A couple of years ago we took our first family trip to the US. We saved the money we’d need for hotels, shopping and activities for a few years ahead of departure day. When the Canadian dollar was above parity, we bought US dollars and stored them in an ING Direct US dollar savings account. Before the trip, I applied for a BMO US Dollar MasterCard. Now, though, it’s time to say goodbye to it.
Why a US Dollar Credit Card May be Beneficial
We could have used our regular Canadian dollar credit card for our US expenses. We didn’t because it would charge us a hidden fee on every dollar we spent.
Like many other credit cards, our Canadian dollar card charges a fee on top of the actual Canadian/US Dollar exchange rate. At the time we travelled, this fee was 2.5% of the cost of the transaction. For example, if we paid $100 USD for lunch, we would have to pay a fee of $2.50 in addition to the actual amount it would cost to buy $100 US dollars with Canadian dollars.
There are some Canadian credit cards, like the No Fee Sears Financial MasterCard that do not charge a foreign exchange transaction fee. Instead of one of those, though, we got a USD card.
Why We Preferred a US Dollar Credit Card
The second reason we got the USD card was to control what we paid as our foreign exchange rate. As I mentioned, we actually bought US dollars ahead of time when the Canadian dollar was stronger than the American. That meant we wanted a card where we could make our purchases in US dollars, then pay the credit card bill directly in US dollars.
For us, the BMO USD MasterCard worked perfectly. We paid no hidden fee and we knew what our exchange rate was because we pre-bought our US dollars.
So Why Cancel the BMO US Dollar Card?
Why, then, did I cancel the card today?
Because the card has an annual fee.
When we signed up for the card, the fee was $25 per year. If you spent $1000 in US funds during the year, they reimbursed the fee. For the first two years we had the card, we did have spending of over $1000 a year. This year, though, we won’t. We don’t plan any travel to the US for several years at least. And the fee is now $35 a year.
I did phone and make a half-hearted effort to have the fee waived. I received at least 6 apologies but no price reduction. So I terminated the card.
Be Careful Cancelling Credit Cards
In our case, our credit rating is fairly good. We also haven’t borrowed any money in many years. Cancelling a credit card can have a negative impact on your credit score. In our case, we didn’t care. If your credit rating is weak, however, be careful. Try to find out what impact, if any, the cancellation will have on your rating before deciding whether to cut up the card.
Do you use a US dollar credit card? Do you travel or just shop online? Please share your experiences with a comment.