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How to avoid credit card fees in Canada
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Want to avoid credit card fees? Here are six ways to steer clear of paying unnecessary fees, including annual fees, foreign transaction fees, and high-interest charges. We’ve also suggested the best Canadian products on the market to help tackle credit cards charges.
Maybe you think credit card fees are as inevitable as that old idiom about death and taxes. Used wisely, your credit card is a financial tool. Plus, there are some pretty sweet perks to having a piece of plastic in your back pocket – managing cash flow, travel rewards, comprehensive insurance, and consumer protection. After all, how else are you going to afford that suite overlooking the Vegas strip?
But credit cards can also come with some hefty charges. It pays to know what fees are associated with credit cards, and even ask yourself: is it worth it to pay an annual fee for a credit card? (Depending on what you want from your credit card, the answer may be yes) Even if you’re the type of person who pays off their balance each month, there are other credit card charges you may not be aware of, as well as some tricks to avoid paying the fees. Here is how to avoid credit card fees – and our recommendations for the best credit cards to help you.
Annual fees
Tangerine Money-Back Credit Card
Apply for a Tangerine Money-Back Credit Card by July 5th, 2023. If you're approved, you’ll earn an extra 10% back on up to $1,000 in everyday purchases made within your first 2 months.*
Many banking institutions charge for the honour of carrying their card in your wallet. Annual credit card fees can vary widely, depending on the product. While fee-carrying credit cards often come with perks such as travel rewards, roadside assistance, or a concierge service, if these things don’t matter to you, why pay an annual fee at all?
The Tangerine Money-Back Credit Card is one of the best no annual fee credit cards on the market. Applicants only require a minimum personal income of $12,000 and are recommended to have at least a Fair;Good credit score. Another perk is the cash back rewards. Earn 2% Money-Back Rewards on your purchases in up to 3 categories of your choice, and 0.50% Money-Back Rewards on all other purchases.
Another bonus: Special 10% extra cash back rate on the first $1,000 spent with the card on everyday purchases (max. $100 cash back) in the first two months if you're approved, apply by July 5, 2023.*
Tangerine pays out rewards monthly – either applied to the balance of your credit card or directly into a Tangerine Savings Account. Not only can you save money, but you’re also not paying an annual fee for the privilege. You can learn more in our Tangerine Money-Back Credit Card Review.
Learn more about the Tangerine Money-Back Credit Card*Terms and conditions apply
Interest charges
In an ideal world, the easiest way to avoid credit card fees is to pay off your statement in full and avoid interest charges. But sometimes life gets in the way, and you find yourself carrying a balance. Credit cards typically come with a 19.99% interest rate. So, it makes sense to avoid additional credit card charges and switch to one of the best low-interest credit cards in Canada.
READ MORE: The best low-interest rate credit cards.
Foreign transaction fees
Let’s face it – travelling can be expensive. On top of paying for air travel and accommodation, there’s a hidden expense that you may not be aware of: foreign transaction fees. Foreign transaction fees are charged by your credit card company when you make purchases outside Canada or with a non-Canadian retailer. The fees—around 2 to 3 percent—are usually incorporated into the exchange rate, so they’re not always noticeable. But they can add up, especially if you’ve got the itch to wander, are planning to study abroad, or are an entrepreneur who makes online purchases in foreign currencies.
Scotiabank Passport® Visa Infinite* Card
Earn up to $1,100* in value in the first 12 months, including up to 35,000 bonus Scene+ points and first year annual fee waived on your first supplementary card.¹ Earn 25,000 bonus Scene+ points by making at least $1,000 in everyday eligible purchases in your first 3 months. Plus, as a Scotiabank Passport Visa Infinite cardholder, you are eligible to earn an annual 10,000 Scene+ point bonus when you spend at least $40,000 in everyday net eligible purchases annually. Offer ends October 31, 2023.
One savvy strategy to avoid paying these charges is to get one of the best no foreign transaction fee credit cards. We’re big fans of the Scotiabank Passport® Visa Infinite* Card, as cardholders are not charged a Foreign Currency Conversion mark-up on foreign currency purchases, whether you make them online or outside of Canada. Only the exchange rate applies. Plus, there’s currently a welcome bonus for new cardholders. Earn up to $1,100* in value in the first 12 months, including up to 35,000 bonus Scene+ points and first year annual fee waived on your first supplementary card.¹ Offer ends October 31, 2023. Win-win!
Learn more about the Scotiabank Passport® Visa Infinite* CardConditions Apply. Visit here for the Scotiabank Passport® Visa Infinite* Card to learn more.
READ MORE: The best no foreign fee credit cards.
Cash advance fees
The best way to avoid paying cash advance fees altogether is to have savings set aside that can be accessed in an emergency. But for those times when it is an emergency, it’s wise to understand how cash advance fees work before you hit up the ATM. As a rule, cash advances are charged at a higher interest rate than usual purchases – around 22% and upwards. And unlike a regular purchase, cash advances don’t have a grace period, meaning you’ll be charged interest from the day you withdraw the money. You may also be charged ATM fees on top of other credit card fees.
The BMO Preferred Rate Mastercard®*
Get a 0.99% introductory interest rate on Balance Transfers for 9 months with a 2% transfer fee* and the $29 annual fee waived for the first year*.
However, it is possible to find a credit card that won’t ding you so hard with high-interest rates on cash advances. For instance, the BMO Preferred Rate Mastercard®* offers a rate of 15.99% on cash advances. The APR on purchases is 13.99% and BMO covers theft and damage protection for items bought with the card*. Add to that, the BMO Preferred Rate Mastercard®* comes with a low annual fee of $29 (which is waived in the first year).*
Learn more about the BMO Preferred Rate Mastercard®**Terms and conditions apply.
BMO is not responsible for maintaining the content on this site. Please click on the Apply now link for the most up to date information.
Interest rate fees
One strategy for tackling credit card debt and avoiding sky-high credit card interest rate charges is through a balance transfer promotional interest rate. Essentially, it involves paying off one credit card with another, by transferring your current debt from a higher-interest card to a credit card with a significantly lower interest rate.
Typically, a balance transfer credit card offers an extremely low or even 0% interest rate, which means you’ll save money on interest charges.
Late payment fees
Even if you’ve got the best intention to settle your balance in full every month, it pays to understand how late payments lead to added credit card fees. Canadian credit cards offer a minimum interest-free grace period of at least 21 days after the billing period. However, if you fail to pay in full by the due date, you’ll be charged interest.
All Canadian credit cards charge interest on unpaid balances, but you may be able to escape a penalty for a tardy payment. For instance, some Canadian banks may not impose a late payment “fee” on their credit cards, but you’ll still rack up interest on the outstanding balance. However, making late or missing payments could cost you in other ways: some institutions may automatically hike the APR (Annual Percentage Rate) if you make two late payments in a 12-month period. Make a habit of it and late payments could damage your credit score.
The bottom line? Missed or late payments on your credit card are never a good idea. Avoid this sticky situation by setting up pre-authorized payments from your chequing or savings account on (or ideally, before) your payment due date.
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