Foreign transaction fees on Canadian credit cards (and how to avoid the 2.5%)

Most Canadian credit cards add a foreign currency conversion markup of about 2.5% every time you spend in a currency other than Canadian dollars, whether you are travelling or just shopping on a US website. That fee stacks on top of the exchange rate set by Visa or Mastercard, so a purchase in US dollars costs you the network conversion plus the markup. You can avoid it entirely with a no foreign transaction fee card, and you can dodge a separate trap (dynamic currency conversion) by always paying in the local currency.

Nothing here is financial advice. Confirm the exact fee on your own cardholder agreement before you act.

What the fee actually is

There are two layers to a foreign purchase, and it helps to keep them separate.

The first layer is the network conversion. When you tap your card abroad or buy from a foreign online store, Visa or Mastercard converts the amount into Canadian dollars using its own wholesale exchange rate. You can preview that rate on Visa's exchange rate calculator. This rate is generally close to the mid market rate, so it is not where most of the cost hides.

The second layer is the issuer markup. After the network converts the purchase to Canadian dollars, your card issuer applies a foreign currency conversion charge on the converted amount. The Financial Consumer Agency of Canada (FCAC) explains that issuers "apply the foreign currency conversion charge after converting the purchase to Canadian dollars," and that some transactions are converted directly to Canadian dollars while others go through US dollars first. On most Canadian cards that markup is about 2.5%. Scotiabank describes "the typical 2.5% foreign transaction fee" as the charge it waives on its Passport Visa Infinite card.

So the headline 2.5% is the issuer markup, and it stacks on top of the network rate. It is not an either or.

How it stacks: a worked example

Say you buy something for 100.00 US dollars online.

1. Visa converts 100.00 USD to Canadian dollars at its network rate. Suppose that comes to 137.00 CAD.
2. Your issuer applies its 2.5% conversion markup on the 137.00 CAD, which is about 3.43 CAD.
3. Your statement shows roughly 140.43 CAD.

The 3.43 CAD is the part you can avoid. On 6,000 CAD of foreign spending in a year, a 2.5% markup is about 150 CAD. Scotiabank estimates an average of 134 CAD in foreign transaction fee savings per account on its Passport card, based on average annual foreign spend over the prior 24 months. The exact number depends on how much you spend abroad and online in foreign currencies.

The dynamic currency conversion (DCC) trap

There is a separate cost that has nothing to do with your card's fee, and it catches a lot of travellers.

At a foreign terminal or ATM, you may be asked whether you want to pay in Canadian dollars instead of the local currency. This is dynamic currency conversion. If you accept, the merchant (not your card network) sets the exchange rate, and that rate is often padded well beyond what Visa or Mastercard would have charged. You can end up paying the merchant's marked up rate and your issuer's foreign currency markup on top.

Visa is explicit that the choice is yours: "Merchants and ATMs should give you a choice to accept or decline currency conversion and must not choose on your behalf," and declining "will not impact your ability to make purchases or withdraw cash internationally." The simple rule: always choose to pay in the local currency and let your card network do the conversion.

Which Canadian cards waive the fee

A small group of Canadian cards either skip the foreign transaction fee outright or rebate it through rewards. The waived cards apply just the network exchange rate with no issuer markup.

Card	Foreign transaction fee	Annual fee	How it works
Scotiabank Passport Visa Infinite	None (waived)	150 CAD (waivable with an eligible account)	"Just the exchange rate applies," no 2.5% markup on foreign currency purchases.
Home Trust Preferred Visa	None (waived)	0 CAD	Converted at the Visa International rate "without additional surcharge," plus 1% cash back on all purchases.
Rogers card (World Elite / Red)	Charged, then rebated on USD	Varies (no fee on some tiers)	Mastdercard rate plus 2.5%, but cash back on US dollar purchases offsets the fee. Confirm the current rebate on the issuer page.

Two things to weigh. First, a waiver beats a rebate for non US currencies, because rebate cards like the Rogers card typically only offset the fee on US dollar spending. Second, an annual fee can erase the savings if you rarely spend abroad, so match the card to how much foreign spending you actually do. The Home Trust card is notable for waiving the fee with no annual fee at all.

Always confirm the current fee, exchange rate language, and any annual fee on the issuer's own page before you apply, since terms change.

How to choose

• If you travel or shop in many currencies, a true no foreign transaction fee card (just the network rate) is the cleanest option.
• If almost all your foreign spending is in US dollars, a rebate card can work, but check that the rewards actually cover the 2.5%.
• Always decline dynamic currency conversion and pay in the local currency.
• Watch the annual fee against your real foreign spend, the same trade off we cover in our cash back vs points guide.

To compare options side by side, see our best travel cards and best no annual fee cards, put two cards head to head on the compare tool, or browse the full card list.