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Canadian Credit Cards > Credit Card News > Editor's choice: Top U.S. dollar credit cards


Editor's choice: Top U.S. dollar credit cards

By Daniel Workman and Kristen Frisa

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The drop in the Canadian dollar relative to the U.S. currency means some Canadians will forgo bargain-hunting trips across the border. But many Canucks still will cross-border shop, buy online from U.S. retailers or book American hotels and car rentals. If you're one of them, even tiny discrepancies in the exchange rate can change the way you spend your money.

Canadian credit cards can charge additional fees for purchases made in foreign currencies. Foreign transaction fees (that is, the fee charged simply for using the card outside of Canada) on your purchases can get really pricey if you spend in the U.S. frequently, or if you spend extended periods there. The foreign transaction fee on most credit cards is typically 2.5 per cent, and is in addition to the currency exchange on your

So, if you use your regular card with a 2.5 per cent foreign transaction fee to purchase an item that costs US$100, you'll actually end up paying about C$140, using the exchange rate as of April 2017.

Options for spending on plastic in the U.S.
If you do spend in the States frequently, you can find a Canadian credit card that doesn't charge foreign exchange rates, such as the Marriott Rewards Premier Visa. However, this card - like other no-foreign-fee cards - comes with a hefty annual fee that could offset your savings. 

You could, alternatively, use debit instead of credit. For instance, RBC's chip Client Card can be used to make debit purchases at retailers and businesses throughout the United States for $1 per transaction.

You can take money out of an American ATM using any Canadian debit card, too, but it could cost you "$3-$5 per transaction in addition to any charges imposed by the local ATM owner or provider," according to an article on RBC's website.

But with both of these options, you lose a bit of control, since the currency exchange rate changes frequently, and is calculated automatically when your transaction is posted (not when you actually make your purchase).

For this reason, you might want to consider applying for a U.S. dollar credit card instead.

Top Canadian U.S. dollar credit cards
U.S. dollar cards allow Canadians to spend and be billed in American currency, so no conversion is made until the shopper chooses to exchange money to pay the bill.

This serves as an effective strategy for averaging out unpredictable exchange rates and minimizing conversion fees on spending and refund transactions

For even more flexibility, you can link your card to a U.S. dollar bank account. This eliminates conversion charges when you pay your monthly bill, and annual fees are automatically deducted using the same currency. You can also wait until the Canadian dollar is higher before depositing converted U.S. funds.

Four U.S. dollar credit cards are available from major Canadian banks:

1. RBC U.S. Dollar Visa Gold
"Canadian RBC clients can use their RBC U.S. Dollar Visa Gold credit card while in the United States to make their transactions in U.S. funds," says Andrea Metrick, senior director of retail cards at RBC. "This is a great option for clients who may make frequent U.S. dollar purchases."

This card is Canada's only U.S. dollar credit card with a rewards program. RBC's product has a 19.99 per cent annual percentage rate (APR) and also includes up to $50,000 in free purchase protection for loss, theft or damages for 90 days after a purchase. Extended warranty coverage automatically doubles the original manufacturer's product guarantee for up to one year.

RBC Visa Gold also offers a comprehensive suite of free travel insurance benefits. These insurance benefits include auto rental collision, travel accident, trip cancellation and trip interruption coverage. The card also provides up to $2,500 for essential clothing and toiletries needed due to lost or delayed luggage.

Con: Among the four cards compared, RBC U.S. Dollar Visa Gold has the highest annual fee at US$65.

2. BMO U.S. Dollar Mastercard
The BMO U.S. Dollar Mastercard has an APR of 19.99 per cent and imposes a US$35 annual fee, one of the lowest in this comparison. Better yet, that fee is rebated if you charge more than US$1,000 annually.

The BMO U.S. Dollar Mastercard is bundled with free purchase protection and extended warranty insurance.

Con: You have to pay extra for travel insurance benefits under BMO's product.

3. TD U.S. Dollar Visa Card
With its relatively modest US$39 annual fee and 19.99 per cent APR, TD's U.S. Dollar Visa Card provides several free travel insurance perks. Complimentary benefits include up to $1,000 per traveller in lost or delayed baggage coverage.

Like the RBC and BMO products, the TD card furnishes purchase protection and extended warranty coverage.

Con: This card excludes trip cancellation insurance, which can be a key benefit for Canadian snowbirds who schedule multiple trips to warmer-weather states.

4. CIBC U.S. Dollar Visa Card
The CIBC U.S. Dollar Visa Card has a built-in service that can automatically debit minimum payments or total balances from a linked U.S. dollar bank account. This enables cardholders to meet their monthly due dates without worrying about the ongoing exchange rate. Plus, the card ties with the BMO card for lowest annual fee, at US$35. It has an APR of 19.99 per cent.

CIBC's product entitles cardholders to rental car discounts and commission-free American Express travellers cheques. The only free travel insurance perk is up to $100,000 in common carrier accident coverage.

Con: Neither purchase protection nor extended warranty coverage is available under the CIBC card - benefits that some Canadian travellers who do a lot of cross-border shopping may miss.

Other U.S. credit card options
Setting up a U.S. credit card with a banking institution south of the border might be possible. In some cases, you may be required to have an account with the institution.

"Canadian RBC clients with a U.S. banking account are eligible to apply for RBC Bank U.S. dollar cards," Metrick says.

In contrast, a representative from Capital One's American website said in an emailed response to questions that, "Canadians are welcome to apply online at any time." (In other words, you do not need to have an existing account with the bank to apply.)

Setting up a credit card account with a U.S. financial institution can get complicated and time-consuming, though.

For most Canadians, the more effective option is to choose a Canadian U.S. dollar credit card.

Not only is this likely the easier choice, but you likely won't have to open a second bank account with an institution that isn't your primary bank, since four of the five major Canadian banks offer U.S. dollar credit cards. This lowers your risk of fraud and your risk of missing payments - something you definitely don't want to deal with after a trip to the States.

See related: Big savings from little-know credit card freebies; Credit card perk: Extended warranty protection

Updated: April 27, 2017