What Are No-Foreign-Transaction-Fee Credit Cards?
The name says it all. No-Foreign-Transaction-Fee Credit Cards are Credit cards that do not charge a fee when you use them outside your home country. Like most regular credit cards, No-Foreign-Transaction-Fee Credit Cards offer benefits such as travel insurance, airline miles, and cash back. These benefits can add value to your overall travel experience.
To understand how No-Foreign-Transaction-Fee Cards work and to learn about the best options available today, this article covers the following topics:
- Who benefits from No-Foreign-Transaction-Fee Credit Cards?
- What fees are associated with No-Foreign-Transaction-Fee Credit Cards?
- How you can maximize travel rewards using a No-Foreign-Transaction-Fee Card.
- What are the best No-Foreign-Transaction-Fee Credit Cards in Canada?
- How to apply for a No-Foreign-Transaction-Fee Credit Card.
What Are No-Foreign-Transaction-Fee Credit Cards?
These cards are a must-have for any regular traveller. The primary reason is the cost-saving potential they offer. With these cards, travellers can avoid paying the typical 1% to 3% foreign transaction fees charged by most other credit cards.
1-3% doesn’t seem like a not but can add up in the long term. For example, let's say you spend $5,000 on a vacation abroad, and your credit card charges a 3% foreign transaction fee. This would result in an additional $150 in fees. Now, imagine you travel regularly or live abroad for part of the year. The costs could quickly reach into the thousands. All more incentive to sign up for a No-Foreign-Transaction-Fee Card.
These cards are ideal for another reason - they offer several travel-related benefits. These benefits include travel insurance, access to airport lounges, and reward points to redeem for travel.
The main appeal of No-Foreign-Transaction-Fee Credit Cards is their convenience. Paying for goods and services abroad is often a hurdle, with many travellers preferring to convert currencies and pay in cash rather than risk an unexpectedly steep foreign transaction fee. No-Foreign-Transaction-Fee Credit Cards eliminate this worry.
Travelling stress-free is great, but a No-Foreign-Transaction-Fee Credit card offers other benefits as well. Many online shopping portals charge a foreign transaction fee if you buy from a foreign merchant or in a foreign currency. No-Foreign-Transaction-Fee Cards eliminate these costs as well and help you save money on retail.
How To Get The Most Out Of Your No-Foreign-Transaction-Fee Card Rewards
One of the significant advantages of No-Foreign-Transaction-Fee Credit Cards is the potential to earn travel rewards. Below are examples of typical travel rewards:
- Early boarding passes.
- Up to 5X points back on travel purchases made using the Card.
- 1-10% cashback on travel-related purchases.
- Access to airport lounges.
- Travel Insurance
To maximize your travel rewards, it's essential to use your Card as much as possible. The fact that they are ideal to use abroad doesn’t mean you can’t use them domestically, and a good way to build up points and savings before a trip is to use the card at home for your purchases.
Another way to maximize your rewards is to use the bonus categories. Depending on the Card, certain spending categories such as restaurants, hotels or specific retailers come with better bonus points or miles. By focusing your spending on these categories, you can earn rewards much faster.
Sign up for a card that offers a sign-up bonus. Many No-Foreign-Transaction-Fee Credit Cards offer a bonus with a few thousand points or cash back if you spend a certain amount of money in the first three months of opening an account.
Finally, remember to pay your balance in full each month. This will help you avoid interest charges and keep your credit score healthy. Set up automatic payments if you are prone to forgetting.
Mistakes To Avoid With No-Foreign-Transaction-Fee Credit Cards
As with all credit cards, No-Foreign-Transaction-Fee Credit Cards come with certain pitfalls. A few notable ones include:
- Carrying a balance from month to month. Leaving any balance in your account at the end of each month results in accumulating interest charges. While several No-Foreign-Transaction-Fee cards offer an initial 0% interest rate for a few months to a year, after this period you may be faced with 19.99% - 29.99% APR (interest rate). Paying interest at these rates can quickly outweigh the potential savings you may build.
- Not reading the terms and conditions. Getting a credit card is an important decision, so be sure you’re clued up on interest rates, annual fees, and the rewards program your card offers.
Understanding these details can help you avoid any unexpected charges and get the most out of your card.
Best No-Foreign-Transaction-Fee Credit Cards
Now that you have a better idea of the benefits that No-Foreign-Transaction-Fee cards offer, you can start learning about the excellent No-Foreign-Transaction-Fee Credit Cards on offer in Canada. Some of the top options include:
