Debit cards with no foreign transaction fees in Canada
Prepaid cards work like debit or credit cards and often come with low or no foreign transaction fees.
Foreign transaction fees can really add up if you travel frequently or shop online at non-Canadian stores. You’ll have a hard time finding debit cards with no foreign transaction fees in Canada, but the good news is that prepaid cards — which work like debit or credit cards — often come with low or no foreign transaction fees.
Get a prepaid card with no foreign transaction fees
Similar to a debit or credit card, a prepaid card lets you make purchases and manage your money. Prepaid cards let you spend using funds that have been deposited into your account, so you can only spend what you have. Unlike many debit and credit cards in Canada, prepaid cards often come with low or no foreign transaction fees.
Alternative: Credit cards with no foreign transaction fees
Credit cards, like debit cards, often attract international transaction fees and ATM fees. Credit cards can give you access to extra funds outside of your available debit balance, which can come in handy during emergencies.
Since a credit card gives you access to money you don’t really have, overspending can become a problem. You could end up accruing high amounts of interest if you’re unable to pay your balance in full. Also, be aware that using your credit card for ATM withdrawals or buying foreign currency or traveller’s cheques is considered a cash advance, which comes with an additional fee.
But do any credit cards not charge a foreign transaction fee? The answer is yes.
The good news is that if you’re searching for a Canada credit card with no foreign transaction fee, there are a few options to choose from. Compare a range of cards to find one that’s right for you.
Alternative: Travel money cards
A travel money card gives you the ability to load multiple currencies onto a single card to avoid currency conversion fees, and you can lock in exchange rates before you travel. Depending on the card you’re using, you may be charged a fee when loading funds onto the card or withdrawing money from ATMs. Make sure you compare your options, as travel money cards have varying exchange rates and fees.
Fees for making international purchases with a debit card
While using your debit card when overseas gives you quick and easy access to money, it pays to find out just how much you’ll end up paying in other fees and costs:
- Foreign transaction fee. This fee is a combination of what your card provider charges along with what the payment processor charges. You have to pay this fee when you use your card to pay in foreign currency, which your card provider converts into pound sterling. It is usually between 2% and 3% of the transaction value.
- Overseas ATM fees. When using your debit card to withdraw money from an overseas ATM, the owner charges a fee, as does your card provider. Lower these fees by withdrawing from your provider’s international ATM partners (if there are any), withdrawing large sums to reduce your ATM visits or switching bank accounts to one that charges no or low international ATM withdrawal fees.
- Foreign exchange rate margin. When converting currencies, banks make money by deducting a small fee (also called a margin or markup) worth a small percentage of the exchange rate between 2 currencies. A high exchange fee means a poor exchange rate and less foreign currency for each Canadian dollar you convert.
- International money transfer fee. If you’d like to send money to someone overseas from your regular bank account in Canada, bank wire transfers can cost $50 or more. Online international money transfer services usually charge lower fees and often support more sending and receiving options.
Pros and cons of using debit cards with no foreign transaction fees
A no foreign transaction fee debit card or prepaid card can come in handy, but there are some drawbacks.
- Save when shopping online. A no foreign transaction fee debit card or prepaid card can lead to significant savings if you frequently buy from foreign retailers.
- Save when travelling. Debit cards with no foreign transaction fees make it easy to spend overseas like you would at home without worrying about being hit with conversion fees.
- Avoid overspending and paying interest. With a debit card, you’re limited to spending what’s in your account. This is unlike a credit card, which lets you spend borrowed funds that have to be repaid with interest.
- No transfers required. A debit or prepaid card gives you direct access to money in your bank account, so you don’t have to worry about loading foreign currency onto your card from another card or account.
- No conversion required. Using your debit card to pay in foreign currency is easy and does not require complicated calculations. Your card provider does this for you using current exchange rates.
- No access to extra emergency funds. You can only access funds in your bank account. In an emergency, a credit card could work better.
- Limited choice. While a number of Canadian financial institutions provide debit cards, not many offer cards with no foreign transaction fees, so your choices remain limited.
When currency is converted, banks charge a foreign transaction fee, which is usually around 2.5% of the transaction amount. It’s possible to reduce foreign transaction fees with a prepaid card, which works like a debit or credit card.
If you’re looking for an alternative to debit cards with no transaction fees, consider getting a travel money card or a Canada credit card with no foreign transaction fees.
Frequently asked questions about debit cards with no foreign transaction fees
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