No Foreign Transaction Fee Credit Cards in Canada

No foreign transaction fee credit cards in Canada let you make purchases in foreign currencies without paying the additional FX fee charged by many cards.

A typical foreign currency conversion fee can be around 2.5%. On a $1,000 foreign purchase, that would add about $25 before considering the exchange rate.

KOHO Prepaid Mastercard

KOHO Prepaid Mastercard is a credit card alternative that lets you spend money you already have.

With KOHO Prepaid Mastercard, you can:

• Get instant approval with no credit check

• Spend only the money you load onto your account

• Pay no interest on your purchases

• Earn up to 2% cash back

• Use your card for in-store purchases, online shopping, and recurring payments

KOHO Extra and Everything plans currently include no foreign transaction fees on non-Canadian purchases.

What Is a Foreign Transaction Fee?

A foreign transaction fee is an additional charge that may apply when you use your card for a purchase processed in a foreign currency.

For example, imagine you buy something that converts to $1,000 CAD.

If your card charges a 2.5% foreign transaction fee, you would pay another:

$1,000 × 2.5% = $25

Your total would become approximately $1,025.

The exact amount can change because currency exchange rates fluctuate.

How Do No Foreign Transaction Fee Cards Work?

A no foreign transaction fee card removes the additional FX percentage normally added by the card issuer.

You still have to convert the foreign purchase into Canadian dollars.

For example, if you spend €100 in Europe, the card network converts that €100 into Canadian dollars using its applicable exchange rate.

A no FX fee card simply avoids adding another foreign transaction fee on top of that conversion.

Are There Credit Cards With No Foreign Transaction Fees in Canada?

Yes.

Some Canadian cards waive foreign transaction fees as one of their benefits.

These cards can be particularly useful if you:

• Travel outside Canada regularly

• Shop from international websites

• Pay for hotels in foreign currencies

• Book flights in another currency

• Have recurring subscriptions billed outside Canada

• Spend significant amounts in U.S. dollars

How Much Can You Save With No Foreign Transaction Fees?

The savings depend on how much you spend abroad.

Suppose your regular card charges a 2.5% foreign currency conversion fee.

If you spend:

• $500, the fee would be about $12.50

• $1,000, the fee would be about $25

• $3,000, the fee would be about $75

• $5,000, the fee would be about $125

• $10,000, the fee would be about $250

These savings can add up if you travel frequently or regularly make purchases in foreign currencies.

Does No Foreign Transaction Fee Mean There Are No Currency Conversion Costs?

Not exactly.

A no foreign transaction fee card eliminates the additional FX fee charged by the card issuer.

The currency still needs to be converted into Canadian dollars.

The card network's exchange rate is generally used to perform that conversion.

Other charges may also apply depending on how you use your card.

These could include:

• ATM fees

• Cash advance fees

• Merchant fees

• Dynamic currency conversion charges

Always check the terms of your specific card.

What Is Dynamic Currency Conversion?

When travelling, a merchant or ATM may ask whether you want to pay in Canadian dollars or the local currency.

This is known as dynamic currency conversion.

Choosing Canadian dollars can result in the merchant or ATM operator performing the currency conversion instead of your card network. The exchange rate offered may include an additional markup.

If you have a no foreign transaction fee card, paying in the local currency generally allows your card network to handle the conversion.

For example, if you are in France and the terminal asks whether you want to pay in euros or Canadian dollars, you would generally choose euros.

Are No Foreign Transaction Fee Cards Good for U.S. Shopping?

They can be.

Canadians frequently encounter U.S. dollar transactions even without travelling.

You might pay in USD when:

• Shopping on American websites

• Visiting the United States

• Paying for software

• Booking travel

• Paying for subscriptions

A no foreign transaction fee card can prevent an additional FX fee from being added every time your USD transaction is converted into Canadian dollars.

What Should You Look for in a No Foreign Transaction Fee Card?

The FX fee should not be the only thing you compare.

Consider:

• Annual or monthly fees

• Foreign transaction fees

• Cash back

• Rewards

• Travel insurance

• ATM fees

• Interest rates

• Exchange rates

• International acceptance

A card with no FX fees could still cost more overall if it has a high annual fee and you rarely make foreign purchases.

Is a No Foreign Transaction Fee Card Worth It?

It can be if you regularly spend money outside Canada or make purchases in foreign currencies.

Someone spending $5,000 annually in foreign currencies could pay around $125 in FX fees with a card charging 2.5%.

Avoiding that fee can make a noticeable difference.