Most credit cards charge 2.5% for currency exchange; a few charge 0%

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[Topic: credit card currency exchange fees]

The majority of credit cards issued in Canada charge a 2.5% fee for currency conversion. On an out-of-country trip, that can add up.

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A $1,000 US transaction might translate into $1,090 Canadian. By the time the charge appears on your credit card statement, another $27.25 will have been added for the currency exchange fee.

But there are a few credit cards that do not impose the 2.5% fee. You just pay whatever the currency exchange works out to for that particular credit card brand.

The cards that I’m aware of that do not impose the 2.5% fee are all issued through Chase Canada, a unit of the U.S. bank JPMorgan Chase.

None of them carry the Chase brand. Instead, the cards have logos for Amazon.ca Visa, Sears Financial MasterCard, and Marriott Rewards Premier Visa.

I used one of those cards on two overseas trips and figure that I saved over a hundred dollars in fees. (I have no financial investments in Chase or in any of the card issuers; I’ll skip mentioning which card I use because a] I don’t want to suggest a favourite and b] I’m a little paranoid and I don’t want you to know which one I use.)

But depending on what you’re buying, the no-fee option might not be the best value.

The credit card world is a thicket of rules, difficult-to-compare benefits, and varying annual fees.

Some cards offer points that can be used toward airline tickets, hotel rooms and a variety of discounts. Some provide travel, health and car rental insurance, plus extended warranties.

The 0% currency exchange fee cards offer fewer of those features.

So, it might be worthwhile to use a card that includes travel and health insurance when you buy airline and train tickets, or rent a car. And one with an extended warranty feature to buy an electronic device.

But if you’re wandering out-of-country, a no-exchange-fee card makes sense for groceries, restaurant meals, clothing, tickets to attractions and shows. From homebase, you could use that card to pay for subscriptions to foreign magazines and mail-order items. 

Sometimes, 0% is good; sometimes 2.5% might be worth it.

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Rewards Canada is a website devoted to examining travel rewards programs, including credit cards that offer travel benefits. It has an annual feature called “Canada’s Top Travel Reward Credit Cards” None of the 0% currency exchange fee cards are on the list.

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Visa has a currency exchange calculator, which gives an indication of the exchange rate that might be charged on a Visa card on a particular day. There’s a field to enter a bank fee of between 0% and 5%, which suggests that some banks are charging not merely 2.5%, but up to 5%.

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Amazon.ca rewards Visa card

Sears Financial MasterCard

Marriott Rewards Premier Visa card

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MoneySense has advice on how to pay for things when you’re travelling.

So does Rick Steves, whose travel column appears every Saturday in the Times Colonist Travel section. He touts the usefulness of cash. Many places in Europe don't accept credit cards or prefer cash, he says.

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My previous posts are here.

 

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