Best US Dollar Credit Cards in Canada
What You Should Know
- US Dollar credit cards allow Canadians to pay with US dollars without any FX conversion fees. This also means that the USD cardholder must pay their credit card balance in USD.
- USD credit cards do not apply a 2.5% FX conversion fee on US dollar transactions but will apply the conversion fee to non-USD transactions.
- U.S. dollar credit cards can benefit those who travel to the U.S. frequently or make purchases in USD often.
Best US Dollar Credit Cards
About US Dollar Credit Cards
U.S. dollar credit cards are denominated in USD instead of CAD. Many Canadian banks offer U.S. dollar credit cards that can be useful for U.S. travel or shopping in USD. Canadian snowbirds who spend much of their year in the United States can also benefit from getting a U.S. dollar credit card.
When you use a USD-denominated credit card, you do not have to pay FX fees, and conversion spread when buying in US dollars. Some of the best Canadian credit cards charge an FX fee of 2.5%, but many other credit cards may have a much higher FX fee due to a high FX spread.
You will have to pay off your balance in USD, so if you do not have a USD-denominated income, you would still have to deal with USD-to-CAD conversion that may fluctuate and contain FX conversion fees.
How Does US Dollar Credit Card Work
US Dollar credit cards are denominated in US dollars instead of Canadian dollars. This means the card is charged and must be paid in US dollars. Like other credit cards, US dollar credit cards can be used for foreign and Canadian purchases, but these transactions will incur currency conversion fees and foreign transaction fees.
What Are Currency Conversion And Foreign Transaction Fees?
Currency conversion and foreign transaction fees can be charged to your credit card for purchases in foreign currency.
A currency conversion fee is charged by your lender when you purchase in a foreign currency. The currency conversion fee is usually 2.5% of the transaction, which means the fee increases proportionally to the purchase price.
A foreign transaction fee is another fee that is imposed on foreign purchases. This fee is charged on foreign purchases but is not explicitly for currency conversion. A foreign transaction fee is typically 1% to 3% of the value of the transaction.
When you pay off your US-denominated credit card, you must pay it off with US dollars. Usually, you can use your Canadian dollar-denominated bank account to pay off the US dollar credit card, but your bank will charge you a currency conversion fee. To avoid unnecessary fees, the best way to pay off your US dollar credit card is with a US dollar bank account.
Advantages and Disadvantages of U.S. Dollar Credit Cards
| Advantages | Disadvantages |
|---|---|
| Save foreign transaction fees when you make purchases in U.S. dollars. | A foreign transaction fee will be applied when you spend in a foreign currency other than U.S. dollars. |
| Each of the big five banks in Canada offers a U.S. dollar credit card. | There are fewer or no rewards compared to the premium cards available in Canada. |
| Most U.S. dollar credit cards have some travel benefits and insurance. | You may need to open a U.S. dollar bank account to pay off your credit card bills. |
| Low annual fee compared to many premium cards in Canada. | U.S. dollar credit cards issued by Canadian banks don’t help you build a credit history in the U.S. |
| U.S. dollar credit cards issued by Canadian banks help you build a credit score in Canada. |
Paying U.S. Dollar Credit Card Bill
There are two common ways of paying off your USD credit card bills –
- Through an online banking account
- Setting up automatic payments from your bank account
Some banks may require you to have a US dollar bank account to make payments. For example, Desjardins requires you to pay using a U.S. dollar bank account. Some banks may require you to have a U.S. dollar bank account only if you opt for pre-authorized auto debit. For example, if you have a TD U.S. Dollar credit card, you can pay your credit card bills through EasyWeb online banking in Canadian dollars or U.S. dollars. However, if you wish to set up automatic payments, you can do so only with a U.S. dollar account. You must verify with your credit card provider if you would be charged an FX fee if you pay your credit card bill using Canadian dollars.
In addition to the above methods, you may have other options for paying your bill, such as by mail or at the bank counter. The payment options vary from one bank to another, and you must carefully learn about them before you apply for a credit card.
U.S. Dollar Credit Card Alternatives
There are a few other credit card options that you may consider instead of getting a U.S. dollar credit card from a Canadian bank.
1. Get a no-fx fee credit card: Some credit cards available in the Canadian market do not charge a foreign transaction fee for transactions in other currencies. However, you should know that some of these credit cards may charge higher exchange rates than those set by credit card networks.
2. Get a credit card from a U.S. Bank: As a Canadian, you may be able to get a credit card offered by a U.S. bank if you have the following:
- A U.S. mailing address
- A U.S. bank account
- A U.S. SSN (Social Security Number)
If you do not have an SSN but have a credit history in Canada, you could use Nova Credit, a service that helps you apply for a credit card in the U.S. using your credit history in a foreign country. You can also use one of the Canadian bank's cross-border subsidiaries, like RBC Bank, to get a US credit card.