Avoid Hidden Currency Exchange Rate Fees and Save Big
*Please note: As of 09/11/2017 it appears that Chase is no longer accepting applications for the Marriott Rewards Visa. We’ve sent an inquiry to Chase in an attempt to confirm or correct our presumption. We will continue to update this article as we learn more, but for now we can only recommend the Rogers Mastercard and Home Trust Preferred Visa for avoiding foreign transaction fees.
Going abroad? Shopping on U.S. websites? Between commissions, fees, and surcharges, ever felt like you were getting the short end of the stick when exchanging your Canadian dollars? Chances are you were. Most banks charge up to 3% in fees over and above the prevailing currency exchange rate. We found a simple, convenient, bank-beating strategy to reduce your exchange rate fees to 0% – really! GreedyRates.ca has compared the main currency exchange methods available to Canadians, revealing the fees of each. We found that while the initial currency exchange rate is done at market rates, your rate then includes an additional mark-up which can be as high as 9%! The mark-up is then blended into the exchange rate you see on your receipt, so consumers have little chance of figuring out how much the the bank or exchange bureau actually charged. Most Canadians are not aware they can do significantly better.
Are you getting the best currency exchange rate?
What we found was surprising. The best currency exchange rate available to Canadians is the use of a no foreign transaction fee credit card. It offers a near perfect foreign exchange rate. All you get charged is the foreign exchange rate for that day, set by Mastercard or Visa, which is based on the market rates as seen in Bloomberg, Reuters and the Central Banks. There is no additional foreign exchange fee. The worst places to exchange your money? The airport, hotels and your bank branch. The only credit cards in Canada that currently offer subsidized foreign transaction fees on credit card are the Rogers Platinum Mastercard and the Home Trust Preferred Visa. Unfortunately, none of Canada’s largest credit card companies (RBC, TD, CIBC, BMO, Scotia, Capital One, Canadian Tire or PC Bank) offer a credit card without a foreign transaction fee. They all charge a foreign transaction fee of 2.5%, on top of the exchange rate set by Visa or Mastercard. They do the same for debit cards either when making a purchase at a U.S. retailer or from an ATM.
As a result, when using your travel credit card out of country or at a U.S. online merchant, whether it be your Aeroplan, Avion, or Air Miles credit card, you may be earning 1%-2% in rewards per dollar spent, but you’re probably being charged about 2.5% per dollar spent in foreign transaction fees, for a net loss of 0.5-1.5% for every dollar you spend outside of Canada! The lesson? Avoid exchanging your Canadian dollars at the bank, taking out money at the ATM or using a credit card with foreign transaction fees while travelling or shopping online.
The best way to get the lowest currency exchange rate is to use a credit card without a foreign transaction fee. You’ll get the best currency exchange rate, the most convenience and you won’t have to worry about carrying cash in your wallet.
Our favourite Canadian credit card with a foreign transaction fee subsidy is the Rogers Platinum Mastercard:
- Unlimited 4% cash back on ALL purchases in a foreign currency
- Earn 1.75% cash back on all your purchases everywhere else, no caps, limits or categories.
- Apply your cash back as a statement credit OR to your monthly Rogers bill (Rogers & FIDO), Rogers & FIDO branded stores, and the Shopping Channel.
- Welcome bonus of $25 in cash back
- You will never have to pay an annual fee as long as your Rogers bill is set up as a pre-authorized payment
A close second is the Home Trust Preferred Visa Card. Not an actual bank, Home Trust keeps its juicy foreign transaction waiver a secret, not even displaying it on their website (don’t worry, it’s clearly stated in the terms and conditions). Here’s what else you’ll get from this hidden jewel for Canadian travelers:
- No annual fees, ever
- 1% cashback on all purchases, no matter where and no matter how much
- Travel benefits such as roadside assistance and liability insurance
Now that’s a bank-beating strategy!