Shopping Discussion

CC Foreign Exch Rate Refund and Purchase Difference

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  • Jun 13th, 2020 1:25 pm
[OP]
Deal Addict
User avatar
Dec 7, 2004
3039 posts
247 upvotes

CC Foreign Exch Rate Refund and Purchase Difference

Something seems wrong to me. I have the Scotia passport, exchange rate is pretty good on purchases. I seem to get dinged by them on refunds. This is not the first time I noticed, but previously the dates were far apart so I thought it was exchange rate changes.
But now, I bought from namesilo close to same dates and the difference is unexpected!
I know it's a small amount, but last time it was $100 difference!
Is this normal and should I just eat the loss?
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10 replies
Newbie
Oct 20, 2011
67 posts
46 upvotes
Toronto
Normal.

They have an exchange "buy" rate, and a "sell" rate. There's a "spread". That's how they make money, get you coming and going.

Only way to avoid this refund penalty is stay in same currency - like using a US$ credit card.
Sr. Member
Feb 18, 2012
725 posts
352 upvotes
Victoria
Thats why you get a cc with no foreign exchange fee.
Deal Guru
Feb 7, 2017
13116 posts
10350 upvotes
Eastern Ontario
frank4162 wrote: Normal.

They have an exchange "buy" rate, and a "sell" rate. There's a "spread". That's how they make money, get you coming and going.

Only way to avoid this refund penalty is stay in same currency - like using a US$ credit card.
This
Horsey2345 wrote: Thats why you get a cc with no foreign exchange fee.
And this

If you do a lot of buying in the US, or travelling there ...

Then it’s best just to set yourself up with a US Money Account at your Bank (buy US Cash when the rates are most favourable) ... and a Cdn Bank issued US Funds CC

All the major banks offer them

Use the Bank Account to pay off the CC purchases

Combined strategy will make your US purchases go easier ... and cheaper in the long run
Newbie
Oct 20, 2011
67 posts
46 upvotes
Toronto
Horsey2345 wrote: Thats why you get a cc with no foreign exchange fee.
For sure, great idea to get a US$ credit card with no foreign exchange fee, like the Home Trust Visa with no annual fee.

But just to be clear, the foreign exchange fee is a fixed amount you're charged, like 2.5% of your transaction. This is over and above the spread you'll have to pay in the case of a refund. So if you do a return, even with no forex fee, you still won't get all your money back.

For example, you send your laptop to USA for repair with an RMA. You ask for an advance replacement to be sent to you, so you're not without a laptop. The company will often charge you a deposit until they get your old laptop back. In the case of a normal CC, you'll end up paying 2.5% X 2 of the deposit amount, plus the spread. Even with a no forex fee card, you'll still have to pay the spread. So be very careful with deposits.

And of course, when you go traveling, you won't have a CC for every currency, you'll end up paying the spread eventually. :)
Sr. Member
Feb 18, 2012
725 posts
352 upvotes
Victoria
Not always true, it all depends on exchange rate, i have made money on returns before.



frank4162 wrote: For sure, great idea to get a US$ credit card with no foreign exchange fee, like the Home Trust Visa with no annual fee.

But just to be clear, the foreign exchange fee is a fixed amount you're charged, like 2.5% of your transaction. This is over and above the spread you'll have to pay in the case of a refund. So if you do a return, even with no forex fee, you still won't get all your money back.

For example, you send your laptop to USA for repair with an RMA. You ask for an advance replacement to be sent to you, so you're not without a laptop. The company will often charge you a deposit until they get your old laptop back. In the case of a normal CC, you'll end up paying 2.5% X 2 of the deposit amount, plus the spread. Even with a no forex fee card, you'll still have to pay the spread. So be very careful with deposits.

And of course, when you go traveling, you won't have a CC for every currency, you'll end up paying the spread eventually. :)
Deal Fanatic
Dec 5, 2006
7057 posts
2663 upvotes
Markham
philelmo wrote: Something seems wrong to me. I have the Scotia passport, exchange rate is pretty good on purchases. I seem to get dinged by them on refunds. This is not the first time I noticed, but previously the dates were far apart so I thought it was exchange rate changes.
But now, I bought from namesilo close to same dates and the difference is unexpected!
I know it's a small amount, but last time it was $100 difference!
Is this normal and should I just eat the loss?
I am not sure its due to exchange rate, I think it's because when you return, they won't give you 2.5% foreign transaction fee back. So you lost the 2.5% regardless

But I might be wrong
Deal Fanatic
User avatar
Jan 9, 2011
8169 posts
9078 upvotes
Vancouver
At best you won’t get 2.5% FX fee back. At worst you lose it both ways. A CAD equivalent $1000 purchase will cost $1025, refund it and they take the 2.5% again, giving you only $975. You’re out $50. No every issuer does this; read the fine print. Best to use a card that has no FX markup at all.

BTW @frank4162 Home Trust Visa is not a USD card.
Deal Guru
User avatar
Apr 23, 2004
11068 posts
124333 upvotes
Montreal
Hi there,

It is how the market goes when using a credit card with a foreign money, it goes up and down. Sometimes, you might be even lucky when you get refund, you get more then what you paid. It all depends on the luck of the draw...

Ju Leon...
Jr. Member
Feb 1, 2019
123 posts
33 upvotes
philelmo wrote: Something seems wrong to me. I have the Scotia passport, exchange rate is pretty good on purchases. I seem to get dinged by them on refunds. This is not the first time I noticed, but previously the dates were far apart so I thought it was exchange rate changes.
But now, I bought from namesilo close to same dates and the difference is unexpected!
I know it's a small amount, but last time it was $100 difference!
Is this normal and should I just eat the loss?
I bought a CIBC US Smart Prepaid Visa for $6.95 activation fee, their fx rates are better than other financial institutions. HSBC has best foreign exchange rates, TD has a hidden charge. You can open acct with Knightsbridge online for convenience https://www.knightsbridgefx.com/currenc ... ge-canada/

My doctor is in Seattle, many of the meds are not available in Canada, CIBC US Visa comes in handy

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