What you need to know about U.S. dollar credit cards

Shopping in the United States is so much better than shopping in Canada. Not only are there more stores and products available, but the prices are lower than in Canada. Unfortunately, a lot of that price difference is caused by the exchange rate. Sure some products are cheaper in the United States because of lower margins but the majority of the lower price is because our dollars are worth 25-30% less than the American dollars our retailers use to buy goods.

The upsides of U.S. dollar credit cards

Luckily for people who do a lot of shopping in the United States, almost every bank in Canada offers a U.S. dollar credit card. These Canadian credit cards have the major benefit of allowing you to shop in the United States in U.S. dollars.

Canadians who work in the United States or live in the United States can realize an automatic benefit with a U.S. dollar credit card. Purchases made in U.S. dollars can be paid off in U.S. dollars and there’s no need to exchange money. By not exchanging money, customers save the 2.5% transaction fee that often accompanies currency conversions on Canadian dollar credit cards.

Since U.S. dollar credit cards are also targeted towards Canadians who spend a lot of time in the United States, the cards often come with increased travel assistance and insurance benefits. People looking to move to the United States one day will also be glad to know that certain banks report U.S. dollar credit card history to the American credit bureaus, meaning that when you make the move south, you won’t be stuck without credit.

The downsides of U.S. dollar credit cards

Canadians using U.S. dollar credit cards should remember one important thing: the cards often have annual fees. Those annual fees, along with any interest accrued, are charged in U.S. dollars. So, while that new TV looks like a great deal, if you can’t pay it off, the interest charge won’t just be 22%. It’ll be 22% due in pricey U.S. dollars.

Canadians without U.S. bank accounts or access to U.S. dollars to repay their bills see little benefit to having a U.S. dollar credit card. This is because without U.S. dollars to spend, Canadians will have to convert their Canadian dollar income to American dollars – and end up having to pay the 2.5% currency conversion fee anyway.

With U.S. dollar credit cards having fewer reward perks than Canadian credit cards, plus an annual fee, it doesn’t make sense to get a U.S. dollar credit card unless you need to. Shoppers who make frequent purchases in U.S. dollars and who have access to U.S. dollars to pay the monthly bills will save money on currency exchange fees with a U.S. dollar credit card. Ordinary shoppers who visit the US once a year for a shopping trip will likely not save money with their U.S. dollar credit card, as they are only deferring the cost of exchanging Canadian dollars for U.S. dollars.