Here in Canada, the vast majority of credit cards will charge a 2.5% fee on transactions denominated in a foreign currency. Whether it’s the Big 5 banks, independent issuers like American Express, or smaller financial institutions, the 2.5% foreign transaction fee is pretty much the norm across the industry.
Some issuers might tack on the fee in a separate charge, while others will incorporate the markup directly into the FX rate that they use. Either way, you’re paying an extra 2.5% on all your foreign purchases that you don’t need to be paying.
With Chase Canada exiting the market earlier this year, let’s have a look at the best credit cards with no foreign transaction fees – as well as other potential solutions for foreign spending – that remain.
The Scotiabank Passport Visa Infinite
Scotiabank’s latest premium travel credit card came out earlier this year, and it marks the first product offered by the Big 5 banks to have no foreign transaction fees.
Instead of charging you a 2.5% markup on FX transactions, the Scotiabank Passport Visa Infinite simply converts the transaction amount at the Visa FX rate, which is negligibly different from the mid-market rate.
You’ll earn a minimum 1% return on all purchases on the card, with a higher 2% return available on grocery stores, dining, entertainment, and transit purchases.
The card also offers 25,000 Scotia Rewards points as a signup bonus when you spend $1,000 in the first three months, which is worth $250 in travel credits. I’ve raved about the Scotia Rewards program in the past and how it compares favourably to other banks’ points programs, because it allows you to retroactively apply points to any travel purchase rather than forcing you to book travel through its own portal. In light of this, I’d value the signup bonus at pretty much exactly $250.
In addition, the card also comes with a complimentary Priority Pass membership together with six free lounge visits per year. It therefore serves as a great card to get yourself airport lounge access if you don’t currently hold the American Express Platinum Card or the Business Platinum Card.
The six passes can be used by the primary cardholder and any guests, so you could use this for six Priority Pass lounge visits for yourself, three visits for you and a guest, a single visit for a group of six travellers, etc.
Throw in the comprehensive travel insurance benefits, including comprehensive emergency medical insurance (even for individuals aged 65+!) as well as flight delay insurance of up to $500, and the Scotiabank Passport Visa Infinite is my preferred choice for all my foreign transaction needs.
The downsides? Like all Visa Infinite products, the Scotia Passport requires a minimum of $60,000 annual personal income or $100,000 annual household income to be eligible, which might be an obstacle for some. The $139 annual fee – reduced to a net $89 if you apply via Great Canadian Rebates – is also not ideal, although it can easily be justified if you spend significant amounts on foreign purchases every year.
The HSBC World Elite MasterCard
I recently wrote about the HSBC World Elite MasterCard, and of course the lack of foreign exchange fees was one of the card’s biggest perks. HSBC uses the MasterCard FX rate for all foreign transactions, which in fact tends to be, on average, closer to the mid-market rate than Visa’s (although again the difference is negligible).
You’ll earn a minimum 1.5% return (in the form of HSBC Rewards points) on all purchases on the card, with a higher 3% return available on travel purchases.
Until December 31, the HSBC World Elite MasterCard is also offering a first-year fee waiver together with a pretty insane signup bonus that totals up to 75,000 HSBC Rewards points, albeit at a high minimum spending requirement of $10,000 in the first 120 days.
If you do successfully meet that requirement, you’ll earn a total of 105,000 HSBC Rewards points, which is worth at least $525 in travel credits. (Quebec residents don’t need to meet any minimum spending requirement to earn the 105,000 HSBC Rewards points, although they must pay the first-year annual fee of $149.)
Similar to Scotia Rewards, HSBC Rewards is also very user-friendly in the sense that the points can be retroactively applied against travel charges at the cardholder’s will. As an added perk, HSBC Rewards points can be transferred to a handful of frequent flyer programs as well, including British Airways Avios.
Compared to the Scotia Passport, the HSBC World Elite’s lounge benefits aren’t quite as good, since you still need to pay for each lounge visit under the MasterCard LoungeKey program. Moreover, as eagle-eyed reader Jian had pointed out, the insurance benefits don’t include flight delay coverage, which makes this less good of a travel credit card than it has the potential to be. Lastly, the minimum World Elite income requirement of $80,000 personal or $150,000 household could also be prohibitive.
In my mind, the HSBC World Elite and the Scotia Passport are pretty much tied for first place in terms of the best all-round credit cards with no foreign transaction fees.
Both have their respective strengths and pitfalls: the HSBC World Elite has a killer year-end bonus albeit with a tough minimum spend outside of Quebec, whilst the Scotia Passport has a lower income requirement and boasts stronger travel perks overall.
If you’re looking for a premium travel credit card with no foreign transaction fees, I’d recommend picking one of these two depending on which is a better fit for your exact situation.
The Rogers World Elite MasterCard
Another decent credit card for foreign spending purposes is the Rogers World Elite MasterCard. While the card technically does have a 2.5% foreign transaction fee, it offsets this by offering 4% cash back on foreign purchases, meaning that you’re netting an effective gain of 1.5% in cash back.
While the signup bonus of $25 is pretty measly, the card excels in other areas: it has no annual fee and also offers a very respectable 1.75% cash back on all purchases. For individuals who like earning cash back on their purchases, you’ll be hard-pressed to find another card in Canada that offers more than 1.75% return across the board.
Personally I’m all about maximizing Miles & Points, and so I feel kind of “eh” about this card because of the emphasis on cash back rather than points. But I can totally see the appeal of this card for one particular reason: the lack of an annual fee makes it a great card to keep around forever for the sole purpose of avoiding foreign transaction fees.
Indeed, if you grabbed either the Scotia Passport or the HSBC World Elite, you’d need to consider whether to renew it every year afterwards for the not-insignificant sums of $139 or $149, respectively. You’d have to weigh up how much money the card saves you on foreign transaction fees against the cost of the annual fee to decide whether to keep it or not.
If you signed up for the Rogers World Elite, you’d just keep the card around forever purely for the savings on foreign transaction fees. Building a long account history with a no-fee credit card would also help you increase your average age of accounts and keep your credit in good health.
I’m sure the late Chase Amazon.ca Visa Card used to serve this exact purpose for many of us before it was shuttered, and the Rogers World Elite can be seen as a like-for-like replacement in that regard.
Like its HSBC counterpart, though, the Rogers World Elite comes with a minimum income requirement of $80,000 personal or $150,000 household. I’d give it a close third-place finish behind the other two cards, although the card’s suitability as a “forever card” for FX purposes means that it’s not by a very large margin.
Other Credit Cards with No Foreign Transaction Fees
There are few other products and alternative methods worth mentioning. First off, there are a few credit cards in the marketplace that are offered by smaller issuers that emphasize their lack of foreign transaction fees as a selling point. These include the Home Trust Preferred Visa and the Brim MasterCard.
Given how stubbornly the Big 5 banks have stuck to their guns with their FX fees over the years (the recent breath of fresh air that is the Scotia Passport notwithstanding), it’s no wonder that 0% foreign transaction fees is seen as an easy differentiator by fin-tech upstarts around the country.
The problem is that these small-time operations can be rather unreliable – indeed, Home Trust customers routinely complain of terrible customer service, whereas Brim reportedly took months to send credit cards to customers after approving their applications.
When you’re a small player in the market, you need to be working all angles to build some credibility, and to me Home Trust and Brim simply haven’t been doing that. Maybe you’ll find joy using these products and taking advantage of their 0% foreign transaction fees, but I personally haven’t bothered to deal with them for that reason.
Meanwhile, US credit cards could potentially be a good solution for foreign spending, but only if you have access to USD at a competitive exchange rate.
Most US-issued premium credit cards don’t charge any foreign transaction fees, so you won’t pay any currency spread when making the purchase itself, but rather when you convert CAD to USD to pay off the card. Services like VBCE, Knightsbridge, and TransferWise provide an exchange rate of close to 1% for this conversion, which is better than the 2.5% that the Canadian banks would otherwise charge, although not as good as the above-mentioned credit cards with no foreign transaction fees.
If you do have access to USD at a more competitive rate (such as if you get paid in USD, or if you know a bank employee who can help you get USD at the mid-market rate), then this could be your go-to method for foreign spending, since the rewards you earn on US credit cards tend to be much more competitive as well.
Lastly, the Stack Prepaid MasterCard is worth a mention, since you can load up Canadian funds and make foreign purchases at the MasterCard rate with no markup – and you get a free $20 signup bonus as well.
Of course, you also won’t be earning any rewards on those purchases since it’s not a credit card, so ideally you’ll want to pair the Stack card (for foreign ATM withdrawals) with one of the above credit cards (for foreign online and point-of-sale purchases) when you’re travelling abroad.
Whether you’re travelling internationally, buying flights from foreign websites, or taking advantage of the cheap shopping south of the border, you really don’t want to pay an extra 2.5% in pesky foreign transaction fees if you don’t have to. The options here in Canada really aren’t as straightforward as back when Chase Canada was still around, but you can’t go wrong with one of the Scotia Passport Visa, the HSBC World Elite, or the Rogers World Elite as your primary solution for foreign spending.