Best Canadian Travel Credit Cards to Avoid Foreign Exchange Fees

Hey Everyone!

Well, here goes my first “real” blog. It is mostly about my attempt at finding the best travel credit card for Sama and I when we go to Australia.

Credit Card

My first real enlightening read was from one of the biggest travel blogs out there, written by a fellow known as Nomadic Matt :  http://www.nomadicmatt.com/travel-tips/picking-a-travel-credit-card/

One of the most valuable points that I encountered was that most credit cards charge a 2.5% Foreign Currency Exchange Fee, which basically means that when you use a credit card outside of Canada, the bank transfers the Canadian funds to the currency of the country that you are spending yous money on (usually the US dollar for us Canadians, but in our case the Australian dollar).

So basically – I buy something from Australia for $10 AUS using my credit card – my credit card company uses the exchange rate (0.95 as of July 21st) to charge $9.53 CAD to my card and then adds another 2.5% (25 cents) to make the total charge to my credit card $9.78 CAD.  So essentially the bank is taking 2.5% of every hard earned dollar that I (anyone) spends out of Canada.

Now most of you are probably thinking , whats the big deal? Its only 25 cents. But if you are spending large amounts out of your home country, that amount will add up fast. If we spend $10,000 over 6 months or a year that would be $250! If we are each spending $10,000 in Australia over the next year then that is $500 – just to convert my money to another currency!

Luckily there is a way around this. Now Americans are extra lucky since it appears that they have many more options for credit cards/ rewards points ect. But in Canada I have found 3(sort of 4) credit cards that charge NO FOREIGN EXCHANGE FEE!

They are all offered through Chase:

  • The Marriott Reward Chase Visa Card
  • Amazon.ca Rewards Visa Card
  • Sears Financial Mastercard (also Sears Financial Voyage Mastercard)

Now the best one really depends on what company you would rather collect points on. For travelling I believe that it will be best to worry a little bit less about the rewards system and a little more about the foreign currency conversion fee! Most credit card companies offer rewards closer to 1% of your total spending – not 2.5%, and if you happen to shop/use any of the points you collect then even better!

Also check out my page on avoiding ATM fees while traveling!

About these ads

5 responses to “Best Canadian Travel Credit Cards to Avoid Foreign Exchange Fees

  1. The 2.5% charged by most credit cards companies is misunderstood by most people. Yes, it is an extra charge but so is exchanging cash currency. It will be hard to find an exchange place where the spread is less than 5%,thus 2.5% on either end.
    The 2.5% charged by credit card companies is actually a bargain.
    You did not mention from which exchange rate the 2.5% is charged. Dig a little deeper and you will find the base rate which sort of sits in the middle.

    • Yes Peter,

      While what you say is true – these cards basically exchange the money for FREE. You can use this card in a foreign country (Australia), AND pay it off in Canadian Dollars, skipping the whole exchange process. So you are still saving that 2.5% most credit cards charge ( or that even higher exchange fee for changing curency ).

  2. Further to my comments as to the above; the spread of the buy and sell of currencies at Canadian airports is notoriously bad. Some are as high as 8%. On either side thus 4%.

  3. Regarding the non 2.5% currency surcharge by some credit cards (as mentioned in your article) the rewards are less than most cards that do add on the 2.5%

    • Also the rewards on these cards aren`t quite as good as you can find in a regular rewards card. But the money you save from not paying that 2.5% is going to be WAY higher than you will be able to find in actual rewards.

      As an example – lets say that these cards will give you 0.5% rewards on any cash spent. This is terrible for a rewards card. When you compare that to a card that can make 2% cash back. But if you minus that you are losing 2.5% cash on EVERY TRANSACTION that you make in a foreign country, it still works out to -0.5% meaning that one of these credit cards will save you a whole 1% of your money when compared to a general credit card..

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s