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Understanding foreign currency conversion fees

It is extremely important to understand foreign currency conversion fees – which is how much your debit and credit cards will charge you when you use them outside of Canada. Even though I travel to the USA often, I never really took the time to research into just how much using my credit card was costing me. So save yourself some money by spending a few minutes calling the number on the back of each credit card. Have them explain the fees and currency conversion amounts to you.

A foreign currency conversion fee is charged to consumers to help offset the cost incurred by credit card companies and the bank, since international transactions are more expensive to process than domestic transactions.

For example, with my MBNA Platinum Plus MasterCard (still the greatest credit card in the world, BTW), all transactions made in a foreign currency will be converted to Canadian dollars. Then, an amount equal to 2.5% of the converted transaction amount will be added to the total.

Meanwhile, my President’s Choice Financial (PCF) MasterCard first converts all foreign transactions into U.S. dollars, and then into Canadian dollars, before charging a 2.5% foreign currency conversion fee.

Aside from credit cards, my options are using my ING Direct or PC Financial debit cards. You will not be able to make individual transactions at stores with either debit card, but you can use them both to access your money through bank machines.

PC Financial charges $3 per withdrawal from bank machines located outside of Canada. In addition, they also charge a fixed rate of 2.5% of the converted amount as their foreign currency conversion fee.

ING Direct, on the other hand, charges $2 for each withdrawal from foreign bank machines, but does not charge a foreign currency conversion fee.

The picture in this blog post shows the only things I carry in my wallet: ING Direct debit card, MBNA MasterCard, Bahn25 discount train card, and driver’s license. I also carry my passport at all times, as well as my NEXUS card – not that it helps me at all over here. My PCF MasterCard, PCF debit card, and any other cards I have are kept locked away in the apartment.

Aside from understanding the foreign currency conversion fees associated with both your debit and credit cards when traveling abroad, here are some tips to help keep you safe and save you money:

Inform your credit card company of your travel plans. Nothing would be more frustrating than having your credit card declined and suspended for suspicious use, because you didn’t take the time to let the card issuer know of your overseas travel plans.

Avoid Dynamic Currency Conversion. Foreign merchants will sometimes try to take advantage of tourists by offering to quote the final price of your purchase in U.S. dollars, instead of in the local currency. The exchange rate is selected by the merchant, and is usually much higher than your credit card. Make sure you know the currency conversion rates before you buy anything. Or, you can download a smartphone app that will do the conversion for you.

Double-check your card expiration date. Your trip could take a serious nosedive if you suddenly discover that your credit card is set to expire while you’re traveling. Contact customer service to see if they can issue you a card with a new expiration date, or mail you a new card to your address abroad, closer to when the card will actually expire.

Stick to using one credit card (but bring a back-up). Using a single credit card will make it easier for you to track your spending while you are away. But, you should also bring a back-up credit card just in case of an emergency – such as, your credit card being suspended, or losing your wallet. The back-up card should be stored somewhere else besides your purse or wallet – like in a safe in your hotel room, or in a money belt if you need to have it with you.

What tips do you have for using your credit and debit cards abroad?

Author: Krystal Yee

I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.


  1. Great post – I always forget to contact my bank about travel plans until the very last minute. I should definitely add it to my pre-travel checklist.

  2. Ashley says:

    Also, there are some cards that have no foreign transaction fees. My capital one card doesn’t have any. It is the only credit card I use when traveling for just that reason.

  3. Good advice to give your credit cards/banks a call to find out what the fees are for foreign transactions. I didn’t do that before I took a trip to Aruba and ended up with a lot more fees on my credit card than I was planning!

  4. Meghan says:

    I bank with Scotiabank and they have agreements with a number of foreign banks, so if you are travelling and use one of the bank machines from a bank they have an agreement with, than you don’t pay any ATM fees. In the States it is Bank of America, and when I went to Spain it was Deutsche Bank. So I’ve never had to pay a fee to take money out of an ATM outside of Canada.

    • Magda says:

      Yup Krystal should definitely have gotten a Scotiabank account before leaving, she would be paying monthly fees, but would be able to access her money for free. Nic could have gotten a free account as a student.
      Oh well Krystal! If you ever decide to go to Europe for 7 months again, get a Scotiabank account! You can even transfer funds for free between their “high” interest savings account and one at another financial institution (ahem ING for example)

      • Krystal Yee says:

        I’ll keep that in mind! But I think the setup I have now is pretty good. I just take cash out of my ING Direct account via ATM machine. I only think I need to take money out once a month, so it will charge me $2 – which I assume is lower than the monthly fee with a Scotiabank account. And no foreign currency conversion fees! Since it seems like nobody here accepts credit card anyway, cash is the better option for me.

    • Greg says:


      Scotiabank is one of the worst Banks for converting funds. I am a customer that is paid in USD converting to CDN$ and I get charged a fee of 3.25% at Scotiabank and when I check the conversion at RBC, they charge 1.875% to do the same amount.

      You can confirm this by entering the same dollar value into
      RBC’s website exchange rate page and then doing the same at Scotiabank’s site.

      I am trying to change to a different back but as we all know it’s difficult. At least I will be starting my children at any bank except Scotiabank.

      • Marv says:

        Scotia bank is the worst for converting foreign currency ,I was told at bank of montreal that they don’t charge a fee ,it’s just the exchange rate ,, on $80,000.00 I was charged $1998.00 over and above the exchange rate ,and they said that was a special rate ,a rip off ,,don’t open an account there ,,,that’s my advice ,,

  5. Savvy Scot says:

    I have just taken out a new card that doesn’t charge ANY fees or commission – :) (nationwide in the UK)
    In the past it has been a trade-off between my debit card and Credit card – Debit charge charges a flat £1.50 rate whereas my (old) credit card charges 3% fee – therefor anything over £50 I used my debit card, anything under my credit card. It is quite effective to do the research and calculate the ‘break point’

  6. Paige says:

    I’m glad that Scotiabank and ING, my banks of choice, seem to have such reasonable policies. Thanks for this article too, as this has been on my to-do list for well over a year!

  7. Marianne says:

    I lived in France for 3 months when I was 16 and had a very bad experience with my bank. Prior to leaving I had checked (and rechecked) with my bank that I wouldn’t have an issue using my debit card. They assured me it wouldn’t be a problem etc. It was a problem though as the machines in France require a 5 digit pin and I only had a 4 digit pin. I had to wait for cheques from home to come and have them cashed by the people I was staying with. It was horrible!

  8. In the US, I love USAA because it’s simply a 1% ATM fee with each transactions, and I’m typically okay with paying that. I prefer to use cash in foreign countries anyway since I find it much easier than trying to use credit. I feel like there’s a higher potential for credit fraud, too, in foreign countries.

  9. Bluehost says:

    Really informative, thanks for this, it really helped. Going to the US very soon.

  10. Angela says:

    I live overseas in Europe and hate having to do the conversions and dealing with service charges of any type and credit card fraud. So generally I make a rough estimate of expenses, then double it and carry that amount in cash, along with a credit card for emergencies. Not for everyone, but works for me.

  11. Squasher55 says:

    I’m with Ashley on this one. My wife and I travel the world, and we have a Capital One credit card that charges no fee at all for International purchases. That is the way it should be.

    Also, we have found that using cash instead of credit cards is a good way to go on foreign travel. We spent two weeks in Japan last year….and that country is almost a cash only country. But it works very well due to the honesty and safety of the Japanese people…plus all Japanese sales people can do mathematics….so the speed of purchases was actually faster than using a debit or credit card here in N. America. Interesting.

    We also used cash on a recent trip to Korea and Taiwan. It worked very well….we did use a credit card for our hotel bill.

  12. Squasher55 says:

    I forgot to add….very good blog, Krystal. There are lots of people who travel who do not know about these charges, and others, and get nailed very badly.

  13. Cyril says:

    A lame attempt at trying to get your users to click your affiliate link Crystal. This is pretty bad.

    • Joe says:

      She’s not lying, it’s the best card – well, at least available to Canadians. I mean it’s 5% cashback on gas and groceries for the first six months (if your partner gets it and then you get it, that’s a full year), and then 3% thereafter. Everything else is always 1%. So what if it’s an affiliate link? People need to make money. She’s not encouraging people to go with a bad card just for a commish.

  14. Jordan says:

    I used to bring two of the same card in case the magnetic band got damaged or something. Most compagny will be glad to send a double.

  15. Charles says:

    I have a BMO USD credit card that I use when I shop in the States, that way I don’t get dinged on conversion fees twice as I just convert my CAD cash to USD once to pay my bills. Perhaps you could get a Euro-denominated credit card.

  16. I have an HSBC US Debit & Credit Card.

    I use the US Debit Card all over the world no transaction fees. I also use the US credit card when I have a need.

    Convert my Cdn funds from my HSBC Cdn account to my US account when the US dollar is above par pay a small fee then I am set!

    As far as I am concernced most Cdn banks charge to much for the service.

  17. Renee says:

    I’ll keep this in mind if I ever get the chance to travel the world– or save enough money to do so.

  18. Jason says:

    Hey Krystal

    Your Nexus card isn’t recognized anywhere as an official piece of identity or citizenship outside Canada and USA.

    While it is easier to carry that around vs your passport, don’t be surprised if they ask for something else to establish your citizenship or identity. If you have your passport on you, I’d put away the Nexus card as it is a pain to replace that (moreso than a passport)

    • Krystal Yee says:

      I know it doesn’t work as a piece of identity outside of Canada & USA. But I keep it with my passport (which I always carry with me), because I feel like it’s safer with me, than leaving it at home.

  19. MinchinWeb says:

    Another thing to consider is what the actual exchange rate is. For major currencies (Euros, American Dollars), this will be fairly standard everywhere, but for more ‘exotic’ currencies, this could become a concern, as what Google reports might not be the rate the credit card company is using. For example, about two years ago I went to Iceland and although my MasterCard worked fine, everything was about twice as expensive as I expected!

    Luckily VISA provides a site for you to look up exchange rates beforehand.

  20. Simon says:

    Which bank / credit card should I use to minimize foreign exchange fees if I’m traveling to Italy? I live in US.

  21. Colin says:

    Sears Financial is now offering cards with no foreign exchange transaction charges and rewards

  22. Colin says:

    I just checked with Capital One. They do not charge a foreign currency transaction fee on US cards but they charge 2.5% on Canadian cards

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  24. Paul De Boer says:

    Does this 2.5% international fee violate NAFTA?

  25. Jacqueline J. Young says:

    Well could that foreign currency conversion fee applies to the withdrawals of funds from binary options. Because ioption review did not state it clearly if that is possible. I am a trader and I don’t live in the area near where the broker site is located.

  26. I agree in your statement about foreign currency conversion fee is charged to consumers to help offset the cost incurred by credit card companies and the bank, since international transactions are more expensive to process than domestic transactions. This can be a big hint for those willing to convert their money to other currency for possible wealth gain.

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