Debit cards with no foreign transaction fees in Canada
Explore no foreign transaction fee debit card options, including prepaid cards that 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.
Can you get no foreign transaction fee debit cards in Canada?
While most of the biggest banks in Canada don’t offer standard debit cards with no foreign transaction fee, there are select prepaid cards that function like debit cards and don’t have foreign transaction fees. These cards can be offered by online banks in Canada, like EQ Bank, or from companies who specialize in international money transfers, like Wise.
Get a prepaid card with no foreign transaction fees
Prepaid card lets you make purchases and manage your money similarly to how you use debit and credit cards. However, unlike many debit and credit cards in Canada, prepaid cards often come with low or no foreign transaction fees. These cards allow you to spend using funds that have been loaded onto your card, so you can only spend what you have.
Travel prepaid cards with no foreign transaction fees
A travel prepaid card lets you load multiple currencies onto a single card to avoid multiplied currency conversion fees. You may even be able to lock in exchange rates before you travel, but 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.
Alternative: Credit cards with no foreign transaction fees
Credit cards, like debit cards, often have 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 traveler’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.
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.
Do traditional banks offer no foreign transaction fee debit cards?
No, traditional Big Banks—like RBC, Scotiabank, BMO, CIBC and TD—do not typically offer no FX fee debit cards. Instead they typically offer credit cards designed for international travel that don’t charge FX fees on international purchases.
That means that if you want to spend from your account instead of on credit while you’re travelling, you’re best bet is to open an account with digital banks that offer no FX fee cards, like EQ Bank or KOHO.
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.
Pros
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.
Cons
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.
Bottom line
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.
FAQs about debit cards with no foreign transaction fees
Financial institutions charge foreign transaction fees (usually around 2.5%) whenever a currency conversion is required. For example, if you pay for a US purchase with a Canadian debit card, your bank will charge a fee for exchanging Canadian dollars to US dollars to process the payment.
If you make an online purchase from a foreign retailer that charges you in any currency other than Canadian dollars, then you would have to pay a foreign transaction fee (unless your card waives this fee).
If a foreign retailer charges you in Canadian dollars, then your funds don't have to be converted and you won't pay a foreign transaction fee.
If the international airline charges you in Canadian dollars, you likely won't have to pay a foreign transaction fee. But if you pay in any other currency, your financial institution will likely charge you a foreign transaction fee.
Yes. Both Visa and Mastercard offer overseas debit card replacements.
If you're a foreign resident visiting Canada, you can avoid these fees by choosing a debit or credit card with no foreign transaction fees. There are also prepaid cards available that don't charge foreign transaction fees, so shop around to find the card that's right for you.
Sources
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Matthew Boyle is a banking and mortgages publisher at Finder. He has a 7-year history of publishing helpful guides to assist consumers in making better decisions. In his spare time, you will find him walking in the Norfolk countryside admiring the local wildlife.
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Tim Falk is a freelance writer for Finder. Over the course of his 20-year writing career, he has reported on a wide range of personal finance topics. Whether you're investing in stocks and ETFs, comparing savings accounts or choosing a credit card, Tim wants to make it easier for you to understand. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
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