Use your Home Trust Preferred Visa on purchases made in foreign currencies without added foreign transaction fees1, whether you’re spending while abroad or shopping online at home.
Credit card currency exchange rates & foreign transaction fees explained
Credit cards can charge you for foreign currency transactions in two ways:
- Exchange Rate Spread: All credit cards convert foreign currency transactions using a specified exchange rate. When determining this exchange rate, most - but not all - credit cards use the exchange rate set by the credit card network (i.e. Visa, MasterCard or Amex), which fluctuates regularly.
Regardless of who your credit card issuer is, the exchange rate they charge you will always include a spread or mark-up over the actual exchange rate set by the relevant country's central bank (i.e. the Bank of Canada, U.S. Federal Reserve, etc...).
- Foreign Transaction Fees: Most Canadian credit cards also charge what is commonly referred to as a foreign transaction fee on purchases made in any currency other than CAD. The fee is equal to a percentage of the amount of any transaction you make in a foreign currency and is typically 2.5%.
So, for example, if your credit card charges a 2.5% foreign transaction fee and you were to make a $1,000 purchase in USD on your Canadian dollar credit card, you would be charged a $25 foreign transaction fee for that purchase in addition to the spread or mark-up your credit card charges on its currency exchange rate.
How to save with a "No Foreign Transaction Fee" credit card
As the name suggests, no foreign transaction fee credit cards do not charge a transaction fee on foreign transactions.
The Home Trust Preferred Visa is one of the few no foreign transaction fee credit cards available in Canada, saving you money on every purchase you make in a currency other than Canadian dollars, whether you're travelling or shopping online.
It's also important to be aware that not all credit cards with no foreign transaction fee are created equal. Read on to learn more.
Not all "No Foreign Transaction Fee" Credit Cards are Created Equal
When choosing a credit card with no foreign transaction fees, one thing to watch out for is the exchange rate they use when converting your foreign currency transactions.
Most credit cards, including the Home Trust Preferred Visa card, use the exchange rates set by major credit card networks (Visa, MasterCard or Amex).
However, some other no foreign transaction fee credit cards set their own exchange rate, which is often not transparent and includes a significantly higher spread or mark-up than the major credit card networks. So, while it may appear on the surface that you're saving money by not paying foreign transaction fees, what cards that set their own exchange rates may be doing is just shifting their foreign transaction fees by baking some or all of these fees into the spread or mark-up they charge on currency exchange rates.
The Home Trust Preferred Visa credit card always uses the currency exchange rate set by Visa International, providing transparency and giving you the comfort that the currency exchange rate you will be charged is in line with most other cards.