Are Dual Currency Credit Cards A Good Idea For Canada?
The Financial Supervisory Commission of Hong Kong has approved the plan from Taiwanese banks to issue duel-currency credit cards, allowing cardholders to pay in self-designated foreign currencies, typically between the Taiwanese HKD and the Chinese RMB.
It will take between eight and 12 months for the new credit cards to become available since banks first have to overcome some technical barriers, the commission added.
The move is expected to help boost banks’ fee and interest incomes due to increased credit card purchases and foreign currency holdings, the commission said.
We thought this would be a great alternative to Canada’s U.S. Dollar card or the 2.5% foreign transaction fees most Canadian credit cards now charge cardholders. In fact, we’re convinced it would be a win-win for Canadian banks and cardholders alike.
We think the first bank that offers this type of card in Canada, on one of its core travel cards, would have a lot to gain. They would likely sustain an initial decrease to their foreign transaction fee revenue. But, they would also likely see an increase in new credit card accounts due to the attractiveness of the product, a rise in foreign denominated currency accounts, and incremental card usage by cardholders while travelling.
From the banks perspective, it would also be far more profitable than just removing the foreign transaction fee altogether, which is the trend in the United States. At least offering dual currency provides the banks with the opportunity to earn foreign conversion fees when cardholders convert their Canadian dollars back at the branch, and/or keep a U.S. dollar account open.
All in all, if this is a global trend, Canadian banks may just want to test it out. In the meantime we’ll just have to compare credit cards to find the best one for our needs.