Foreign Credit Card Transaction Fees

April 1, 2015

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Many travel south in the winter to the US or abroad for many reasons. You may be planning to drive into the USA in the summer. You should be aware that most credit cards add a foreign transaction fee in addition to the exchange rate, when using your credit card outside of Canada for travel or simply ordering something online.

These charges are generally 2-3% over and above the exchange rate, which can seriously add much more to your travel expenses or a large purchase in the US or other foreign funds.

A foreign transaction fee is an extra charge added on after a credit card’s currency exchange rate is applied. Generally, American Express, Master Card and Visa set these additional transaction fees, to be added on after the card issuing financial institution sets the currency conversion rate.

Though Canada’s big five banks impose a standard 2.5 percent foreign transaction fee, you can get around these little-known exploitive fees by using certain credit cards which do not additionally charge them. Beware of returns too. Card issuers may re-apply the foreign transaction fee for refunds. Debit cards aren’t immune either.

Though the US and the UK are trending towards not allowing foreign transaction fees, Canada seems not to be moving in that direction yet. However the good news is that there are cards out there that do not charge a foreign transaction fee, such as Amazon.ca’s Visa offered by Chase.

Here is a short list of specialty credit cards that enable Canadians to avoid foreign transaction fees. JP Morgan Chase issues the first four cards listed below. You should do your own investigation before selecting a card as some may have an annual fee while many are also free of annual fees. Check out the list below for cards that are free of the additional foreign transaction fee.

• Marriott Rewards Premier Visa Signature Card
• Amazon.ca Rewards Visa Card
• Sears Financial MasterCard
• Sears Financial Voyage MasterCard
• BMO U.S. Dollar MasterCard
• TD U.S. Dollar Visa Card

How else can you mitigate foreign transaction fees?
Consider pre-paying while still in Canada for tours or package holidays in Canadian dollars.

Source: JP Morgan Chase

 

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