Should you Avoid Foreign Exchange Fees?

This post goes out to my sister who loves the Chase Marriott Visa card (Canada) that has no foreign exchange(forex) fee. She got me thinking about this subject and looking up articles that went into this.

Here is a nice simple article from that explains this quite well.

Obviously yes, you should avoid them.

But…should you? YES…but…

Basically it is saying you are going to pay a 2.5% forex fee on your purchases outside Canada. Fine, let’s assume this is accurate.

Before I go any further, I love the Chase Marriott Card and have done many posts on it.

Here is a good post on it and why you should get it if you haven’t yet.

(Current sign up bonus is still 50,000 points and a free night. your welcome – follow my links – we get nothing)

What was my point again?

Ah yes. What would you value Marriott points at? or IHG points or Best Western points?

You can google that stuff, but my checking shows about .7 cents a points for a Marriott point, but it very much depends on how you are using them.

What do you value…say Starwood points at? Well, I have been getting 5 cents or better on my Starpoints and next weekend am using 7000 points to get a $400 hotel room or almost 6 cents a point.

It could come down to how you use your points rather than avoiding a forex fee as I will show you.

Remember this is not including sign up bonus and annual fee – although it should as believe it or not the Starwood Amex card would crush the Marriott Visa

Marriott Visa – free – 50,000 points worth on average $350 + free night worth $150 = $500 in hotel stays – free

Starwood Amex – $120/year – 20,000 points worth anywhere from a low of $600 to well over $1000 for me.

People hate paying an annual fee. I get it. But the numbers don’t lie.

Anyway, back to an example. Say you spend $6000 in the US. (NOT at Marriott properties or airfare, car rental)

1. You get 6000 Marriott points. Not enough for a hotel night. But no forex fee! Worth about $42

2. You get 6000 Starpoints. Enough for 2 weekend nights at Starwood class 2 properties that go from $100-$150 a night. Let’s say $125. So about $250 in hotel stays. Forex fee of $150. Difference of $100 in your favour.

What it really comes down to is if you can use your points to maximize their value – in this case over 4 cents a point for Starpoints minus 2.5 cents forex fee = 1.5 cents compared to .7 cents a point for Marriott points.

Now, people can get better value out of Marriott points, so there will be cases where this is not true so you need to know how to get the maximum value out of your points!

Here is the link for the Starwood Card. Best Hotel credit card out there. Read this to see.

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