Saving on Foreign Transaction Fees

Banks are expensive conveniences, especially when travelling outside one’s country. Travelling as a Canadian with Canadian debit and credit cards, the foreign transaction fees can add up. We don’t have as many options as some other countries for cards that give us a break. Most credit card companies charge 2.5% or more, over and above any interest you may pay. If you spent $1,000 on a trip, that’s $25 you could save. Better to have it in your pocket than the bank’s.

BEST CREDIT CARDS FOR TRAVEL

For a long time, there was only one credit card in Canada that didn’t charge a foreign transaction fee– Chase Canada. But recently, Rogers joined the game with their Platinum MasterCard.

The great news about Chase is that they offer a Visa card without an annual fee. Their Amazon Rewards card also offers 2% cash back on Amazon.ca purchases and 1% cash back per $1 spent everywhere else. The downside is the interest rate of 19.99%, but that’s pretty typical of any no-fee credit card. They also offer a Marriott Rewards card which also has no foreign transaction fee, but has a $120 annual fee, which is waived the first year.

The Rogers MasterCard does have an annual fee of $29, also with a 19.99% interest rate. This is waived annually if you’re a Rogers customer and your Rogers bill is set up as a pre-authorized payment. You will earn 1.75% cash back on all your purchases and receive a welcome bonus of $35 in cash back.

While great to have travelling, I also find my Amazon Visa card terrific for shopping outside Canada. Let’s face it, we can often get much better prices when shopping south of the border. A card that doesn’t add on an extra 2.5% only helps me save a few more dollars.

If you want to be totally covered, get both cards. I’ve run into places that wouldn’t accept my Visa card, only taking MasterCard and vice versa. That said, I travel with my Chase Visa and use my debit or cash otherwise.

DEBIT ACCOUNTS TO TRAVEL WITH

With debit cards, things are not as clear cut. Most banks will offer a card with no foreign transaction fees, but carry a high monthly fee. For example, TD Canada Trust offers an All-Inclusive card with the monthly fee of $29.95, which is waived if you maintain a balance of $5,000. That’s a lot of money to leave sitting in an account not earning any interest, but it might be worth it to either transfer some funds if you’re taking a trip under a few months’ duration and plan to use your debit card a lot. You could also consider changing your account type from one of the lower-cost accounts for the duration of your travels, eating the monthly fee for the benefits the account offers.

Below I’ve compared bank account fees at four of Canada’s big banks. I didn’t include credit unions, as they are provincial. Also, I did not list all of the accounts’ specific details, only those most pertinent to the foreign traveller. Please click the links to the banks to see full details.

COMPARE BANK ACCOUNTS

TD Canada Trust account fees:
1-866-222-3456

Similar fees at CIBC are:
1-800-465-2422

And Royal Bank of Canada:
1-866-826-2880

Lastly, Bank of Montreal.
1-877-225-5266
With any of their accounts, BMO offers no-fee travellers cheques.

After looking at the options available, the TD All-inclusive and Royal Bank’s VIP Banking accounts give the best value for money. These are premium accounts with a higher monthly fee. If you don’t have one, it may be worth switching accounts just for your period of travel. It’s easy to do through online banking, then you can switch it back to a lower priced account when you get home.

As a final note, it’s worth mentioning that travelling with a foreign credit card is not saving you fees unless you’re earning money in that currency. You will end up paying your credit card bill with Canadian dollars, otherwise, and will get charged the foreign exchange surcharge at that point.

If you have any other tips or tricks, or know of accounts offering great travel perks, please share them in the comments below. Happy travels. Here’s to saving money!