Best Travel Credit Cards (Canada)

We wrote previously about the benefits of using credit cards when traveling abroad. The main drawback of that strategy were the fees associated with foreign transactions. In Canada most banks charge a hefty (usually around 2.5%) foreign exchange fee on all transactions that are not denominated in Canadian dollars (and sometimes on CAD-denominated transactions originated from outside of Canada). On top of that, if you draw foreign exchange from any ATM, locally or abroad, you will be charged a Cash Advance fee, which is usually at percentage of the amount (usually around 1%) with a min ($5) and/or maximum ($10).

To better evaluate the benefits of the cards we devised a simple scenario, where a cardholder spends $1,000 in foreign exchange and draws an equivalent of $500 from an ATM in two transactions.

Moneysense publishes an annual ranking of credit cards. Unfortunately all of the top 8 travel cards carry standard foreign exchange fees coupled with cash advance fees. Our scenario will result in total cost of somewhere between $47.50 and $52.88 (and that’s on top of their already high annual fees).

Luckily, Chase has a small portfolio of cards that carry no foreign exchange fees. They still charge cash advance fees, so the total cost of our scenario would be $10. You get to choose from:

no-fee Amazon.ca Visa, which offers 2% return at Amazon and 1% everywhere else

no-fee Sears Financial MasterCard with 2 points at Sears and 1 point for $1 elsewhere

$39 Sears Financial Voyage MasterCard with 3 points at Sears Travel, 2 points at Sears, 1.5 points for gas, groceries and travel and 1 points elsewhere

$120 Marriott Rewards Premier Visa Card with 5 points at Marriott, 2 points for flights and 1 points for $1 everywhere else

Unless you are getting 3% or more points return on your spend, the “top” travel cards are no bargain. To us, Amazon is the clear winner, if used only for travel and cross-border shopping – it’s hard to argue with no fee and 1% back is plain icing.

As always, be careful with cash advance, as the interest fees start as soon as your transaction posts. The only way to beat this is to pre-pay the expected amount prior to the trip / shopping spree.