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, most banks and fintechs charge between 1% to 3%.
How to avoid foreign transaction fees on international bank accounts
Here are a few ways to stop paying a foreign transaction fee when you swipe your credit card:
- Exchange currency before you leave Canada. Converting money at your home bank before you head off overseas could save you the conversion fee.
- Consider cross-border banking. 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 prepaid or credit card with no FX fees. Consider getting a prepaid or credit card that doesn’t charge foreign transaction fees. Good options include a HomeTrust Visa or the EQ Bank Card.
- Consider a foreign currency account. If you regularly spend or get paid in other currencies, a foreign currency account allows you to hold funds in the international currency of your choice.