Most Canadian credit cards charge a foreign transaction fee when you make a transaction with your card that is processed in a currency other than the Canadian dollar. This fee is an extra 2.5% on top of the price tag when you make purchases while on vacation and can significantly increase your total spending.
Mind you, the foreign transaction fee does not only pop-up when you are on a trip abroad. You could be dinged an extra 2.5% even when you are within Canada and you make purchases online from a merchant who takes payments in a foreign currency, or if the transaction is routed via a non-Canadian bank.
When combined with foreign exchange rates that are generally skewed to not favour you, this extra cost becomes a real pain!
Best Credit Cards With No Foreign Transaction Fees
Foreign transaction fees consist of a currency conversion fee charged by the payment processor (e.g. Visa or Mastercard) plus a fee from the issuing bank. Most credit cards end up charging you about 2.5% in fees, but in some cases, it is as high as 3%!
What this means is that if you end up spending $10,000 while vacationing abroad, you pay an extra $250 in foreign transaction fees you did not plan for. If for any reason you need to return stuff you bought in a foreign currency, this fee is again charged (so double) and 5% or more of your money goes down the drain.
To avoid paying these extra fees when making purchases or spending abroad, your best bet is to either use a no foreign transaction fee credit card, or a card that rewards you with enough points or cash back to offset the fee and leave you in positive territory.
While 0% foreign transaction fee credit cards are somewhat scarce in Canada, there are a few that are worth taking a look at.
1. Scotiabank Passport Visa Infinite Card
The Scotiabank Passport Visa Infinite became very popular after Chase shut down their Amazon Visa card last year. It offers the following features and benefits:
- No foreign transaction fees i.e. 0% FX mark-up
- Earn 30,000 bonus points with your first $1,000 in purchases in the first 3 months
- Earn 2 Scotia Rewards points on every $1 spent on eligible grocery, dining, and entertainment purchases, and daily transit
- Earn 1 Scotia Rewards point on every $1 spent on all other purchases
- Enjoy a complimentary Priority Pass membership plus 6 free VIP airport lounge visits per year (worth $379 per year)
- Earn an extra 10,000 bonus Scotia Rewards points when you spend $40,000 or more per year
- Travel emergency medical, trip cancellation, flight delay, delayed and lost baggage, travel accident, rental car collision/damage, hotel/motel burglary insurance
- Purchase security, extended warranty, and price protection
- Complimentary Avis Preferred Plus membership (5% to 25% off)
The Scotiabank Passport is clearly a premium card that comes with premium benefits. It’s one downside is the $139 annual fee. However, this is not surprising given its many features.
The initial bonus rewards of 30,000 points ($300 value) easily pay the annual fee for the first year. If you use the card and spend up to $40,000 per annum, you receive an additional 10,000 points ($100 value). These are in addition to the basic 1-2% rewards rate earned on your eligible spending.
One thing to note is that you will need a minimum annual income of $60,000 or a minimum household income of $100,000 to apply for this card.
Lest we forget, the Scotiabank Passport Visa Infinite card charges a 0% foreign transaction fee. When this is combined with its other premium features and insurance coverage, it qualifies as a very decent card.
2. Scotiabank Gold American Express Card
The Scotiabank Gold American Express ranks as one of the best travel rewards credit cards in Canada. Here’s what you get from the card:
- No foreign transaction fees (a savings of 2.5%)
- 5 points on every $1 spent on groceries, restaurants, and entertainment
- 3 points for every $1 you spend on gas, daily transit, and streaming services
- 1 point on every $1 spent on everything else
- 30,000 bonus points ($300 value) when you spend up to $1,000 in the first 3 months
- 10,000 extra bonus when you spend up to $7,500 in your first year
- Travel emergency medical, trip cancellation/interruption, delayed and lost baggage, travel accident, and hotel/motel burglary insurance
- Rental car collision loss and damage waiver
- Purchase security and extended warranty
The Scotiabank Gold American Express was recently refreshed to offer $0 FX mark-up fees. The lack of a fee for foreign currency purchases combined with its top-of-the-line 5% cash back on grocery purchases and comprehensive travel benefits, make this card one of the best deals out there.
This card comes with a $120 annual fee.
3. KOHO Premium Visa
The KOHO Visa is not a credit card but a reloadable prepaid card that works just as well. There is no minimum income requirement to apply for this card and your credit score does not come into play, making it very easy to obtain. The KOHO Visa and app offers:
- $0 monthly or $9 monthly fee for the premium card
- $0 foreign currency exchange fees
- Up to 2% cash back on all purchases
- KOHO Save and high-interest savings on your entire balance
- 1 free international ATM withdrawal/month
- 1.20% savings interest rate on your balance when you setup direct deposit
- Free automated savings and budgeting tool
- Free financial coaching
- Joint accounts
- Price matching program
- Access to Credit Building and Early Payroll
The KOHO Premium Visa card is great for travellers and saves you the 2.5% to 3% FX fee charged by your regular credit card. You save on ATM fees and can use the roundup feature on the app to save money as you spend. Best of all, you earn cash back on all your spending!
Read my detailed KOHO review.
Apply for the KOHO Visa (plus a 1% cash back bonus with promo code CASHBACK)
4. Home Trust Preferred Visa
The Home Trust Preferred Visa card is a no-fee card that waives the foreign exchange transaction fee. Some of the features of this card are:
- No annual fee
- No foreign transaction fee
- 1% cash back on all purchases with no annual limits
If you do not want to pay annual fees for a card and would also rather not pay unnecessary transaction fees while on vacation, the Home Trust Preferred Visa may be for you. Check out this review.
5. Rogers World Elite Mastercard
The Rogers World Elite Mastercard is no longer as good for foreign currency purchases as it once was. Starting in June 2020, it now offers cash back on only US dollar purchases at a lower rate of 3%.
It’s compelling features include:
- 3% cash back on purchases made in US Dollars (0.50% gain)
- 1.50% cash back on all other purchases
- Extended warranty and purchase protection
- Rental car collision/damage, emergency medical, trip interruption, and trip cancellation insurance
- $25 welcome bonus cash back when you make your first purchase within 3 months
The Rogers World Elite Mastercard has an okay level of cash back offers for a no-fee card.
One downside to note however is that you need to meet a minimum annual income requirement of $80,000 or $150,000 household) to apply for this card. Also, you now need to spend at least $15,000 annually to remain eligible.
Read my review of the Rogers World Elite Mastercard review.
6. Rogers Platinum Mastercard
The Rogers Platinum Mastercard is fairly similar to the Rogers World Elite but offers a bit less cash back rewards. If your annual income is less than $80,000 and you are looking for a credit card that offers good cash back on foreign currency purchases, this card is worth taking a look at.
Its features include:
- No annual fee
- 3% cash back rewards on purchases made in US Dollars
- 1.00% cash back on all other purchases
- $25 cash back when you make your first purchase within 3 months
When the 3% cash back earned on USD purchases is considered, the Rogers Platinum Mastercard still has a net 0.50% cash back gain after foreign transaction fees of 2.5% have been deducted.
If this card is of interest to you, also take a look at the Fido Mastercard which offers basically the same rewards.
7. HSBC World Elite Mastercard
This card is one of few no foreign transaction fee cards available in Canada. Its highlights include:
- $149 annual fee
- No foreign transaction fees
- Earn 3% in travel rewards on all eligible travel purchases
- Earn 1.5% in travel rewards on all other eligible purchases
- $100 annual travel enhancement credit
- Complimentary Mastercard Airport Experiences
- Unlimited Wi-Fi through Bongo at over 1 million hotspots worldwide
- 10% discount on select hotel bookings with Expedia and Agoda using your card
- Emergency travel medical, Baggage delay or loss, Trip cancellation, and trip interruption/delay insurance
- Car rental insurance
- Purchase protection and extended warranty
The HSBC World Elite Mastercard is apparently considered a premium card, hence its $149 annual fee. You also require an annual personal income of $80,000 (or $150,000) to apply for it.
Canadians have only a few cards to choose from when they are looking for a credit card with no foreign transaction fees.
If you are opposed to paying annual fees on a card, take a look at the Home Trust Preferred Visa. Brim Financial recently introduced a no-fee card that meets the no-fee criterion as well, however, user reviews of the card have not been great.
For a low-fee prepaid card that offers high-interest rates, up to 2% cash back on all spending and no-foreign transaction fees, try the KOHO Premium Visa Card.
Credit cards that charge foreign transaction fees but offset it with corresponding cash back on your foreign purchases and which also have no annual fee are Rogers World Elite Mastercard, Rogers Platinum Mastercard, and Fido Mastercard.
Lastly, a prepaid card option to directly spend foreign currency and avoid foreign currency exchange fees altogether is the CIBC Air Canada AC Conversion Card.