Credit Card Strategy for a Falling Canadian Dollar

The Canadian dollar is really taking a pounding against the U.S. dollar, so what should we do for our credit card portfolio as Canadians? In the past, the best credit cards to use for all foreign based transaction is to use the Chase Canada credit cards, as most of them waived the foreign transaction fees. With the Sears credit cards coming to an end, there are actually only two choices left, along with the new Rogers credit card on the scene. Below are the credit cards that waive the foreign transaction fees:

• Chase Marriott Rewards Premier Visa Card ($120 annual fee waived the first year)
• Chase Amazon.ca Rewards Visa Card (no annual fee)
• Rogers Platinum MasterCard (no annual fee)

The above credit cards still make sense where the Canadian dollar is still strong against the foreign currency, but obviously not the ideal choice for U.S. purchases. What may make more sense are U.S. affiliated credit cards offered by Canadian financial institutions. Unfortunately they all offer an annual fee. Below are the options:

• Desjardins U.S Visa Card ($30 USD annual fee)
• BMO U.S. Dollar MasterCard ($35 USD annual fee)
• Scotiabank U.S. Dollar Visa Card ($35 USD annual fee)
• CIBC U.S. Dollar Visa Card ($35 USD annual fee)
• TD U.S. Dollar Visa Card ($39 USD annual fee)
• RBC U.S. Dollar Visa Gold ($65 USD annual fee)

The main benefit of having any of the credit card is that you pay your credit card bills in USD directly, which means you do not have to worry about any foreign transaction fees for USD purchases. But if you make other foreign purchases, then the fees will apply.

These credit cards are beneficial if you already have USD that you converted a while back when the rates were more favourable to Canadians. The rates are looking something like this lately:

• $1.00 USD is worth more than $1.31 CAD.
• $1.00 CAD is worth less than 0.76 USD.

So if you have to convert the Canadian dollar today, into USD, to pay off this credit card bill, then you are probably better off having either the Chase Amazon.ca Rewards Visa Card or Rogers Platinum MasterCard. The reason is because they have the same effect as converting the money yourself, the credit card company will just do the same conversation for you, but at least these two credit cards do not have any annual fees.

Conversely, it is actually very beneficial for Americans to come to Canada with the weakened dollar. Let’s see if it results in an increased number of tourists in Canada.