When using a Canadian credit card abroad or making online purchases in a foreign currency, you may be charged a foreign transaction fee. This often-overlooked fee can add up quickly and reduce the value of any cashback or rewards you earn.
In this guide, we’ll break down what foreign transaction fees are, how they work, and how to avoid them with the right credit card strategy.
1. What Are Foreign Transaction Fees?
A foreign transaction fee (also called an FX fee) is an extra charge added to purchases made in a currency other than Canadian dollars (CAD).
How It Works
- When you buy something in USD, EUR, GBP, or any non-CAD currency, your credit card issuer converts the amount into CAD.
- A 2.5% to 3% fee is added on top of the exchange rate.
- This applies to both international travel and online shopping from foreign retailers.
For example:
- You buy a $1,000 USD laptop online.
- The exchange rate is 1 USD = 1.35 CAD.
- Your bank converts it to $1,350 CAD.
- A 2.5% FX fee adds $33.75 extra.
- Your total cost is $1,383.75 CAD instead of $1,350 CAD.
✅ Tip: Even if you’re shopping from a Canadian website, you may still pay FX fees if the retailer processes payments in a foreign currency.
2. How Much Do Canadian Banks Charge for FX Fees?
Most major Canadian credit card issuers charge a standard 2.5% fee on all foreign currency transactions.
Foreign Transaction Fees by Canadian Banks
| Bank | FX Fee (%) | Notes |
| RBC | 2.5% | Standard fee on most cards |
| TD | 2.5% | Applies to all foreign purchases |
| Scotiabank | 2.5% | Offers some no-FX-fee cards |
| BMO | 2.5% | Standard fee on most cards |
| CIBC | 2.5% | Some premium cards waive fees |
| American Express | 2.5% | Applies to most Amex cards |
| National Bank | 2.5% | Some exceptions for premium clients |
✅ Tip: Even though 2.5% seems small, frequent travelers or online shoppers can lose hundreds of dollars per year to FX fees.
3. How to Avoid Foreign Transaction Fees
The best way to avoid FX fees is to use a credit card with no foreign transaction fees. These cards waive the 2.5% fee, saving you money when traveling or shopping internationally.
Best No-Foreign-Transaction-Fee Credit Cards in Canada
| Credit Card | FX Fee | Cashback / Rewards | Annual Fee |
| Scotiabank Passport Visa Infinite | 0% | 2% on groceries, dining, & entertainment | $150 |
| Rogers World Elite Mastercard | 0% | 1.5% cashback on all purchases | $0 |
| Brim World Elite Mastercard | 0% | 2% cashback on select purchases | $199 (often waived) |
| HSBC World Elite Mastercard | 0% | 3% in travel rewards on all purchases | $149 |
| Home Trust Preferred Visa | 0% | 1% cashback on all purchases | $0 |
✅ Tip: If you travel frequently or shop from international retailers, switching to a no-FX-fee card can save you hundreds per year.
4. Other Ways to Reduce FX Fees
1. Pay in Canadian Dollars (CAD) When Possible
Some online retailers allow you to choose your billing currency. If you’re given the option, select CAD to avoid FX fees.
✅ Tip: Watch out for Dynamic Currency Conversion (DCC)—this is when a merchant offers to charge you in CAD instead of the local currency, but often at a bad exchange rate. Always choose to pay in local currency when abroad.
2. Use a Multi-Currency Bank Account
Banks like Wise (formerly TransferWise), Revolut, and EQ Bank allow you to hold multiple currencies and make payments without FX fees.
✅ Tip: A Wise Borderless Account lets you pay in foreign currencies at the real exchange rate with no hidden fees.
3. Use a Travel Debit Card
Some fintech companies offer multi-currency debit cards that don’t charge FX fees.
✅ Example: Wealthsimple Cash Card and Stack Prepaid Mastercard.
5. Who Should Get a No-FX-Fee Credit Card?
You should consider getting a no-FX-fee card if you:
✔ Travel frequently outside Canada.
✔ Shop online from international stores (e.g., Amazon US, AliExpress, Etsy).
✔ Subscribe to services priced in USD (e.g., Netflix, Adobe, Spotify US).
✔ Make frequent business purchases in foreign currencies.
Even if you only travel once a year, a no-FX-fee card can save you enough to justify switching.
6. Final Thoughts: Save Money on Foreign Purchases
Foreign transaction fees are a hidden cost that can add hundreds of dollars to your annual expenses. The best way to avoid them is to use a no-FX-fee credit card whenever possible.
Quick Recap: How to Avoid FX Fees
✔ Use a no-foreign-transaction-fee credit card for travel & online shopping.
✔ Pay in local currency (not CAD) when traveling.
✔ Use a multi-currency account for frequent foreign transactions.
✔ Watch out for bad exchange rates on international payments.
By making small changes, you can keep more money in your pocket while still earning cashback and rewards on your purchases.
