credit card

Dundas Square - Toronto

After my Monthly Savings Recap for February, I wanted to elaborate on the methods I used to save money. So here are the tips and ways of thinking that led me to save during that month (and in my day-to-day life). Today, I’m talking about the credit card.

I first learned about the credit card while checking out on a banner said, “Get $20 back on this purchase when you sign up for the credit card!” (Or something like that; I don’t remember the exact words.)

At the time, I didn’t like credit cards that much. I used to think of them as a burden, just one more thing to manage and worry about. I already had my bank credit card, so why on Earth would I want another one? Today, I see I was wrong. There are plenty of reasons you should want another credit card.

In the case of the credit card, that reason is no foreign currency conversion fees.

The Foreign Currency Conversion Fee

Most credit cards will charge you a 2.5% fee to convert your expenses into foreign currency. This means that if you use your credit card to buy something outside of Canada and you pay in any currency other than Canadian dollars, you will pay an additional 2.5% of the purchase total as a conversion fee. This includes purchases from US websites and stores.

So if you buy something online at an American store, your credit card will charge you 2.5% more for that transaction. Sweet, eh? Some people claim that the total fees can add up to 4% when adding Visa or Mastercard’s applied exchange rate to your credit card’s conversion fee.

It may not seem like much, but think about a small trip abroad. If you pay for your tickets, a rental car, food, gifts, shopping, and everything else with your credit card, you’ll see the costs of your trip start to rise. “C’mon, Dan, it’s only 4%!” you might be thinking right now. But let me ask you this: How hard do you have to work to make your money grow by 4% a year? What would you say if I told you, “Hey, from now on, you’re getting a 4% cut in your salary”?

If you’re anything like me, you use your credit card a lot. So if you do the math, you’ll realize that 4% of all your purchases is a lot of money in the long run. But the way I see it, even if it’s only $4, those are my $4, and if I can find a way to keep companies from taking that extra money from my wallet, I’ll do it! Credit Card

The credit card doesn’t charge a 2.5% fee for foreign currency purchases, which makes it a great option if you buy a lot of stuff in US dollars or if you’re planning a trip abroad. Of course, there are better cards for traveling, but as a general purpose card, the credit card is a nice option.

On top of that, it gives you 1% cash back for every purchase outside of and 2% cash back for purchases on Once you accumulate $20, your cash back is automatically added to your card statement as a credit. Easy as pie! You don’t even have to worry about spending your points by a certain date because they never expire!

Another strong point about this card? There’s no annual fee.

Final Word

As Barry from Money We Have wisely says:

It really doesn’t matter how many credit cards you use as long as you’re paying off your full balance on time every month. If you’re only making minimum payments, it might be a good idea to cut up some of those cards and reduce your limit.”

* Photo by Flickr user Jamie McCaffrey

Submit a Comment

Your email address will not be published. Required fields are marked *