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.

… exchanging currency abroad

If you ever travelled abroad you have undoubtedly faced the very unfair exchange rates at the local exchange bureaus – some rates can be as high as 10% off from the wholesale currency market. Fortunately, there is an existing alternative to this injustice.

There are some people who are seriously averse to using credit cards, but they could be quite a convenient solution in this particular case. First of all, credit cards are accepted virtually everywhere and there are cash machines all over the world to easily obtain foreign currency. Secondly, it is much safer and more convenient to carry cards than wads of domestic and foreign cash when you travel. Finally, the rate you get is much closer to the wholesale rate than you get by any other means.

The biggest concern with using credit cards is cost. Most credit cards charge foreign transaction fees when foreign currency is being used. They range anywhere between 0 and 3%. There are opportunities to find the lowest fee card possible (you need to check the fine print of your credit card agreement).

If you plan to withdraw foreign cash from an ATM, keep in mind that some ATMs do charge a hefty commission for the transaction. These fees are usually posted at the machine itself. At the same time, most banks in Europe do not charge any fees on getting cash from your credit card. However, this transaction will be considered a cash transaction by your credit card with all related complications. Most cards charge fees to obtain cash regardless of the currency, which could be as high as 5% and may have a fixed minimum like $5. Credit cards also start charging interest as soon as transaction is processed. To manage these issues, you should find the card with the lowest fees and cash advance interest charges. Also, prior to the trip you should pay off the entire balance (and may be some extra), and pay the new balance off immediately at your arrival back home. This will help you to keep average balance at the minimum and avoid interest charges altogether.

Finally, not all cards are accepted everywhere. Visa, just as they claim, is the most widely accepted, closely followed by MasterCard. American Express is slightly less popular. Such cards as Discover, Diners Club and JCB are virtually unheard of in most countries outside of major hotels and airlines. There are other acceptability issues as well. For example, credit cards issued by American banks (Citi, Amex, Capital One) are not accepted in Cuba due to embargo. Some other countries are also suspicious of foreign cards, especially when used for online purchases.

So, you need a card that is accepted at your destination and carries the lowest combined fee for foreign transactions and cash advances, if you plan to withdraw cash, or just foreign transactions fore regular purchases. At the end of the day, even with all the fees, it could be much cheaper and safer to use your card abroad instead of carrying cash or travellers cheques (with their own fees and acceptance issues).

Domestic Amount = (1 + Cash Advance Fee %) x (1 + Foreign Transaction %) x (1 + ATM fee %) x Foreign Amount
Or (Min Cash Advance Fee) + (1 + Foreign Transaction %) x (1 + ATM fee %) x Foreign Amount

... Washington Memorial

Located in the heart of old Virginia town Alexandria on the top of the hill overlooking the U.S. Capital is the true Existing Alternative to its namesake on the Mall - George Washington Masonic Memorial. The memorial looks like the Ancient Lighthouse of Alexandria and commemorates the life of the first president and the most notable Freemason.

It is a must as a quick detour to any DC trip. Along with Washington exhibits the memorial houses one of the largest Freemasonry museum. It also serves as a meeting room for a couple of lodges and a community meeting space.
Check out our reviews on Tripadvisor and Yahoo!Travel
Let us know what you think when you visit.

Reliable Travel Information

How do you prepare for a long trip? We used to get a whole bunch of books and read up on location. To get better specifics as to where to stay and what to see, one would get AAA (CAA) books, Fodor’s, Mobile Travel Guides or Lonely Planet. Now there are plenty of Existing Alternatives out there on the Net.

Our favourites are: TripAdvisor and Yahoo!Travel. The beauty of these sites, as opposed to the books, is that they offer almost real time information based on the experience of travellers just like you. Sometimes reviewers will include little tips that may actually help one save a lot of money (as in what’s worth it what’s not).

On both sites we have started ExistingAlternatives profiles to report on all the recent adventures in the never ending search for Existing Alternatives – so read on! And don’t forget to comment and contribute yourself.