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The subject of foreign exchange fees among Canadian credit cards is a popular one.

Heck, we have one rankings page and another blog post entirely dedicated to cards that avoid these fees.

And for good reason – these fees add up quick. So it’s no wonder Canadians are trying their best to avoid them.

Aside from regular foreign currency purchases, not many people are talking about what happens if you have to return an item purchased in a foreign currency. It probably doesn’t happen a lot, but there are instances where you may have to send something back.

So let’s go over how foreign exchange fees work, and how returning a foreign exchange purchase works as well.

Related: PayPal Raising Foreign Currency Conversion Fees – How To Fight Back

How foreign currency exchange works on credit cards

So how do foreign exchange fees actually work?

Each time you make a purchase with your credit card in a foreign currency, your statement will show the exchange rate and the actual cost in Canadian dollars. Basically, they take the exchange as posted by the card’s network (either Visa, Mastercard or Amex).

But on top of that, they add the foreign exchange fee, which is 2.5% of the total transaction for almost every card in Canada (some are as high as 3%)

Cards with no foreign exchange fees

So, if a card charges no foreign exchange fee, you save yourself that 2.5% on every transaction you make.

In fact, the exchange rates provided by credit card networks are nearly identical to the actual exchange rates and can often be better than just exchanging currency at the bank.

Here’s an example showing the exchange rate for USD purchases on July 5, 2019 for cards on the Visa and Mastercard networks, compared to the actual exchange rate at the end of the day as provided by

Network/Bank Network Exchange Rate Actual Exchange Rate % Difference
Visa 1.308069 1.31204 -0.302%
Mastercard 1.307837 1.31204 -0.32%
TD Canada Trust 1.349 1.31204 2.74%

The Visa and Mastercard numbers were provided by tools the networks offer. You can view Visa here and Mastercard here.

Unfortunately, American Express doesn’t have a similar tool. Amex actually has a quirk when it comes to foreign currency purchases – they convert purchases to US Dollars first, then make the conversion to CAD.

If you want the best exchange rates, a no foreign transaction fee credit card is generally the best way to go.

Cards that offer bonus rewards on foreign currency purchases

Certain cards (mostly issued by Rogers Bank) offer credit cards that offer bonus rewards on foreign currency transactions.

They still charge the normal 2.5% conversion rate, meaning the number you see isn’t what you actually get.

Take the for instance. It advertises you get 3% cash back on purchases made in U.S. dollars. However, take away the 2.5% conversion fee, and you’re down to a net return of 0.5%.

So while that’s still better than most cards, it’s not a great as advertised.

Returning purchases made in a foreign currency

So how does it work when you return a foreign currency purchase?

We’ll go over what happens with either cash or credit card.

Returning foreign purchases made with cash

With cash, it’s straightforward.

Whatever you paid, you’ll get back if the exchange rate is the same. If not, then you might lose or gain a little bit.

Returning foreign purchases made with a credit card

With a credit card, it works the same way as a regular foreign transaction purchase, only they don’t include the foreign conversion fee. Meaning, no matter what, you lose that the 2.5% conversion.

As an example, say you purchased an item for $100 USD. If you used a normal credit card and got an exchange rate of $1.31 for your purchase, this is what you paid for it:

(1.31 x 2.5%) X 100 = $134.28

When you go to return it, say at an exchange rate of $1.315, here what you get returned on your credit card:

1.315 x 100 = $131.50

So, you’re out $2.78 because you won’t be getting back the foreign exchange fee.

The exchange rate actually helps a little in this situation, as that decreased your loss by 50 cents.

This highlights why a true no foreign exchange fee credit card is best for foreign purchases. In this case, you actually would have been ahead 50 cents, instead of being down $2.78.

You won’t ever have to worry about paying the conversion fee, or lose out when you may need to return a purchase as well.

If you had a credit card that just offered bonus rewards foreign purchases, you’re no better off than someone who didn’t have those extra rewards – you would lose out on the exchange rate as well as the bonus rewards you earned.

Credit cards with no foreign exchange fees

So with that in mind, what are the best no foreign exchange fee cards out there?

The pickings are small, but there are a few that stand out.

Credit Card Welcome Bonus Earn Rate Annual Fee, Income Requirements Apply Now
Scotiabank Passport Visa Infinite 25,000 points (terms) Up to 2 points per $1 spent * $139 annual fee
* 60K personal, 100K household income requirements
Apply Now
Scotiabank Gold American Express 20,000 points (terms) Up to 5 points per $1 spent $120, no income requirements Apply Now
Brim Mastercard $200 on the first purchase at participating retailers (terms) * 1 point per $1 spent on all purchases $0, 15K personal income requirements Apply Now
HSBC World Elite Mastercard Up to 60,000 points (terms) * Up to 6 points per $1 spent * $149 annual fee
* 80K personal, 150K household income requirements
Apply Now
Home Trust Preferred Visa None 1% cash back on eligible purchases $0, no income requirements Apply Now
Stack Prepaid Mastercard N/A N/A $0, no income requirements Apply Now
KOHO Premium Prepaid Visa Additional 1% cash back in the first 90 days (terms) Up to 2% cash back $84, no income requirements Apply Now

Scotiabank Passport Visa Infinite

One of our top no foreign exchange fee credit cards, the offers no foreign exchange fees as one of its perks.

To start you off, you’ll earn 25,000 Scotia Rewards points after spending $1,000 in the first 3 months. That’s worth $250 when redeemed for travel.

On your everyday spending, you’ll earn points at these rates:

  • 2 points per $1 spent on groceries, restaurants, entertainment and transit, and
  • 1 point per $1 on all other purchases.

On top of great rewards, there are even more benefits this card provides.

First, it comes with a great insurance package, including emergency medical for 10 days for people over 75 – a rare perk.

It also comes with Priority Pass membership along with 6 free passes.

For no fx fees, flexible rewards points, insurance, and travel benefits, Scotiabank has it all with this card.

Scotiabank Gold American Express

The is another top card offering no foreign exchange fees – in fact it’s our #1 card in that category.

It comes with some of the highest earn rates available on a credit card:

  • 5 points per $1 spent on restaurants, groceries and entertainment,
  • 3 points per $1 spent on gas, transit and select streaming services, and
  • 1 point per $1 on all other purchases.

Your daily purchases will rack up points quickly.

Throw in a welcome bonus of 20,000 points and you’ll be flying free in no time.

Brim Mastercard

A top no annual fee card with no foreign transaction fees is the . You’ll earn a simple 1 point per $1 spent on all purchases. A single point is worth 1 cent when redeemed towards any purchase on the card.

You can also earn plenty of bonus rewards with Brim’s wide selection of online retail partners, get 5 types of insurance, including their unique event ticket protection, and free Boingo Wi-Fi.

Or, for more perks, Brim offers 2 more cards to better suit your needs:

HSBC World Elite Mastercard

Offering flexible travel rewards along with some unique perks, the also has no foreign transaction fees.

You’ll earn 3 points for every $1 spent on the card, which gets doubled on travel purchases. An HSBC Rewards point is worth 0.5 cents each when redeemed for travel, a return of up to 3%.

Plus, you can earn up to 60,000 bonus points when you spend $5,000 in the first 6 months.

And there are also some great perks to help you save:

  • $100 annual travel enhancement credit,
  • complimentary membership to Mastercard Airport Experiences, and
  • 10% discount on select hotel booking through HSBC’s Expedia and Agoda sites.

It’s for an annual fee of $149 that’s currently rebated for the first year.

* This offer is not available to residents of Quebec. For residents of Quebec, please click here.

Home Trust Preferred Visa

A great no annual fee choice, the also offers no foreign transaction fees and an easy 1% cash back on every purchase you make. Just note that you won’t earn cash back on purchases made in a foreign currency.

Throw in a basic roadside assistance plan and you’ve got yourself a great no fee cash back card, should you end up stranded on the side of the road.

Stack prepaid Mastercard

While not a credit card, the is a prepaid Mastercard that has no annual fees and charges no foreign transaction fees as well.

Simply load some Canadian cash on your card and you’ll be enjoying a great exchange rate. Plus, you can earn some rewards at select partners as well.

It’s a great option if you don’t want to apply for a credit card or just need something for occasional purchases or trips.

KOHO Premium Visa

While not a credit card, the is a prepaid Visa that charges no foreign transaction fees as well.

Simply load some Canadian cash on your card and you’ll be enjoying a great exchange rate.

You can earn some rewards on all your purchases as well:

  • 2% cash back on groceries, dining, drinking, and transportation, and
  • 0.5% cash back on all other purchases.

It’s a great option if you don’t want to apply for a credit card.

And if you don’t want to pay the annual fee of $84, you can just pay the $9 monthly fee and switch to the when you like. And as a bonus, it has a lower foreign exchange fee of 1.5%.

Your thoughts

What are your thoughts on foreign currency purchases?

Do you cringe at the thought of losing 2.5% each time you make a purchase in a foreign currency?

Let us know in the comments below.