FCAC
encourages consumers to understand credit card fees before travelling abroad
Agency updates its Credit Cards and You interactive tool
Financial Consumer Agency
of Canada (FCAC) released the latest update to its Credit Cards and You
comparison tool. This tool compares over 200 credit cards, allowing consumers to
easily select the one that best suits their needs based on annual fees, interest
rates, rewards, benefits and more.
FCAC is encouraging
consumers to be aware of all the fees associated with their credit cards.
Consumers should understand how all fees are calculated, especially individuals
who are planning on making purchases or taking cash advances with their credit
cards while travelling abroad.
"It is important to
understand that extra credit card fees will occur when you are vacationing in
another country," says FCAC Commissioner Ursula Menke. "Canadians need to
understand these foreign exchange and cash advance fees in order to budget for
their travel expenses and determine their best course of action for making
purchases abroad or withdrawing funds."
Most financial institutions
charge between 1.8 – 2.5 percent in conversion fees on top of the exchange rate
for each purchase made in a foreign currency. Each credit card issuer decides
its own foreign conversion fees, based on its own criteria. The foreign
conversion fee for any credit card is indicated in the credit card agreement.
Consumers should be aware
that cash advances made using a credit card are also charged a conversion fee on
top of the usual cash advance fee and that interest rates begin accruing right
away. The cash advance fee is set by the financial institution and can be either
a fixed amount, from $1 to $5, or a percentage of the withdrawal, usually 1 to 4
percent.
If a credit card is used to
make a purchase or to obtain a cash advance in a foreign country, the foreign
currency will either be converted directly into Canadian dollars, before it is
recorded on the account, or it will first be converted into U.S. dollars and
then into Canadian dollars before it appears on the account.
Consumers should also know
that they are protected from unauthorized transactions when they use a personal
credit card while travelling abroad. Safety features, like the Zero Liability or
fraud protection guarantee, mean that cardholders are not held responsible for
purchases made on their personal credit card if it is stolen, and will still be
protected on the road. Zero Liability does not apply to commercial credit cards,
something that individuals who are out of the country on business should keep in
mind. Consumers should verify with their credit card issuer for exact details on
these policies.
"There is a lot to consider
when it comes to using your credit card while travelling abroad," explains
Commissioner Menke. "To learn more about foreign conversion and cash advance
fees, I invite consumers to read our booklet called Service Fees on Credit Card
Transactions. I also encourage consumers to use our interactive tool if they are
shopping around for a new credit card, so that they can pick the one that best
suits their needs."
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