Canada’s 5 Best No Foreign Transaction Fee Credit Cards

No Foreign Transaction Fee Credit Cards: What You Need to Know

When choosing a credit card with no foreign transaction fees, you should familiarize yourself with what benefits a no-FX credit card can offer, what features to look out for, and how no-FX credit cards can fit into an optimized overall credit card strategy.

Why get a credit card with no foreign transaction fees?

Currency conversion fees are a quick way to chip away at your precious travel budget, whether it’s ATM withdrawals or purchases on your card.

When you’re spending abroad with your credit card, all transactions must be converted from the local currency to Canadian dollars before appearing on your account statement. Most cards levy a 2.5% foreign transaction fee on top of the spot rate.

For example, let’s say a purchase priced at $75 (USD) converts to $100 (CAD). Ultimately it’ll be charged as $102.50. Instead, cards with no foreign transaction fees will convert transactions to Canadian dollars at the mid-market rate (as set by the bank or payment network), without a surcharge – in that case, you’d only be charged $100.

Cards without these fees are indispensable for travellers, as they effectively represent a 2.5% discount on all of your spending while travelling out of the country.

They’re also useful at home. If you do any online shopping at retailers based outside of Canada who charge prices in other currencies, you’d be subject to conversion fees unless you use one of these cards.

What should you look for in a credit card with no foreign transaction fees?

No foreign transaction fees itself is the obvious feature to look for, but not all of these cards are created equal.

There are a few basic no-fee cards that fit this bill, but the lack of foreign transaction fees is usually their only notable feature.

A select handful of travel-oriented cards have no foreign transaction fees, but it’s hardly the standard in Canada. Don’t assume that all travel cards have this perk, or you’ll be sorely disappointed; indeed, most of the highest-end premium travel cards still impose a 2.5% FX fee.

Beware that not all credit cards earn rewards the same way on foreign transactions.

Some cards, like the Scotiabank Gold American Express® Card, earn different rewards rates for foreign currencies. You don’t get a category bonus if the purchase isn’t in Canadian dollars.

Other cards, like the Rogers Red World Elite® Mastercard®, can be the opposite: they may actually offer higher rewards on foreign transactions, but don’t waive the conversion fee. The higher rewards are meant to offset the fee.

On these cards, if you have to return an item, you’d be dinged for the conversion twice, once each way, with no rewards to show for it and a total loss of 5%. These cards are much better for daily travel spending, and not for online shopping or souvenir purchases. Instead, a true no-FX card is much more versatile.

What’s the optimal strategy for credit cards with no foreign transaction fees?

No foreign transaction fees is a relatively rare feature on Canadian credit cards. It’s rather frustrating to be dinged an extra 2.5% on all your spending when you’re abroad, so it’s a good idea to leave room for at least one credit card with no foreign transaction fees in your wallet.

Ideally, you’ll want a credit card with no foreign transaction fees that also earns strong rewards on your foreign spending, as well as some useful benefits that you’ll get value out of. Without these, the no-FX benefit on its own can often struggle to justify a card’s annual fee.

For example, the trade-off between the Scotiabank Passport® Visa Infinite* Card and the Scotiabank Gold American Express® Card (both of which have no foreign transaction fees) is that the former has a lower 2% bonus earning rate that also applies on foreign purchases, whereas the latter has higher bonus earning rates of up to 5%, but they only apply on purchases made in Canada. Abroad, you’ll only earn 1%.

Depending on how much you travel internationally, you might well prefer the Scotiabank Passport over the Scotiabank Gold Amex, since it’ll be a better partner along your international trips with its higher earning rate, airport lounge benefits, and wider global acceptance on the Visa network.

Alternatively, you may also consider US credit cards, where the lack of foreign transaction fees is much more commonplace on both premium travel credit cards and basic no-fee cards alike. You can use those US cards in Canada, or anywhere else, without additional fees.

However, you’d still have to consider any costs involved in exchanging Canadian dollars to US dollars in order to pay your credit card bill, including fees, the spread, and currency fluctuations.

Either way, a savvy traveller always makes sure they have at least one credit card with no foreign transaction fees on hand for their international trips, tailored towards their foreign spending volume, tolerance for annual fees, and other benefits they might value.

Frequently Asked Questions

Below are some questions we frequently hear from readers about the best credit cards with no foreign transaction fees in Canada.

What will the foreign exchange rate be?

Conversion rates are set by Visa, Mastercard, and American Express. They’re very close to the true mid-market rate, often within tenths of a percent, and are usually much better than most other ways to exchange currency when you travel.

When is the foreign exchange rate determined?

The transaction will be converted to Canadian dollars at the time it is settled and posts to your account, not at the time it was authorized.

Will I get good rates on purchases in all currencies?

For all foreign currencies other than US dollars, credit cards will process two conversions: first from the underlying currency to USD, then from USD to CAD. You may be subject to a negligible spread on both conversions, but no additional fees.

Can I use cards with no foreign transaction fees anywhere in the world?

These cards all run on either the Visa, Mastercard, or American Express payment networks. They’ll be accepted at any merchant where Visa, Mastercard, or Amex is accepted, respectively.

If I’m offered the choice to pay in the local currency or to pay a converted CAD/USD amount, what should I do?

Always choose to pay in the local currency. The converted CAD/USD option is known as “dynamic currency conversion”, and is almost always a terrible deal that uses a very unfavourable exchange rate.

If you’re paying with a credit card that has no foreign transaction fees, you’ll be much better off paying the correct amount in the local currency and then having that converted into CAD/USD on your credit card bill based on the mid-market rate.

Can I use credit cards with no foreign exchange fee to buy foreign currency?

You shouldn’t. If you purchase cash from a currency broker, or use an ATM to withdraw from your credit card, those would be considered cash-like transactions. You’ll be charged a cash advance fee (usually a flat rate), and interest on the cash advance charge will begin accruing immediately (unlike regular purchases which have a grace period until your statement payment is due).

^†Terms and conditions apply. Refer to the card issuer’s website for complete, up-to-date information.