Accessing your money overseas — whether it’s online shopping at a foreign store from home or withdrawing cash at an overseas ATM — can get pricey. Familiarize yourself with the fees you could be facing, and consider switching to a more competitive chequing account with no foreign transaction fee if the costs are starting to add up.
What is a foreign transaction fee?
A foreign transaction fee, also called an FX fee, is charged to your account when a currency conversion takes place. For example, if you buy something online from the US and your bank needs to process the payment in USD instead of CAD, it’ll charge you a fee for making this exchange. Although foreign transaction fees vary by institution, they’re usually around 1-3%.
How to avoid foreign transaction fees
If you’re stuck paying a foreign transaction fee when you swipe your card, here are a few ways to avoid them:
Exchange currency before you leave Canada. Converting money at your home bank before you head off overseas could save you the conversion fee.
See if your bank has any foreign partnerships. Some banks partner with other institutions to bring their customers fee-free access overseas. For example, Scotiabank is a founding member of the Global ATM Alliance. When you’re travelling outside of Canada, you can use the ABMs of the international banks in the Alliance, and you’ll skip the surcharge and save on access fees.
Get a new chequing account. If foreign transaction fees are eating into your bank account, you may want to consider getting a debit card with no foreign transaction fee. That way you can avoid the fee and keep more money in your pocket.
What are the features of debit cards with no foreign transaction fee?
Chequing accounts with debit cards geared toward users who make foreign transactions generally include features such as:
Low currency conversion fees. Some debit cards have low fees or waive these fees altogether.
Competitive exchange rates. Using a debit card from a bank that charges exchange rates as close as possible to the mid-market rate can save you a considerable amount of money on foreign transactions.
Global money transfers. If you regularly make foreign purchases or payments then you may want to look for a bank that offers low-cost or free international transfers.
Rewards programs. Some debit cards let you earn rewards points for eligible purchases which you can use to claim travel benefits. Take a look at whether your card is linked to a frequent flyer program or a dedicated provider rewards program.
Other fees to watch out for
In addition to foreign transaction fees, look out for the following when traveling abroad:
Some banks will charge you a fee as high as $5 or more for using a foreign ATM, which you’ll have to pay on top of the fee you’re charged from the ATM provider. These fees can be charged any time you use an ATM, including to withdraw money, transfer money or just check your balance. To save on these fees, you can withdraw a large amount of money when you visit a foreign ATM to limit the number of transactions you need to make.
Currency conversion fees are charged each time you make a transaction where the bank needs to convert your money into a different currency. Most banks will charge currency conversion fees as a percentage of the amount you withdraw or spend. These fees can be charged on their own if you’re shopping online at a foreign store or purchasing something in person while traveling.
They can also be added on top of ATM fees if you withdraw money while out of the country. Most banks charge around 3% for using a foreign currency, but accounts geared towards travelers can sometimes come with lower or no conversion fees.
Banks also make money by adding a margin on top of the real exchange rate when transferring one currency into another. For example, if $1 CAD is currently worth EUR€0.88, your bank might exchange your money at $1 CAD = EUR€0.87 and keep the difference. While this cost is not as transparent, if your bank is offering a poor exchange rate you could be losing money when using your debit card overseas.
If you need to send money to someone overseas, your bank can charge you an international money transfer fee on top of the currency conversion fee and exchange rate margin, which can get pricey. These often cost around $15 to $45 at major banks, though some debit cards allow you to transfer money to partner banks in various countries and with no fees.
A foreign transaction fee isn’t the only debit card issue to be concerned about. If you’re a frequent traveler or you regularly use foreign currencies, you may want to consider:
Access. Check how easy it is to access your money while overseas. For example, does your bank have partner ATMs overseas? Do you have a debit card that’s widely accepted internationally, like a Visa or Mastercard?
Online banking. If you travel often, you’ll likely want access to online banking when you can’t get to a branch. Some banks will even let you add travel notices to your card online so your account doesn’t end up getting frozen while overseas.
Prepaid options. Card providers have come out with various prepaid debit card options for travelers that allow you to load your card with the money you want to spend. These cards let you save on currency conversions and also some foreign transaction fees. If you like your current debit card for everything other than foreign transactions, you can get a prepaid card to use when traveling.
Foreign transactions fees can get pricey, especially when they’re being charged on top of each other. For example, if you withdraw money at a foreign ATM, you can be charged an ATM fee, currency conversion fee and exchange rate markup. To make sure you’re getting the best deal, compare chequing accounts to find one with a debit card that works for both your domestic and international purchases.
Frequently asked questions
Your bank will generally charge anywhere from $3 to $5 plus 3% of the transaction for using an ATM. On top of that, you’ll need to pay the ATM provider’s fee, which can vary greatly depending on which country you’re in. For a more specific list of fees by country, read our guide to foreign ATM fees.
Shirley Liu is Finder's global program manager. She was previously the publisher for banking and investments and has also written comparisons for energy, money transfers, Uber Eats and many other topics. Shirley has a Master of Commerce and a Bachelor of Media, Journalism and Communications from the University of New South Wales. She is passionate about helping people find the best deal for their needs.
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