What is a foreign transaction fee on a credit card in Canada?

It's a charge your card issuer adds when you pay in another currency, on top of the exchange rate. The Financial Consumer Agency of Canada (FCAC) calls it a foreign currency conversion charge, and the amount is in your card agreement.

How is the charge worked out?

The Financial Consumer Agency of Canada (FCAC) explains that for a purchase in a foreign currency, your financial institution applies:

1. an exchange rate for the purchase, and
2. a foreign currency conversion charge.

The charge is applied after the purchase has been converted to Canadian dollars.

What does it add up to? The FCAC's example

These are the FCAC's example numbers, not today's exchange rate or any particular card's charge.

• Purchase: €1,000
• At an example rate of 1.45: $1,450
• Conversion charge of 2.5% in the card agreement: + $36.25
• Total on your statement: $1,486.25

On a whole trip of card purchases, that extra line adds up.

Where do you find your card's charge?

The FCAC points to your credit card agreement for the total foreign currency conversion charge. Charges differ between cards and change over time, so the agreement for your own card is the place to check, before you leave.

Why can't you see the fee on your statement?

In the FCAC's example, the charge is added to the converted amount, and the result is "the total amount of your purchase". So a statement may show one Canadian-dollar amount for the purchase rather than a separate fee line. How your own statement shows it depends on your card issuer. The rate is in your card agreement.

What about cash from a credit card abroad?

Taking cash out of an ATM with a credit card is a cash advance. The FCAC says there's no interest-free grace period: interest runs from the day you take it until it's paid back in full. There may be a fee each time, the fee abroad is typically higher than in Canada, and a conversion charge may apply too. More in changing money abroad.