One of the hot topics in Canadian financial landscape is the strong Canadian dollar and the deals that we can obtain from the U.S. I’ve written about USD Chequing accounts, how to save money during foreign currency exchange and even the process of buying a car from the U.S.
When I shop in USD, despite the 2.5% forex commission, I prefer to use a credit card. But what if one regularly has USD expenses – is there a way to avoid the 2.5% overhead? That’s where a USD based credit card can be used to help save money as the purchase is kept in the USD currency and avoids the forex fee.
Heads up though, having a USD credit card only really saves money if you already have USD accumulated or if you’re income is USD based. That way, you don’t need to convert your Canadian dollars into USD to pay off the credit card, which would really defeat the purpose.
Checking out the credit card providers in Canada, it appears that four of the big banks offer USD credit cards. All of them have annual fees but vary in what they offer. Although I do not like paying annual fees on credit cards, these cards would end up paying for themselves in short fashion. $1000 charged to a USD credit card in a month would save $25, over a year, that’s $300.
Here is what I came up with:
|Annual Fee||$35 (up to 3 free extra cards)||$25 (spend $1k / yr and next yr is free)||$65 (extra cards $30)||$39 (free extra cards)|
|Points||None||None||1 RBC Pt for every $1 spending||None|
|Extras||Free Travelers Cheques||None||Free Travelers Cheques||None|
Judging from the choices in the table, for me, it’s all about value, even if there is an annual fee. The only card that offers a rewards program is the RBC product, but surprise, it also has the highest fee. For me, unless you already collect RBC points, the higher fee doesn’t justify starting a new points program. I will say that having trip interruption/cancellation insurance on a credit card is a plus as it can be very expensive when purchasing it through a travel agent.
If you are dead set against paying an annual fee, then the BMO product is likely best. They will waive the $25 annual fee the following year providing that you spend at least $1k USD in the current year. As this card has the lowest cost, so are the extra offerings – however, they do offer the essential extended warranty which I have used before.
For the traveler, the most value may be the TD card. For $39 and free additional cards, they get a USD credit card with a load of insurances. While it includes the standard extended warranty/theft insurance, it also includes car rental collision, trip interruption and lost/delayed baggage. However, these insurances can only be used if the trip is booked with the credit card, and how often does one book their trips using USD?
If I were to pick one today, it would likely be the BMO product. It’s low cost (almost free) and I can depend on my CAD based credit cards to cover the travel insurances.
How do you pay for your USD expenses?