If you’re a Canadian consumer who visits the States frequently, you may have tried in vain to get a U.S. credit card. The process can feel like navigating a maze. Fortunately, options appear to be improving
If you do a lot of spending in the States, you may be considering getting a U.S. dollar credit card, which will allow you to spend in American currency and avoid foreign transaction fees.
“If you’re a Canadian snowbird vacationing in Florida for five or six months [with a Canadian dollar credit card], those foreign transaction fees can definitely add up … about two and a half per cent on all your spending,” says Patrick Sojka, founder and CEO of Rewards Canada, a travel rewards information website.
While the process of getting a U.S. dollar credit card might be difficult through an American bank, you can apply for a U.S. dollar credit card at any of the major Canadian banks.
Getting a U.S. dollar credit card in Canada
Janette Boleantu, a wealth advisor for The Expatriate Group Inc., a Calgary-based organization providing financial advice to Canadian expats living abroad, says getting a U.S. dollar credit card from a U.S. bank can be a fairly complex and individualized process.
“Obtaining a U.S. dollar credit card is largely case-specific,” says Boleantu. “Just like … in any country, the issuer will look at your credit history, and if you don’t have an American credit history or an American bank account, getting a credit card in the U.S. is going to be extremely difficult for you.”
However, it’s a different story if you apply for your U.S. dollar credit card from a Canadian bank. “You can get a U.S. dollar card issued by a Canadian bank, so it’s based on your Canadian credit rating,” says Sojka. Everything happens through the Canadian bank, he says, but you’ll spend in U.S. dollars.
The application process is no different than applying for a Canadian credit card. You do not need a U.S. dollar bank account or a U.S. address, as you likely would if you applied through an American bank.
However, having a U.S. dollar bank account with the same Canadian bank that issues your U.S. dollar credit card may make things a little less costly for you, even if it isn’t necessary. With a U.S. dollar bank account, you’ll be able to pay your bill in U.S. dollars without worrying about the exchange rate or currency conversion fees (most banks charge about a 4 per cent conversion fee).
You can supplement the account in a couple of ways. First, if you have any income coming in from the U.S., you can simply deposit your U.S. dollars into the account. If not, Sojka recommends waiting until the exchange rate is favourable to Canadians, then funding your U.S. dollar account on the cheap.
A U.S. dollar bank account might be worth having if you do a lot of spending in the States — say, if you’re a snowbird who spends several months there out of the year. However, if you only use your U.S. dollar credit card occasionally, you might not worry too much about exchange rates when you pay off your purchases from a Canadian dollar bank account.
U.S. department store credit cards
Of course, you may only shop in the U.S. to access stores with no Canada location, or to get better deals than those found in Canada branches. In that case, you may want to get a U.S. store credit card instead. It’s easier than getting a general purpose U.S. dollar credit card from an American bank, according to Sojka, and it might be optimal for those who don’t spend anywhere else.
“Those department store credit cards are pretty interesting because they’ll issue them to Canadians without a U.S. tax number or credit rating,” he says. According to credit services at Bloomingdales, all you need is a Canadian passport and your Canadian social insurance number and you’re eligible for the department store card.
However, it may be a little more difficult to pay the balance from Canada. “You might be able to pay the balance online, but chances are better you’ll need a U.S. money order from your bank that you can send in,” says Sojka.
Best option for AmEx cardholders
If you are moving to the U.S. and you would like a U.S. dollar credit card from an American bank, one of the easiest cards to obtain without much hassle is American Express, as long as you already have a Canadian AmEx.
“Visa and MasterCard are accepted globally, but their brands are issued by banks in different countries,” says Sojka. “American Express is truly global, thanks to what’s called their Global Card Transfer, [which allows you to] transfer all of your Canadian American Express credit history to a new American Express card in the U.S. or other country.”
So if you know you’re moving to the U.S., Sojka recommends getting an AmEx card about six months before your move. Then, you’ll already have a head start toward a credit history in America.