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How to avoid credit card foreign currency exchange fees when travelling

Are you going overseas? Avoid foreign transaction fees with the right travel money, so you can save more on your holiday.

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Using a credit card while travelling overseas is a convenient and safe option, but it can get costly when you factor in rates and fees. Learning how to get the most ideal interest rates and how to avoid unnecessary conversion fees can go a long way towards saving you cash that could be better spent on your travels.

Compare no foreign currency exchange fee credit cards

Name Product Purchase Interest Rate Cash Advance Rate Annual Fee Minimum Income Benefits with this card Description
HSBC World Elite® Mastercard®
19.9%
22.9%
$0 annual fee for the first year ($149 thereafter)
$80,000
Earn 3% in travel rewards on all eligible travel purchases (6 Points per $1 spent) and earn 1.5% in travel rewards on all other eligible purchases (3 Points per $1 spent).
Earn up to 100,000 Points ($500 travel value) plus get a full annual fee rebate for the Primary Cardholder for the first year. Apply by December 28, 2020. Conditions Apply. This offer is only available to residents of Canada other than the province of Quebec. (Quebec residents eligible for separate offer).
BMO U.S. Dollar Mastercard
19.99%
22.99%
$35 USD
$15,000
Receive an annual fee rebate with a minimum yearly spend of US$1,000. Plus, spend in US Dollars with no exchange rate surprises.
When your purchases total US$1,000 or more in a year, the next year's annual fee (US$35) is rebated to your card.
Scotiabank Gold American Express Card
19.99%
22.99%
$120
$12,000
Earn 5 Scotia Rewards points per $1 spent on eligible grocery, dining and entertainment purchases, 3 points per $1 spent on eligible gas, transportation and select streaming services, and 1 point per $1 spent on eligible purchases elsewhere.
Earn 25,000 bonus Scotia Rewards points when you spend at least $1,000 on eligible purchases in the first 3 months. Apply by February 28, 2021.
Scotiabank Passport Visa Infinite Card
19.99%
22.99%
$139
$60,000
Earn 2 Scotia Rewards points for every $1 spent on eligible grocery store, dining, entertainment and daily transit purchases, and earn 1 Scotia Rewards point for every $1 spent elsewhere.
Earn up to 30,000 bonus Scotia Rewards points (up to a $300 travel value) in your first year. Apply by February 28, 2021.
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What rates and fees should I be watching out for?

When spending overseas with your card, you will encounter one or both of these fees:

  • Foreign currency exchange rate. You may notice first of all, that your card exchange rate is less favourable than the listed interbank rates. This may be to incorporate a small profit margin for your card provider.
  • Foreign currency conversion fee. You’ll be charged a foreign transaction fee or currency conversion fee on each overseas transaction. This is typically 3% of the transaction amount, which can amount to hundreds of dollars if you consistently swipe your card for big ticket items.

How can you avoid foreign currency exchange fees?

To avoid foreign currency exchange fees, consider these options:

No foreign transaction fee credit cards

If you’re a frequent traveller, it is advisable to seek out credit cards designed for travelling. These cards typically advertise low or no fees on foreign transactions, are often connected to extensive worldwide ATM networks, usually come with a suite of travel insurance, and in some cases will even waive any extra fees for currency conversion. You may pay a slightly higher annual fee for this type of credit card, but the money you’ll save on overseas spending might balance that out.

Using debit cards

Most debit cards will charge foreign currency exchange fees when used overseas. To save costs on your next vacation, look for a debit card with low or no foreign transaction fees. Unlike a credit card, debit card transactions don’t incur interest and you can withdraw funds without being charged a cash advance fee. If your card belongs to an international ATM alliance, you can also save on ATM withdrawal costs.

Travel rewards credit cards

Rewards are typically more expensive when it comes to annual fees and interest rates, but you can find some with no foreign transaction fees. If you usually repay your balance in full each month, a travel rewards credit card with no foreign transaction fees could be a great way to get rewarded for your travelling expenses.

Compare travel rewards credit cards in our guide here

Using cash

Carrying the local currency in cash is another way you can avoid foreign transaction fees on day-to-day vacation expenses. It’s not exactly safe to carry all of your travel budget in cash though, so look for a card that has low ATM withdrawal fees if you’re considering paying in cash.

What are the other costs and features to consider?

Even if your travel credit or debit card helps you avoid currency conversion fees, there are still other costs and factors to consider. When you’re comparing your travel money options, keep the following in mind as well:

  • ATM fees. If you’re not careful, you could end up paying fees for using an overseas ATM twice. Unless your bank has a global ATM alliance that allows you to make international withdrawals for free, you could be charged by your bank and by the issuing bank for withdrawals and even account balance enquiries when travelling.
  • Annual fee. The price for paying low or no foreign transaction fees on your credit card is often a high annual fee. Before committing to a card, make sure that the savings and rewards you’ll reap outweigh the annual fees for the card. You can compare cards with no annual fee or foreign transaction fees here.
  • Supported currencies and global acceptance. Make sure the card you’re using will work where you’re travelling and that the credit card is accepted worldwide, as you can expect with a Visa or Mastercard. If you’re using a travel money card, make sure it supports the local currency you’ll be using or doesn’t charge a currency conversion fee.
  • Merchant fees. You might find in some places that the merchant adds a surcharge to your transaction for using a foreign issued credit card. It would be prudent to check your bill before paying to avoid that fee wherever possible, and to have alternative travel money options on hand in those events.
  • Exchange rates. Check to see how often exchange rates are updated and if there are additional fees for currency conversion. A good way to avoid negative exchange rate movements is to lock in the rates with a travel money card.
  • Additional travel perks. Complimentary travel insurance, a 24/7 global emergency customer service line and travel rewards points programs are all extras that could offer some added value to your card.

Bottom line

How often you travel, the length of your stay and the way that you spend money overseas all factor into your decision about the type of credit, debit or travel card to use abroad. Be sure to consider your typical expenses and everyday spending needs when choosing a card so you can find one with the most value.

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