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US dollar credit cards vs no foreign transaction fee credit cards
Learn the difference between overseas credit card options so that you can save more money when you convert between currencies.
Compare credit cards
US dollar credit cards available in Canada
|US Dollar Credit Card||Purchase Interest Rate||Annual Fee|
|BMO U.S. Dollar Mastercard||19.99%||US$35|
|CIBC US Dollar Aventura Gold Visa Card||20.99%||US$35|
|RBC US Dollar Visa Gold||19.99%||US$65|
|Scotiabank US Dollar Visa Card||19.99%||US$35|
|TD US Dollar Visa Card||19.99%||US$39|
Why should I choose a currency conversion card?
When you shop overseas with a Canadian credit card, you’ll typically be charged a foreign transaction fee of around 2.5% of your transaction. This is in addition to the money you lose on exchange rates.
A currency conversion card, like a US dollar or no foreign transaction fee card, will save you from paying that expensive margin on top of every dollar, pound, euro or rupee you spend. A US dollar card can also save you money on exchange rates.
What is a US dollar credit card?
A US dollar credit card helps you save money on exchange rates and foreign transaction fees when you travel or shop in the US. The card holds a balance in US dollars, which means the bank won’t need to convert your Canadian currency into US dollars on every transaction. However, you need to have a source of US dollars to pay off your balance if you want the cost-saving benefits of the card to be worthwhile.
What is a no foreign transaction fee credit card
If you opt for a card with no foreign transaction fees, then you’ll be able to use it in countries around the world (not just the US). This type of card eliminates the standard 2.5% currency conversion fee for purchases made overseas, but you’ll still have to pay your bank’s markup on exchange rates. This is because the funds you pay your balance with will be Canadian dollars, not the local currency.
Benefits of US dollar credit cards and no foreign transaction fee credit cards
US dollar credit cards
- Pay with US currency. You can pay for your purchases directly with US dollars rather than converting currencies.
- No exchange rates in the US. You won’t lose money on the difference in exchange rates between Canadian and US dollars.
- No foreign transaction fees in the US. You won’t pay an additional 2.5% markup on purchases.
No foreign transaction fee credit cards
- No foreign transaction fees worldwide. You won’t pay more to make purchases in countries around the world.
- Travel rewards and benefits. Most foreign transaction cards give you more rewards and benefits than US dollar cards.
Drawbacks of US dollar credit cards and no foreign transaction fee credit cards
US dollar credit cards
- Limited to the US. You won’t save money on currency conversion in countries outside of the US.
- Balance must be paid in US dollars. If you pay your balance in Canadian dollars, you’ll lose any money saved on fees and exchange rates when the bank converts your payment.
- Few rewards and benefits. Most US dollar cards are very basic and don’t offer much in the way of rewards or perks.
- Rates and fees in US dollars. All of your charges will be in US dollars, which can drive the overall price of your card up.
No foreign transaction fee credit cards
- Exchange rates. You’ll have to pay exchange rates to convert to other currencies (including US dollars).
- High annual fees. Most cards come with expensive annual fees (usually over $100).
Which option is right for me?
The type of card that’s right for you will depend on how often you travel or make purchases in the US vs other overseas countries.
- US dollar card. This card is probably a better fit for you if you frequently travel and shop in the US, but don’t often visit or spend money in other countries. It only makes sense if you have a source of US dollars to pay your balance with.
- No foreign transaction fees. You might want to take out a no foreign transaction fees card if you shop or travel worldwide. These cards often offer more travel rewards and benefits (like travel insurance) than a US dollar card, and they still work in the US. The only difference is that you’ll have to pay exchange rates. These are an especially good fit if you don’t have a US income source to pay off the balance on a US dollar card.
- Rewards card. Another option is to offset the cost of foreign transaction fees (which are usually around 2.5%) with a card that offers a high return on cashback. If you find a card that offers as much as a 4% return on cashback, you’ll still make a 1.5% return when you subtract the foreign transaction fees.
What to look for in your next card?
Once you’ve settled on the option that makes the most sense for you, look for the following features to help you decide which card offers the best deal.
- Low fees. Look for a card that offers the most rewards for the lowest fee. You can also see about having the fee waived in your first year.
- Rewards. Look for a card that offers a decent return on cashback or rewards, especially for travel related purchases.
- Welcome bonus. Aim for a card that has a generous welcome bonus on points so that you can earn more in your first couple of months.
- Basic insurance. Look for a card that offers a bare minimum of purchase protection and extended warranty coverage.
- Travel insurance. If you travel extensively, you might like to opt for a card that offers cover for emergency medical, trip interruption, trip cancellation and other forms of coverage.
- Travel discounts. Some cards offer discounts on flights and car rentals, so look for the one that will give you the best combination of benefits you want.
US dollar credit cards can help you save money on exchange rates when you shop or travel in the US. You can get many of the same cost-saving benefits with no foreign transaction fee credit cards, which work all around the world and typically offer better rewards and benefits.Back to top
Frequently asked questions
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