Within the comments of my popular top free cash back credit cards in Canada post, there is some discussion about the top “out of country” or “foreign currency” travel card in Canada. If you didn’t know already, most credit cards have a surcharge (around 2.5%) for any purchase that’s not in your home currency.
For example, if you are Canadian and travel to the US, most purchases while on your trip would be in USD. If you were to make the purchase with a typical credit card, the credit card would convert the purchase amount to your home currency (using the spot foreign exchange rate) AND add a 2.5% surcharge for the convenience of using a credit card. Maybe not a big deal at first, but if you regularly make USD purchases, the 2.5% surcharge is $25 for every $1,000 spent.
Capitalizing on this fee surcharge annoyance, a number of FREE credit cards have been introduced that offer 0% or reduced surcharge on foreign transactions. The picture on the top of this post may have given it away but from my research, there are four credit cards in Canada that are efficient to use while travelling out of country or making foreign currency purchases in general. Here are my favorites:
Best Credit Cards for Foreign Currency Purchases
To my knowledge, this was the first free credit card to be offered to Canadians that does not charge a foreign exchange (FX) fee. I like this card due to easy cash back redemption, and not being forced to redeem cash back against Amazon purchases (automatically receive a statement credit when you reach $20 cash back). The biggest downside is that it doesn’t have any insurance coverage. I personally use this card during US trips and it works like a charm.
- 0% surcharge on FX transactions (essentially 3.5% return when making purchases outside your home currency);
- 2% cash back on amazon.ca purchases;
- 1% cash back on everything else; and,
- Automatically receive a statement credit when you reach $20 cash back threshold.
- No insurance coverage; and,
- If this is not a main credit card, you could be waiting a while before you get $20 cash back.
This is a newish credit card offered by Rogers Bank, and really only geared towards Rogers customers. Technically, it may not belong in this list because it has a $29 annual fee, but the fee is waived if you charge a Rogers service to the card (the first year is free regardless).
What’s attractive about this card is the 4% cash back on foreign currency transactions, which works out to be a 1.5% net benefit after counting the 2.5% FX surcharge. What’s also attractive is the 1.75% cash back on everything else. For a pseudo-free credit card, 1.75% cash back is huge. Note though that the cash back accumulated is supposed to be used towards Rogers services, although some have requested and received a statement credit instead via telephone once a year.
- 4% cash back on all foreign currency transactions (note that they still charge a 2.5% on fx, so the net reward is 1.5% on foreign currency transactions);
- 1.75% cash back on everything else; and,
- $29 annual fee waived if you charge a Rogers service to the card (first year annual fee is automatically waived for all users).
- No insurance coverage; and,
- Cash back must be used towards Rogers products. Although some have reported to have phoned into Rogers Bank once a year to apply the accumulated cash back as a statement credit.
The Fido MasterCard is very similar to the Rogers MasterCard above, but with slightly less cash back and no annual fee to think about. 4% cash back on foreign currency transactions, which works out to be a 1.5% net benefit after counting the 2.5% FX surcharge. This card also offers 1.5% cash back on everything else. Note though that the cash back accumulated is supposed to be used towards Fido services, and you may be able to get a statement credit instead by phoning in (like the Rogers card).
- 4% cash back on all foreign currency transactions (note that they still charge a 2.5% on fx, so the net reward is 1.5% on foreign currency transactions); and,
- 1.5% cash back on everything else.
- No insurance coverage; and,
- Cash back must be used towards Fido products (statement credit may be available).
This is my overall favorite free cash back credit card in Canada right now. It offers up to 2% cash back on up to three categories of your choice, and 1% cash back on everything else. While it doesn’t offer 0% FX surcharge, instead of 2.5%, they have a reduced charge of 1.5%. What’s also attractive is that it has some insurance – purchase assurance and extended warranty. If you are against carrying multiple credit cards, this is a strong choice as a single go-to credit card.
- Earn 2% Money-Back Rewards on purchases in up to three 2% Money-Back Categories of your choice, and 1% Money-Back Rewards on all other purchases;
- No annual fee;
- No limit on the amount of Money-Back Rewards you can earn;
- Three 2% Money-Back Categories if you choose to have your Rewards deposited into your Tangerine Savings Account, or two 2% Money-Back Categories if your Rewards are deposited back onto your Credit Card (categories include: drug stores, restaurants, entertainment, furniture, gas, grocery, home improvements, hotels, public transportation and parking, recurring bill payments);
- Earn 4% Money-Back Rewards for the first 3 months in your chosen categories;
- 1.5% Foreign Conversion Fee (most cards charge 2.5%);
- Free Cards for Authorized Users on your Account; and,
- Purchase Assurance and Extended Warranty.
- Limited insurance coverage; and,
- While 1.5% surcharge on foreign currency transactions is better than most credit cards, it’s still 1.5% more than the cards above.
The competition for foreign currency purchases is pretty tight and the best card will really depend on your specific circumstances. If you are a Rogers customer, I can see the Rogers MasterCard being more attractive than the rest. The same can be said for Fido. However, if you aren’t using Rogers/Fido services, then it really comes down to the Amazon Visa and the Tangerine MasterCard.
Personally, although the Amazon Visa has less reward on foreign currency transactions than Rogers and Fido (1% vs 1.5%), the flexibility of the Amazon card wins out for me. However, I don’t mind carrying and using more than one credit card. If I were set on only using one free credit card right now, it would be the Tangerine MasterCard (Full review here).
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On the topic of credit cards, if you are interested in the generous and free PC Financial World Elite MasterCard (3% cash back at Loblaws group of companies), check out the limited-time $75 gift card sign up bonus (plus $20 in groceries) if you sign up through Rate Supermarket. More details here.