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For those of you who often make purchases that aren’t in Canadian dollars, no foreign exchange fee credit cards are becoming more popular all the time.

And why not? You’ll save that annoying 2.5% fee on every purchase you make in a currency other than CAD.

If you shop frequently in U.S. dollars or live in the U.S. for part of the year, there’s another option for you to consider – U.S. dollar credit cards.

They’re a different animal than credit cards with straight no fx fee savings, but they’ll still save you that 2.5% typical exchange fee on purchases in U.S. dollars. But how they do that is completely different.

So, what are U.S. dollar credit cards?

How do they work?

When are no foreign exchange fee credit cards better? Are U.S. dollar credit cards a better option?

Here are the answers to all your questions about U.S. dollar credit cards.

What are U.S. dollar credit cards

So, what are U.S. dollar credit cards?

They work just like all credit cards do – but with a twist.

You make purchases on the card in USD. Then, when it comes time to pay your bill, you also have to pay it in USD.

That’s how you avoid the typical 2.5% foreign transaction fee. Everything is done in the same currency – USD.

If you use a USD credit card on purchases in any other currency, you’ll pay the standard 2.5% foreign conversion fee. And yes, this includes CAD.

So one thing you’ll need with these cards? A U.S. dollar bank account to store your USD and make bill payments in the right currency (most of the big 5 banks offer choices for residents of Canada).

U.S. dollar credit cards compared to cards with no foreign exchange fees

How do U.S. dollar credit cards compare to no foreign exchange fee cards?

Credit cards convert any purchase you make in a foreign currency into Canadian dollars. This is done at an exchange rate determined by the network (Amex, Mastercard, or Visa).

Credit cards that have no foreign exchange fees simply save you an additional 2.5% – the typical fee most credit cards charge for foreign transactions.

Then, when it comes time to pay your bill, it’ll be in Canadian dollars and there’s no need to convert your money – your credit card already converted it for you when you made the purchase.

And this is where, for most people, a no foreign exchange fee credit card is better, even for USD purchases. You don’t need to maintain a U.S. dollar bank account and convert your Canadian currency to USD just to pay the bill. Plus you can use no fx cards for any currency you want.

No fx cards are much simpler and easier to use. And they’re generally much better when it comes to things like rewards and features as well.

Who are U.S. dollar credit cards for?

With all this said, there are 2 scenarios when a U.S. dollar card might be your better option:

  • you have an income source in USD while also making frequent purchases in USD, or
  • you live in the U.S. for part of the year.

Why? Banks themselves don’t have the greatest exchange rates. In fact, they can be worse than credit cards – unless you have a bank account that offers special exchange rates.

So, if you have a steady USD income and make frequent purchases in USD, you can save on foreign exchange fees the bank charges you. Plus you can skip the hassle of converting your cash into Canadian dollars.

Or if you live in the U.S. for part of the year, you’re probably already converting a decent amount of cash into American to pay for expenses. And with a USD card, you can dip into this pool to pay a credit card bill as well.

But these are realistically the only 2 ways a USD card makes sense. Otherwise, you’ll be better off with a no foreign exchange credit card.

Best U.S. dollar credit cards

So what USD cards are there? There aren’t many to choose from, but a few of the major banks in Canada offer them.

Here’s a quick overview of each one.

RBC U.S. Dollar Visa Gold

Our top-rated USD card is the . You’ll earn 1 RBC Reward point per $1 spent, and get great insurance for an annual fee of $65 USD.

CIBC Aventura U.S. Dollar Card

The only other USD card that offers rewards is the . You’ll earn 1 point per $2 spent (1 point per $1 on travel booked through CIBC Rewards), get some insurance coverage, and pay a lower annual fee of $35 USD.

Plus you can qualify for an annual fee waiver for this card if you have the following with CIBC:

  • either a CIBC US$ Personal Account or a CIBC Bank USA Smart Account, and
  • a premium CIBC personal credit card (defined as a CIBC card with an annual fee of $99 or more).

TD U.S. Dollar Visa

Next up we have the . While it has no rewards, it does come with good travel and purchase insurance for an annual fee of $39 USD.

But if you have the TD Borderless Plan bank account (monthly fee of $4.95), it comes with an annual fee waiver for this card.

BMO U.S. Dollar Card

The only Mastercard in this group is the . It comes with limited insurance – extended warranty and purchase protection, for a $35 USD annual fee.

And if you spend $1,000 USD on purchases a year on the card, the annual fee gets rebated the following year.

Scotiabank U.S. Dollar credit card

The last one is the . It’s a basic card with extended warranty and purchase protection, for a $35 USD annual fee. But unlike most of the cards here, there aren’t any ways to get an annual fee waiver.

No fee U.S. dollar credit cards

Unfortunately, there aren’t any USD cards that don’t have any annual fee.

The closest you can get is with the , where if you spend $1,000 per year on the card you’ll get the fee rebated the following year. Most USD cards have some way to waive the annual fee, but this card has the easiest method.

Top no foreign exchange fee credit cards

Looking for some top no foreign exchange fee credit cards instead? These cards will either offer you top rewards for your purchases or come with no annual fee instead.

Here are our top no fx fee cards.

Credit Card Welcome Bonus Earn Rates Annual Fee, Income Requirements Apply Now
Scotiabank Gold American Express 25,000 points (terms) * 5 points per $1 on groceries, restaurants, and entertainment
* 3 points per $1 on gas, transit, and select streaming services
* 1 point per $1 all other purchases
* $120
* $12K personal income
Apply Now
Scotiabank Passport Visa Infinite 25,000 points (terms) * 2 points per $1 on groceries, dining, entertainment, and daily transit
* 1 point per $1 all other purchases
* $139
* 60K personal or 100K household income
Apply Now
Home Trust Preferred Visa None * 1% cash back on eligible purchases * $0
* No income requirements
Apply Now

Our top no foreign exchange fee credit card is the .

Why this card? It has high earn rates and flexible rewards, in addition to waiving foreign exchange fees completely.

Get up to 5 Scotia Rewards points per $1 spent on your purchases, plus earn a welcome bonus of 25,000 points after spending $1,000 in the first 3 months.

Just note that you only earn 1 point per $1 spent on purchases made in a foreign currency, regardless of which category the purchase belongs to.

It has an annual fee of $120. But if you have the Scotia Ultimate Banking Package, you’ll get the annual fee waived every year.

If Amex acceptance concerns you, you can turn to our #2 card instead – the .

You’ll earn up to 2 Scotia Rewards points per $1 spent, plus a welcome bonus of 25,000 points after spending $1,000 in the first 3 months. Unlike the previous card, you’ll earn bonus points on foreign exchange purchases as well.

And it comes with top-notch insurance, including emergency medical for those over 75, and a priority pass membership with 6 free passes.

It has an annual fee of $139, and this card also qualifies for an annual fee waiver with the Scotia Ultimate Package.

Want a basic no fee credit card instead? Then look at the .

For no annual fee, you’ll get:

Just note that you won’t earn cash back on foreign currency purchases.

Your turn

U.S. dollar credit cards certainly provide an interesting way to reduce foreign transaction fees, but they’re not the greatest way to go about it.

What are your thoughts on U.S. dollar cards?

If you have one, what has your experience been?

Let us know in the comments below.