening and maintaining a U.S. dollar bank account. Unless you keep a certain amount of U.S. funds in that account, you will be charged account fees. For example, TD Canada Trust offers a Borderless Plan that requires a minimum account balance of $3,000 to waive the annual credit card fee and account fee.
For most of us, it’s easier and less costly to get a Canadian Dollar credit card with no foreign transaction fee!
What is the best no foreign transaction credit card?
All things considered, we rate the Scotiabank Passport® Visa Infinite as the best no foreign transaction fee credit card. While the Scotiabank®* Gold American Express® Card is better for rewards, the travel insurance and additional perks offered by the Passport® are hard to beat. The global acceptance of Visa also helps it to claim top spot over the competition.
No matter which one you choose, Scotia Rewards are some of the most flexible on the market – which makes it easy to redeem for travel or statement credits, amongst other options.
The Best Credit Cards in Canada
|Travel Rewards View all »||Sponsored Scotiabank®* Gold American Express® Card »||Sponsored Scotiabank PassportTM Visa Infinite* Card »||Sponsored TD® Aeroplan® Visa Infinite* Card »|
|Gas Rewards View all »||Sponsored American Express CobaltTM Credit Card »||Sponsored Scotia Momentum® Visa Infinite* Card »||Sponsored Triangle™World Elite Mastercard® »|
|Low interest View all »||Sponsored True Line® Mastercard® credit card »||TD Emerald Flex Rate Visa® Card »||Scotia Momentum® Mastercard ®* Credit Card »|
|Balance Transfer View all »||Sponsored True Line® Mastercard® credit card »||Scotiabank Value® VISA* Card »||Tangerine Money-Back Credit Card »|
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