When you use your credit card to make a purchase in a foreign currency, the payment processor applies a currency exchange rate to convert the cost into Canadian dollars. On top of that, the bank charges a small percentage as a foreign transaction fee.
Using a no foreign transaction fee credit card can help you save money around the world. If you're travelling to the US, you can also save with a US dollar card.
Here, you'll find an overview of what currency exchange rates are, the fees involved, the best credit cards to help you avoid related fees and complications, and much more.
Key Takeaways
- American Express, Mastercard, and Visa use exchange rates to convert foreign credit card purchases into Canadian dollars.
- Banks usually charge a 2.5% foreign exchange fee on top of any converted transaction.
- The best no foreign exchange fee credit card is the Scotiabank Gold American Express Card.
- The best credit card for USD purchases is the CIBC U.S. Dollar Aventura Gold Visa Card.
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What are credit card currency conversion rates?
Whenever you make a transaction in a foreign currency – whether it's a cash advance, purchase, or return – your credit card issuer has to figure out how much to charge you in Canadian dollars (CAD).
The most important factor in these calculations is the currency exchange rate (or currency conversion rate), which shows how many Canadian Dollars equal one unit of foreign currency.
1 foreign currency unit ÷ value of 1 Canadian dollar = currency exchange rate
Every financial institution calculates a different exchange rate for every foreign currency every day. For example, the Bank of Canada's US dollar (USD) exchange rate on May 13, 2025, was 1.396, meaning every $1 USD was worth $1.396 CAD. By contrast, the Mexican peso's exchange rate was 0.071, meaning every $1 MXN was worth just under 8 Canadian cents.
Cost in foreign currency x currency exchange rate = cost in Canadian dollars
In a perfect world where you're charged the exact Bank of Canada exchange rate, if you had bought a $10 USD sandwich in the Chicago O'Hare Airport on that day, your credit card would have been charged $13.93 CAD. But if you'd bought a single bus fare in Mexico City for $10 MXN, you'd be charged $0.72 CAD.
As the Bank of Canada explains, the value of our dollar rises and falls based on international demand for Canadian products, our inflation rate, and the strength of Canada's economy. For example, the US exchange rate ranged from 1.357 to 1.454 in 2025 and 1.16 to 1.396 in 2015 (the less said about that, the better).
You lose money when exchange rates are high and save money when they're low. In other words, save your shopping sprees for countries with low exchange rates or days when the Canadian dollar is strong!
Credit card currency rates vs. foreign transaction fees
Every foreign transaction on your credit card statement is actually made up of 2 parts:
- The cost of your purchase in CAD using the appropriate exchange rate
- The FX fee charged by your credit card
Foreign transaction fees – also known as foreign exchange fees or FX fees – are applied to your transaction total after it's been converted to CAD using the exchange rate. The typical transaction fee is 2.5%, but you should always check your credit card's terms and conditions to make sure.
Cost in foreign currency x currency exchange rate + FX fee = total cost in CAD
After applying a 2.5% FX fee, the total cost of your $10 sandwich would be $14.28 CAD, and your bus fare would be $0.74 CAD. Obviously, these are modest costs, but transaction fees can really add up if you often use your credit card while travelling internationally.
Payment networks sometimes charge a currency conversion fee (or "currency exchange rate fee" or "foreign exchange rate fee") on top of transaction fees. Conversion fees are usually no bigger than 1%, if they appear at all. As always, check your credit cardholder agreement for accurate numbers.
How much do credit cards charge for foreign transactions?
Unless otherwise stated, most credit cards use the foreign exchange rate decided by the payment network (i.e., American Express, Mastercard, or Visa). Credit card issuers – like your bank, credit union, or favourite store – set and apply any FX fees.
Although Amex, Mastercard, and Visa change their exchange rates daily, they generally track those set by the Bank of Canada.
Looking back to September 10, 2025, consider the true cost of the $10 USD sandwich from the previous example. According to the BOC, the official exchange rate on this date was 1.3854.
If you used one of the top credit cards in Canada, this is how your purchase would look:
| MBNA Rewards World Elite Mastercard | RBC Avion Visa Infinite | |
|---|---|---|
| Network exchange rate | 1.4213675 | 1.420854 |
| Foreign transaction fee | 2.5% | 2.5% |
| Total cost | $14.21 CAD | $14.21 CAD |
As you can see, there's less than a 0.4% difference between the BOC's exchange rate and those of Mastercard and Visa. Unless you make a large foreign transaction (or repeated smaller ones), you probably won't notice the difference.
What is American Express's exchange rate?
American Express uses the foreign exchange rates calculated by AE Exposure Management Limited (AEEML), a subdivision of the company. Unfortunately, AEEML doesn't publish an online calculator or guide, so we can't see how it compares to the Bank of Canada.
For what it's worth, according to American Express, the percentage difference between the exchange rate used by UK Amex cards and the one published by the European Central Bank averages 2.69%.
But it's important to note that American Express first converts any foreign currency to USD – and then to CAD for your Canadian credit card statement.
What is Mastercard's exchange rate?
If you need to preview the cost of a foreign purchase using a Mastercard credit card, use the Mastercard Currency Converter Calculator. At the time of writing, the exchange rates of the BOC and Mastercard were as follows:
| Institution | Transaction | Exchange rate | Transaction fee | Total |
|---|---|---|---|---|
| Bank of Canada | $1,000 USD | 1.3567 | N/A | $1,356.70 CAD |
| Mastercard | $1,000 USD | 1.49644 | 2.5% | $1,533.85 CAD |
Meaning, per $1,000 USD spent, you would have paid $37.41 CAD to put it on a Mastercard credit card on March 11, 2026.
What is Visa's exchange rate?
Not to be outdone, Visa also offers an online Exchange Rate Calculator. Plug in the same numbers as above, and you get:
| Institution | Transaction | Exchange rate | Transaction fee | Total |
|---|---|---|---|---|
| Bank of Canada | $1,000 USD | 1.3567 | N/A | $1,356.70 CAD |
| Visa | $1,000 USD | 1.320976 | 2.5% | $1,360.40 CAD |
Per $1,000 USD, the cost of using a Visa credit card is $33.02 CAD – on March 11, 2026, that is. Visa's rate is slightly lower than Mastercard's rate.
Should you use dynamic currency conversion?
When you swipe your credit card, you may be offered the option to pay in the local currency or CAD. Paying in your preferred currency is known as dynamic currency conversion, and you should avoid it at all costs.
Sure, it's handy to see how much you're paying in CAD, but you're at the mercy of merchant fees and poor exchange rates, and you may still be hit with an FX fee.
Instead, you'll get better rates by having your bank or card issuer convert the charge at the best foreign conversion rate.
How to avoid foreign transaction fees
If you often travel for business or pleasure, transaction fees and minute differences between exchange rates can quickly add up. As we've shown, every $1,000 USD spent adds up to $40 CAD in FX fees – not to mention the money you lose when you convert a strong dollar to our poor loonie.
Here are the 2 best ways to avoid paying FX fees:
- Use a no FX fee credit card
- Use a US dollar credit card
You'll find a guide to both options below.
The best no foreign transaction fee credit card in Canada
The best way to save on FX fees is to eliminate them altogether. There is a specific type of credit card designed for travellers who don't want to pay these fees, and the top option is the Scotiabank Gold American Express® Card.
The Scotiabank Gold American Express Card earns flexible travel rewards and saves money with a 0% FX fee. On top of a generous welcome bonus, you can earn Scene+ points at the following rates:
- 6 Scene+ points per $1 spent at Sobeys, Safeway, FreshCo and more
- 5 Scene+ points per $1 spent on groceries, dining, and entertainment
- 3 Scene+ points per $1 spent on gas, select streaming services, and transit
- 1 Scene+ point per $1 spent on foreign currency purchases
- 1 Scene+ point per $1 spent on all other purchases
With 12 types of travel insurance and purchase protection, it's a solid choice of travel credit card – just make sure to watch out for the $5 – $7.50 CAD foreign ATM fee.
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The best US dollar credit card in Canada
If you frequently travel or shop south of the border, it may be time to consider a U.S. dollar credit card. You can skip the FX fees by avoiding currency exchanges altogether – instead, you can both shop and pay off your card entirely in US dollars.
Don't forget, banks apply exchange rates to bill payments and money transfers, too. To apply for and fully use a US dollar credit card, you need a USD bank account.
The top US dollar credit card in Canada is the CIBC U.S. Dollar Aventura Gold Visa Card. On top of not paying any FX fees, users earn valuable Aventura rewards – 1 point for $1 spent on travel (through CIBC Rewards), and 1 point for every $2 spent on everything else.
Other travel benefits include discounts on rental cars through Avis and Budget and 4 types of insurance – including rental car insurance and hefty coverage for travel accidents.
With a low US $35 annual fee, low personal income requirements, and no household income requirements at all, this card is surprisingly accessible.
FAQ
What is the exchange rate for credit cards?
American Express, Mastercard, and Visa calculate credit card exchange rates every day, adding a small premium to the rates set by the Bank of Canada. The difference between these and the BOC's rates can be as little as 0.5%.
Is it better to pay foreign currency on a credit card?
Paying with foreign currency on a credit card is only better than paying with local cash if you have a no-FX-fee credit card. Otherwise, you'll be charged an average of 2.5% on top of your purchase – and your network exchange rate may be higher than the exchange rate you can find buying your currency in advance.
How do I avoid credit card exchange rates?
If you shop in a foreign currency, exchange rates are unavoidable, but you can avoid the foreign transaction fee by either paying in cash (in the local currency) or using a no-FX-fee credit card. If you have a cash back credit card with rates high enough to offset the FX fees, that could work too.
Does Visa or Mastercard have better exchange rates?
Visa, Mastercard, and American Express all change their exchange rates daily. Our research indicates that Visa may offer slightly better exchange rates, but the difference between the two is negligible. At most, you'll only see a few dollars' difference.
Which credit card is best for foreign transactions?
The Scotiabank Gold American Express Card doesn't charge foreign transaction fees at all, and is actually the best of all the credit cards in its class. The Scotiabank American Express Platinum Card and Scotiabank Passport Visa Infinite Card are also excellent options if you're trying to avoid these fees.
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