No Foreign Transaction Fee Credit Cards

If there’s one thing that I dislike, it’s fees. That will be the theme throughout this post. One of the most annoying fees is the foreign transaction fee. When you pay with your credit card in a foreign currency, your credit card will usually charge an additional 2.5% in foreign transaction fees. As Canadians, we often travel to the US or buy things in US dollars, resulting in foreign transaction fees that can add up significantly over time.

When I started living in Canada and traveled back to the US for work, I paid with my US credit card, paid off the balance with my US bank account, and was reimbursed by my company in Canadian dollars. That was my hack to avoid foreign transaction fees and also allowed me to convert some of my US dollars into Canadian dollars. The problem is that I would run out of US dollars eventually.

The Amazon.ca Rewards Visa credit card was launched in 2012 but was closed in 2018. It was a great credit card that had no annual fee and no foreign transaction fee. One of the other fees that I don’t like are annual credit card fees. Credit cards that charge annual fees often offer the first year for free. You’ll often read about people churning through annual fee credit cards for the rewards and canceling after the first year. More power to those people, but I prefer not to spend my time doing that. After the credit card disappeared from the Canadian marketplace, I looked around for other no annual fee, no foreign transaction fee credit cards.

Rogers Platinum Masterard

I decided to apply for the Rogers Platinum Mastercard. It’s a no annual fee card. It charges a 2.5% foreign transaction fee, but you get 3% cash back on purchases in USD, effectively offering a 0.5% cash back. The annoying thing about the card is that the cash back must be applied to previous purchases, with a minimum $10 redemption. The exchange rate could change drastically between the time that I made a purchase and when I’m ready to redeem. More recently, Rogers is offering and is pushing its new Rogers Mastercard, which only offers 2% cash back. While I could upgrade to the Rogers World Elite Mastercard, which maintains the 3% cash back, I find that redeeming cash back is an annoying process. I expect that Rogers will eventually sunset the Platinum Mastercard and force me to switch, which is one of the reasons why I’m looking for alternatives.

Scotiabank Passport Visa Infinite

After extensive online research, I determined that the best no foreign transaction fee credit card is the Scotiabank Passport Visa Infinite. Another travel benefit is access to 6 airport lounge passes through Dragon Pass. The only “airport lounge” that I accessed in the past was the dedicated waiting area for Porter Airlines at Billy Bishop Airport, which offered free snacks and drinks. Those perks are gone as of 2018. So I’m looking forward to something that’s a step up.

The Scotiabank Passport Visa Infinite card has a welcome bonus of 30,000 Scene+ points if you spend $1,000 within the first 3 months. You can also earn an additional 10,000 Scene+ points each year on an annual spend of $40,000. I doubt that we’ll qualify for that. The fine print says that anyone who has held a Scotiabank personal credit card in the past 2 years is ineligible for the welcome bonus.

While the first year’s annual fee is waived, the downside is that the annual fee is a lofty $150. That’s quite high, but if you use the card enough, the total rewards outweigh the price. If you dislike fees like me, you’ll find ways around it and that I did. If you open or upgrade your chequing account to the Scotiabank Ultimate Package, you can get an annual fee waiver of up to $150. The Scotiabank Ultimate Package requires a minimum chequing account balance of $6,000/month. That is quite high. At current interest rates, it’s better to pay the annual fee than upgrade to the Ultimate Package and maintain the minimum balance. We were willing to maintain the minimum balance, but after talking to a financial advisor at Scotiabank, they told us that one of us is eligible for the Scotiabank Professional Plan. This plan eliminates the minimum balance requirement.

EQ Bank Card

EQ Bank is an online bank that offers high-interest savings without the need for a promotional interest rate lottery. They recently announced an even higher 4% interest rate if you direct deposit your paycheque of at least $500/month. They’re giving traditional banks and even other online banks a run for their money.

I’m an EQ Bank customer and recently requested an EQ Bank Card. The EQ Bank Card is not a charge credit card, but a prepaid card. It works by creating another account under your account. Funds can be transferred between your Everyday Savings account and your EQ Bank Card account. Payments through the EQ Bank Card are withdrawn from the EQ Bank Card account. There’s no need to worry about losing interest on your EQ Bank Card account balance because it earns the same interest rate as your Everyday Savings account.

EQ Bank has made a name for itself when it comes to foreign exchange as it has integrated with Wise for currency conversion and money transfer. You can even open up a US dollar account that earns 3% interest! Well, the EQ Bank Card does not charge any foreign transaction fee. Foreign currency transactions are subject to Mastercard’s currency conversion rates, but EQ Bank itself will not charge an additional fee or markup.

I plan to use the EQ Bank Card for small annual spending that isn’t shared expenses, like personal subscriptions. With the paltry 0.5% cash back, it’s a perfect replacement for the Rogers Platinum Mastercard.