The Best Canadian Credit Cards for Avoiding Foreign Currency Fees in 2021
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Sometimes it pays to choose a card for what it doesn't have, and by that I mean foreign currency fees. Online shopping is becoming more and more prevalent, Canadians are travelling abroad more and more, and there is often a hidden cost involved that many don't consider. This cost comes in the form of a foreign transaction fee on your credit card which can add up, especially if you are making large purchases or regularly spend in a foreign currency. Typical foreign currency conversion fees on Canadian cards are around 2.5%. What's important to know, is with a little know-how, these foreign currency fees can easily be avoided. Here are the ways you can avoid these fees, either by using a credit card that doesn't have them or by switching some options when you're about to finalize an online purchase.
The best ways to avoid foreign currency fees and markups:
- Choose a credit card that doesn't have an extra fee
- Always pay in the local currency
- Use an app-based debit card with no conversion fees
Choose a credit card for what it doesn't have, instead of what it does
Most Canadian credit cards will charge you around 2.5% the value of the transaction if it's made in a foreign currency. This means even if you stay at home and buy something online in US Dollars or Euros you're still getting dinged the extra fee (read on to see how this can be avoided sometimes). There are a number of credit cards in Canada that don't charge anything extra when you pay in a froeign currency. Here's a comparison of some of those cards and their features:
|Brim Mastercard||Hometrust VISA||ROGERS Platinum Mastercard|
|Foreign Currency Fee*||0%||0%||2.5%|
|Signup reward value||$10 (with referral)||$0||$25|
|Free Boingo Wifi||Yes||No||Yes|
|Rental Car Insurance||Yes||Yes||Yes|
|Fee Disclosure||Click here||Click here||Click here|
|*Note that where the fee is 0% from the issuer, the Mastercard or VISA rate applies.|
The recommended card in this case is the Brim Mastercard because you'll save the most on foreign transaction fees over the life of the card. Additionally, because it uses the Mastercard exchange rate, it has the least markup when compared to VISA or American Express. When you sign up here for the Brim Mastercard, you get $10 in cashback rewards which can be used to pay your credit card bill.
Pay in the local currency, however counterintuitive it seems
Another tip to avoid the extra foreign currency markup when you're shopping online or paying abroad is the payment terminal or checkout markup. For example, when making a purchase and paying with your card through Paypal in a foreign currency, you will be offered the price in your home currency. The price in your home currency is normally inflated 4.5%. If you use a card with no foreign currency markup, you can choose to pay in the shop's local currency therby avoiding the Paypal markup.
The same principle applies when making a purchase with a pinpad in a store, or taking out cash at an ATM. Your rate will be lower if your card doesn't charge a foreign currency fee. If you are abroad and presented a value in your home currency, always be suspicious of the conversion markup. For example, for foreign cards in Canada, Moneris pinpads markup 4% from the base exchange rate. This markup applies to pinpads anywhere in the world.
Have an app-based debit card without conversion fees
Another tip, and if all else fails, an app-based card will do the trick. You just sign up on your phone, and you can load money as needed or withdraw back to your bank when you're done with it. A great place to start is with Stack. If you sign up by clicking here, you'll get an extra $5 when you register.