By Sandra MacGregor
It’s a ritual almost as anticipated as Thanksgiving itself: Black Friday cross-border shopping. While Americans gather around their dinner tables, loosening their belt buckles and digging into turkey, Canadians are heading in droves across the border to shop.
Lower tax rates and cheaper pricing have always made the U.S. an attractive shopping destination to deal-starved Canucks. The country’s price-busting power, however, goes into overdrive the day after American Thanksgiving. Like moths to a flame, Canadians join their neighbors to the south to give their credit cards a workout on the busiest shopping day of the year.
The Dreaded Foreign Transaction Fee
But for Canadians, are those Black Friday USA bargains more dud than deal? Many consumers from the Great White North may be unknowingly losing money when they shop internationally if they use the same credit card they normally rely on in Canada. Why? Most Canadian credit cards charge a foreign transaction fee (aka FX fee) between 2.5 to 3%. That’s right. Suddenly that flat-screen TV or laptop doesn’t look like such a great Black Friday deal when you add an extra 2.5 percent to the price (not to mention the gas it took to drive to the US and the lackluster Canadian exchange rate). Foreign transaction fees are imposed by the credit card issuer as a charge to convert your payment from the foreign currency into your own currency.
So, what can you do to avoid those FX fees? Well, if you’re thinking you can just nix the fee by staying home and waiting a few days for that other great American shopping bonanza known as Cyber Monday, you’re in for a big surprise. FX fees might also be charged when you shop online, if the retailer is based outside Canada and charges in American dollars. For example, when you use your credit card on sites like Amazon.com and beloved fashion retailer Net-a-Porter, you are still paying the added foreign transaction fee.
To make matters worse, your credit card company may make it difficult for you to figure out how much you’re actually being charged. Credit card issuers are loath to advertise that they charge you extra to shop internationally; on your statement, the fee is often lumped in with the overall purchase rather than as a separate transaction.
How to Avoid Losing Money to FX Fees
Does this mean it’s time to cry foul and say so long to Thanksgiving Black Friday deals? Not necessarily.
If you’re planning on going south to bargain hunt for Black Friday USA , contact your credit card company to determine if they charge foreign transaction fees—the answer is most likely ’yes’—and what percentage they charge.
If you do a lot of shopping in the States or travel to other international destinations, your best move is to get a credit card that doesn’t charge foreign transaction fees. Unfortunately, unlike in America, there aren’t a lot of Canadian credit cards that don’t have FX fees. But here’s a roundup of our top three:
This under-the-radar credit card is a standout value. Not only does it have no foreign transaction fees or annual fees, it also offers purchase protection: if the price of the item you buy drops after you make your purchase, the credit card issuer will reimburse you for the difference. The cash back rate is 1% on all purchases anywhere, with no cap.
While the card does technically charge a 2.5% foreign transaction fee, its 4% cashback rate on all foreign purchases more than makes up for the fee, because you end up with a net gain of 1.5% cash back on international purchases. You’ll also earn 1.75% cash back on any purchases in Canadian dollars, so the card is flexible while at home or abroad. To sweeten the deal, cardholders pay no annual fee.
Like the Rogers Platinum Mastercard, this card also technically charges a 2.5% foreign transaction fee, however it too features a 4% cashback rate on foreign purchases, negating the FX fee and then some. There is no annual fee and the card has an attractive $50 cash back welcome bonus.
Shop Smart on Black Friday USA 2017
You don’t have to let FX fees curb your itch to shop internationally, you just need to be smart about it. When shopping in Canada, it makes sense to use the card that offers the highest rewards or cash back rate. But when making purchases abroad or in a foreign currency, be a savvy shopper by using a card that doesn’t charge a foreign transaction fee—it’s a helpful way to ensure Black Friday doesn’t put you in the red.