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.
In this article, we’ll take a look at the best Canadian credit cards with no foreign transaction fees, as well as other potential solutions for foreign spending that might pique your interest.
In This Post
- 1. Scotiabank Passport Visa Infinite
- 2. Scotiabank Gold American Express
- 3. HSBC World Elite MasterCard
- Other Credit Cards
1. 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, with an additional 10,000 points available if you were to spend $40,000 annually on the card (which would probably only apply to the small segment of cardholders).
I’ve raved about the Scotia Rewards program in the past and how it compares favourably to other banks’ in-house 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 Scotia Passport has an annual fee of $139, which is not waived for the first year, but can be justified with the card’s No FX Fee feature if you happen to spend significant amounts in foreign currencies per year. There’s also a minimum annual income requirement of $60,000 (personal) or $100,000 (household) to qualify for this Visa Infinite product.
If you’re interested in the Scotia Passport, I’d be grateful if you considered using the Prince of Travel affiliate link to apply, which goes a long way towards supporting the website. Alternatively, you may also check websites like Great Canadian Rebates to see if any of their cash-back offers on this card might pique your interest.
2. Scotiabank Gold American Express
In 2019, Scotiabank refreshed their popular Scotiabank Gold American Express product to add the No FX Fee feature to this card as well, solidifying their reputation among the Big 5 banks for being the most friendly to foreign spending.
Unlike Visa and MasterCard, the American Express payment network doesn’t seem to disclose their exchange rates online, but one can safely assume that the exchange rate will be very close to the fair mid-market rate, with any difference being negligible.
This product is well-known for its highly rewarding “5-3-1” earning categories, which will earn you 5 Scotia Rewards points per dollar spent on dining and entertainment, 3 Scotia Rewards points per dollar spent on gas, transit, ridesharing, and streaming services, and 1 Scotia Rewards point per dollar spent on everything else.
However, it seems that the elevated earning rates on the Scotia Gold Amex aren’t applied to purchases made in a foreign currency, so that’s why I ultimately rank the Scotia Passport higher, whose 2% bonus category does apply on foreign purchases.
As with the Scotia Passport, the Scotia Rewards points you earn on this card are highly flexible and can be offset against any type of travel purchase retroactively at a rate of 1 cent per point. These points are therefore very useful for booking travel outside of the flights and hotels that you’d book with the traditional award programs.
What about the signup bonus? Well, we’ve historically seen signup offers on the Scotia Gold Amex higher than the currently available 20,000 Scotia Rewards points after spending $1,000 in the first three months, which isn’t really enough to justify the $120 annual fee. Therefore, unless you’re in a rush to get this card, I’d recommend waiting for a higher offer to come around.
When the time comes, if you’re interested in the Scotia Gold Amex, I’d be grateful if you considered using the Prince of Travel affiliate link to apply, which goes a long way towards supporting the website. Alternatively, you may also check websites like Great Canadian Rebates to see if they have cash-back offers that pique your interest.
3. HSBC World Elite MasterCard
The HSBC World Elite MasterCard is a highly versatile credit card with frequent elevated signup bonuses, and the lack of foreign exchange fees is 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.
The card also routinely puts on promnotional signup bonuses, the highest of which came in at the level of 105,000 HSBC Rewards points in December 2018, which is worth at least $525 in travel credits. More recently, we’ve seen signup bonuses like 60,000 points (worth $300) and 90,000 points (worth $450), so it’s definitely worth getting this card when one of the higher bonuses come around.
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 and Cathay Pacific Asia Miles.
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, 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, all three cards among the Scotia Passport, the Scotia Gold Amex, and the HSBC World Elite represent excellent choices for avoiding foreign exchange fees.
Each has their respective strengths and weaknesses, and none is really a clear winner over the others, so one potential strategy could be to cycle through all three cards continuously, collecting the signup bonuses while always keeping one of the cards open for your foreign spending needs.
Other Credit Cards with No Foreign Transaction Fees
There are few other products and alternative methods worth mentioning. First off, there are a few products that were viable options for foreign spending, until they were devalued and no longer worth considering.
The Home Trust Preferred Visa also has no foreign exchange fees and no annual fee, but as of 2020, it also doesn’t offer any rewards at all on foreign spending, so you’d definitely be better off going with one of the above-mentioned products instead.
Meanwhile, the Rogers World Elite MasterCard recently moved to reduce its 4% cash back on FX purchases to a lower 3% for USD purchases and 1.5% for other currencies, as of June 2, 2020. Previously, the 4% cash back would offset against the 2.5% FX fee to give you a net 1.5% positive return, but with the recent round of changes, this card is no longer a viable option for your foreign spending either.
There are still 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, such as 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 from Scotiabank 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 – Brim reportedly took months to send credit cards to customers after their applications were approved. You might be able to save a paltry amount of fees 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.
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 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 Scotiabank and HSBC credit cards (for foreign online and point-of-sale purchases) when you’re travelling abroad.
Finally, it’s also worth asking the question as to whether you need to be avoiding foreign exchange fees on your foreign spending in the first place. Indeed, there’s a case to be made that as with any domestic spending in Canada, you should simply put your purchases on whichever credit card’s minimum spending requirement you’re working towards at the moment.
Think about it: if your spending were going towards the $7,000 minimum spend on the Amex Business Platinum to unlock a bonus of 75,000 MR points, wouldn’t that be hugely worthwhile compared to the 2.5% fees that you pay? A little food for thought.
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.
There really aren’t too many good options here in Canada, but you can’t go wrong with one of the Scotia Passport Visa, the Scotia Gold Amex, or the HSBC World Elite as your primary solution for foreign spending.
Brim, Stack, and US credit cards provide a few other viable options, and ultimately you should also consider whether the trouble of avoiding FX fees is worth it compared to keeping things simple and aiming to complete as many minimum spends as possible regardless of whether the spending is domestic or foreign.