Credit Card Fees in Canada: A Comprehensive Guide

Credit card fees in Canada can be a real surprise. In Canada, credit card companies charge various fees, including annual fees, interest charges, foreign transaction fees, and late payment fees.

Some credit cards come with annual fees, which can range from $50 to $1,000 or more. For example, the American Express Platinum Card charges a $699 annual fee.

Late payment fees can be steep, with some credit cards charging up to $35 per missed payment. This can add up quickly, especially if you're not keeping track of your payment due dates.

Interest charges can also be a significant expense, especially if you're not paying your balance in full each month. In Canada, interest rates can range from 12.99% to 29.99% per annum.

Take a look at this: What Is a High Interest Rate on Credit Cards

In Canada, businesses can charge customers a credit card processing fee, also known as an interchange fee, when they pay with a credit card. This fee covers the costs of using credit card networks.

As of October 6, 2022, businesses outside of Quebec have the option to pass this fee on to customers. The fee is capped at 2.4% and not all businesses choose to charge it. Businesses must disclose processing fees to customers at the point of transaction.

Intriguing read: Passing on Credit Card Fees to Customers

You'll want to pay attention to the types of fees associated with your credit card. Some fees, such as interest charges and annual fees, will be clearly stated on your monthly credit card statement.

Interest charges can add up quickly, so it's essential to understand how they work. Your credit card issuer will calculate interest based on your outstanding balance and the interest rate on your card.

Annual fees can vary depending on the type of credit card you have and your issuer. Some cards have no annual fee, while others can charge a significant amount.

Other fees, like foreign transaction fees, may not be clearly highlighted on your statement or may be hidden in the fine print. This is why it's crucial to read your credit card agreement carefully.

For another approach, see: Amex Charges for Currency Conversion

In Canada, businesses can now charge customers a credit card processing fee. As of October 6, 2022, businesses across Canada (excluding Quebec) can pass this fee on to customers.

This fee covers the costs of using credit card networks, and it's also known as an interchange fee. Previously, business owners were responsible for paying processing fees.

Processing fees are capped at 2.4%, and not all businesses charge them. Businesses must disclose processing fees to customers at the point of transaction.

These disclosures should be visible at storefront entries and on websites for online businesses. The fee will also appear as an itemized dollar amount on your receipt.

Canadians may pay more at merchants who choose to pass on interchange fees, which are now allowed after a lawsuit settlement.

Some merchants, like Bell and Telus, are planning to add these fees to customers' purchases.

Customers are upset about the extra costs, especially in an economic environment with high inflation, higher interest rates, and pricey food.

Politicians, like the federal NDP, are also criticizing the fees, calling them unfair to Canadians.

Customers may choose to pay with cash to avoid the fees, but this could lead to smaller purchases.

Larger companies might be able to absorb the loss of customers, but smaller businesses could feel the pinch.

So far, there hasn't been a noticeable change in consumer behavior, with many Canadians still distracted by other economic concerns and holiday shopping.

EQ Bank is a great option for Canadians who want to avoid foreign exchange fees. Their prepaid debit card waives all foreign exchange fees charged by EQ, which can save you money on international transactions.

The EQ Bank Card is a prepaid debit card, not a credit card, but it's still a useful tool for avoiding fees in foreign currencies. You can use it as a backup card when your regular credit card isn't accepted.

Transactions made with the EQ Bank Card are still subject to Mastercard's currency conversion rate, but at least you won't be charged any extra fees by EQ.

Intriguing read: Prepaid Visa Credit Card Canada

Interchange fees, also known as swipe fees, are a percentage of every sale that credit card companies and banks collect from merchants.

In Canada, interchange fees can be as high as 3%, with the average fee on a Visa card being 1.4% prior to the recent agreement. The new deal caps interchange fees at 0.95% for eligible businesses, with a 10 basis point reduction for online transactions.

Merchants with a Visa sales volume below $300,000 a year and those with a Mastercard sales volume under $175,000 a year qualify for the reduced fee. This change is expected to benefit small businesses, although it may take time to see the impact.

Merchants can now pass on interchange fees to customers, but they must give 30 days' notice and clearly indicate the fee at the time of purchase. The fee itself is capped at 2.4%.

Discover more: Visa Credit Card Fees

Interchange fees, also known as swipe fees, are collected by a credit card network on every transaction. These fees are set by credit card networks and are mandatory.

The rate of interchange fees varies depending on the type of credit card used. For example, the fee to accept a Classic Visa card is 1.25%, while it's 0.92% for a basic Mastercard.

A premium Visa, which tends to offer more rewards, sits at approximately 2%. However, these fees can go up to as much as 3%.

The interchange fee rate is directly related to the rewards offered by the credit card. Typically, the higher the rewards, the higher the interchange fee.

Recommended read: Visa Credit Cards for No Credit

Retailers who pass interchange fees on to their customers must give them 30 days notice before doing so.

Merchants have to clearly let their customers know at the time of purchase that the fee is being charged.

The fee itself is capped at 2.4%, which means it can't exceed this amount.

Using a credit card for foreign transactions can be a costly affair, especially if you're not aware of the fees involved. Many credit cards in Canada charge a foreign transaction fee of around 2.5 per cent to convert transactions in a foreign currency into Canadian dollars.

A different take: Mastercard Charges for International Transactions

The foreign transaction fee is usually rolled into the conversion rate, so many cardholders are unaware they're spending an extra 2.5 per cent. This fee is charged by the credit card issuer and applies to every purchase made in a currency that's not Canadian dollars.

You can avoid this fee by using a credit card that doesn't charge foreign transaction fees, but be aware that some credit cards may charge dynamic currency conversion fees, which can range from 3 to 5 per cent.

For more insights, see: Currency Conversion Charges on Credit Cards

Don't withdraw cash using your credit card, it's a costly mistake. You'll incur hefty fees, including a foreign transaction fee, ATM fee, and cash advance interest charges.

Withdrawing cash from an ATM using your credit card will immediately incur cash advance interest charges, making it a double whammy of fees. This can add up quickly and leave you with a surprise bill.

Using a debit card that doesn't charge foreign transaction fees, like the EQ Bank Card, is a better option. This way, you'll get cash based on the bank's exchange rate and pay only the overseas ATM fee.

Avoiding cash advances is essential, as they're typically subject to a higher rate of interest than other purchases.

Additional reading: Do Credit Cards Charge Daily Interest

Foreign currency conversion can be a sneaky way to add extra fees to your transactions. Many credit cards in Canada charge a fee of about 2.5 per cent to convert any transactions in a foreign currency into Canadian dollars.

This fee is usually rolled into the conversion rate and thus many cardholders are unaware they are spending an extra 2.5 per cent whenever they buy anything online or in-person that is not in Canadian dollars. To put it into perspective, imagine spending €1,000 during a trip to Europe and being charged an extra $37.73 in foreign transaction fees.

The credit card network uses a credit card conversion rate that's slightly higher than market rates to convert the transaction amount from the local currency to Canadian dollars. You can check the Mastercard currency exchange rate and Visa foreign exchange rate online to see how much you'll be charged.

Here are some examples of how foreign currency conversion can affect your transactions:

As you can see, using a no FX fee credit card can save you a significant amount of money on foreign currency conversion fees.

Interest charges on your credit card are based on either your unpaid balance or your cash advance amount. This means that if you have a balance on your card, you'll be charged interest on that amount, and if you take out a cash advance, you'll be charged interest on that amount separately.

You'll usually find a separate section on your credit card statement for cash advance interest charges versus interest on your overall balance. This can help you keep track of your interest charges and make informed decisions about your spending.

To avoid unnecessary interest charges, it's a good idea to scale back on your credit card spending to only what you absolutely need.

Curious to learn more? Check out: How Much Do Credit Cards Cost

Interest charges can be a significant part of your credit card bill, so it's essential to understand how they work.

Unlike a set credit card fee, interest is charged based on either your unpaid balance or your cash advance amount.

Your credit card statement will usually have a separate section for cash advance interest charges versus interest you're charged on your overall balance.

Interest charges can quickly add up, so it's crucial to pay your balance in full each month to avoid these extra fees.

Explore further: Why Am I Being Charged a Cash Advance Fee

Over-the-Limit fees can be a costly surprise, ranging from $25 to $50 per statement period if you exceed your credit limit.

It's your responsibility to keep track of your spending and avoid going over your limit.

If you do go over, you'll be charged an over-the-limit fee, which can add up quickly.

The only exception is if a merchant places a temporary hold on your credit card that exceeds your limit, but the actual charge is under the limit, such as when buying gas or having groceries delivered.

Scaling back your credit card spending can be tough, but it's essential to avoid overspending. To make it easier, consider using a credit card interest calculator to see how much you'll pay in interest over time.

You can also use a credit card minimum payment calculator to determine how long it'll take to pay off your balance. This can help you make more informed decisions about your spending.

Worth a look: How to Pay off Credit Cards with Other Credit Cards

It's a good idea to scale back to only what you absolutely need to put on your credit card. This will help you avoid overspending and stay within your means.

If you're struggling to cut back on credit card use, consider using a prepaid credit card, such as the KOHO Essential Prepaid Mastercard. This can help you stick to your budget and avoid overspending.

Here are some popular credit cards that offer rewards and cash back:

By scaling back your credit card spending and using the right card for your needs, you can avoid overspending and stay on top of your finances.

Interchange fees can be a significant burden, but there are ways to lessen the burden or avoid them altogether. Merchants who pass interchange fees on to customers must give them 30 days notice and clearly let them know at the time of purchase that the fee is being charged.

To avoid foreign transaction fees, consider using a no forex fee credit card. This can save you a significant amount of money, especially when traveling overseas. For example, using a credit card with no overseas fee can save you $37.73 on a €1,000 purchase in Europe.

Some retailers charge a fee for credit card transactions, but you can avoid these fees by opting for cash or debit payments. Online payments may also go through credit card services, but some retailers that accept Interac Debit payments can offer an alternative.

Here are some fees and charges to be aware of:

By being aware of these fees and charges, you can make informed decisions when using your credit card and avoid unnecessary costs.

Foreign transactions can be a sneaky way to overspend. Many credit cards in Canada charge a fee of about 2.5 per cent to convert any transactions in a foreign currency into Canadian dollars.

This fee is usually rolled into the conversion rate, so many cardholders are unaware they're spending an extra 2.5 per cent whenever they buy anything online or in-person that's not in Canadian dollars.

Here's an interesting read: Canadian Credit Card No Foreign Transaction Fees

Late payment can have serious consequences. Some credit card companies may charge a late payment fee, but many skip this fee altogether.

Instead, they might increase your interest rate, making it even harder to pay off your balance. This can lead to a vicious cycle of debt.

Late payment can also cause you to lose out on promotions and rewards. For example, if you're late with a payment, your credit card company might withdraw a pending offer or discount.

In extreme cases, late payment can even lead to the cancellation of your credit card. This can be a huge inconvenience and may require you to apply for a new card.

Avoiding interchange fees is a smart move, especially when you're making purchases that can add up quickly. You can save money by choosing a no forex fee credit card, which can be a game-changer for frequent travelers or online shoppers.

Using a credit card with no foreign transaction fees can help you save on fees like the 2.5% foreign transaction fee charged by regular credit cards. For example, if you spend €1,000 on a trip to Europe, you'd save $37.73 with a no FX fee credit card.

Some retailers may charge interchange fees, but you have the option to pay with cash or debit instead. This can be a good choice if you're making smaller purchases or shopping at stores that don't charge a fee.

Merchants who decide to pass interchange fees on to customers must give them 30 days notice and clearly indicate the fee at the time of purchase. The fee itself is capped at 2.4%.

Here are some options to consider if you want to avoid interchange fees:

Some credit cards in Canada offer rewards programs that can be quite lucrative, with cash back rates ranging from 1% to 5% on certain purchases.

For example, the American Express Cobalt Card offers 5% cash back on dining, takeout, and food delivery, while the Scotiabank Momentum Visa Infinite Card offers 4% cash back on groceries.

Other benefits include purchase protection, which can refund or replace items that are damaged, stolen, or lost within a certain timeframe.

Some credit cards, like the TD Cash Back Visa Infinite Card, also offer travel insurance, which can cover trip cancellations, interruptions, and delays.

Additionally, many credit cards offer sign-up bonuses, which can be a great way to earn a large amount of rewards points or cash back in a short amount of time.

The CIBC Aventura Visa Infinite Card, for instance, offers a sign-up bonus of 25,000 points, which can be redeemed for flights, hotel stays, or other travel rewards.

Take a look at this: Travel Credit Cards Canada

Credit card fees in Canada can be a real headache, especially when traveling abroad. Canadians pay foreign transaction fees, as much as 2.5%, on every purchase outside of Canada.

Some credit cards offer no foreign transaction fees, which can save you a lot of money on your international purchases. Scotiabank's Passport Visa Infinite Card and Gold American Express Card are two strong options for Canadians who travel frequently.

If you're a frequent traveler, look for credit cards that offer no foreign transaction fees to avoid paying extra on your international purchases.

You can find the perfect credit card for you in under 60 seconds with CardFinder, no SIN required.

Canadians who love travel and shopping often pay foreign transaction fees, as much as 2.5%, on every purchase when using their credit cards outside of Canada.

There are several strong credit card options for Canadians that either offer no foreign transaction fees or reward purchases with more than enough cash back to cover the fees.

The Scotiabank Passport Visa Infinite Card is a great option, offering no foreign transaction fees.

The Scotiabank Gold American Express Card is another strong contender, but it's not mentioned if it offers no foreign transaction fees.

MoneySense has been helping Canadians navigate money matters since 1999, and their editorial team compares the offerings from over 12 major institutions to find the best financial products.

The Wealthsimple Cash card is a great option to consider. It doesn't charge any service fees, which is a huge plus.

You won't have to worry about exchange fees on purchases made in foreign currencies either. This can save you money on international transactions.

At a minimum, you'll earn 3.5% interest on your balance, which is a decent rate.

If you're looking to avoid credit card transaction fees, consider using cash or debit payments at stores. This way, you can skip the extra charge.

You can also shop at stores that don't charge a fee, which is a great option if you're planning a big purchase. Some retailers that accept Interac Debit payments can offer an alternative to credit card payments online.

If you're already used to making credit card payments, you might be able to wait until the end of a bill cycle to pay for a purchase, which could be a good reason to stick with credit cards despite the charge.