How To Get US Credit Cards – Part 7 – Foreign Exchange

So you’ve passed through the gauntlet and have your first US credit card.  Congratulations!  Now you face another challenge, meeting your minimum spend requirements in order to get your sign-up bonus.  Luckily the American Express Premium Reward Gold Card that I recommended earlier does not have any foreign currency charges so you basically pay the average daily rate for USD–>CAD.  And once you meet the minimum spend of $2,000 in the first 3 months, you would receive 30,000 Membership Rewards points!

I have no doubt if you’ve gotten this far, you should have no problems meeting the spend requirements but once you do, how do you get USD to make your payment?  Or more specifically, how do you get USD without breaking the bank?  Well, that’s what we’ll discuss today.

PointsNerd’s Method

When I first got my US cards I did a lot of research on how to best exchange Canadian dollars to US dollars in order to make my credit card payments.  There were a lot of options out there but most had high fees, making it fairly unattractive.  Bank rates were usually preposterous as well as they included a hidden 2.5% uplift on the daily foreign currency exchange rates.  What was sneaky about this was that they wouldn’t tell that you were paying a premium.  If Google told you the CAD-USD exchange rate was 0.8, you would get something like 0.78 from the bank and that rate gets passed onto you as if it is the daily exchange rate.   Unless you were paying attention, you wouldn’t even know.

The one very fair way to do the FX I have found was through a company called TransferWise.   Now I’m sure there are others but this is a method I have used successfully and I have 100% trust in the company.

What Is TransferWise?

TransferWise is a foreign currency exchange that has transparent pricing for their exchanges.  You don’t have to be a math wiz to reverse engineer your actual cost for the exchanges, as is the case with the banks.  I have found the fees to be incredibly reasonable and the process is dead simple.  Below is a quick video from TransferWise that gives you a better understanding of what they do:

What Are The Fees?

Pricing is dependent on the amount transferred but it’s roughly 1% with a minimum fee of $3.00.  The more you transfer, the lower the rate becomes but it’s not substantial until you get into the 6 figure transfers.  The easiest rule of thumb is that you get the market rate and the fee will be 1%.

Here’s an example.  Say you want to transfer $1,000 CAD.  The first thing they do for the calculations is take their fee (of roughly 1%) and then exchange the amount left over at the market rate.

Seems reasonable.  But let’s make sure via Google, which has the exchange rate of the day.

What the what????  TransferWise is actually providing a better rate than what Google shows.  How this is likely because TransferWise has yesterday’s mid-market rate whereas Google has the current exchange but as you can see from the above example, you are getting the actual exchange, not some marketed up hidden rate.

What’s the Process to Transfer CAD-USD?

It’s actually pretty simple.  When you create a TransferWise account, you will need to confirm your identity, address, and banking information but the process is pretty straightforward and easy.  This is a necessary step because monetary transactions are met with a lot of scrutiny.  Once everything is confirmed here’s what you do to complete your transfer.

First, you decide how much you want to transfer.  

Then you need to decide where to send the money.  Typically this would be to yourself.  Don’t worry about Step 2 from the image … that’s just to verify that you are sending the money.

Then you review your transfer one last time.

Now for the very cool part … at least I find it cool.  The actual transfer.

As you can see, you can choose to do a Direct Debit from your chequing account, a wire transfer, a Visa or Mastercard Debit card payment or a Visa or Mastercard credit card payment.  The debit/credit card payment methods have fees associated with them but if you are willing to pay it, it’s not a bad option.

I use the Direct Debit option because there are no fees.  If you choose this method, you actually log into your bank account and authorize the Direct Debit and the money is immediately taken from your bank account.

It should be noted that even though the money is taken right away from your chequing account, TransferWise doesn’t receive it for a few days after that.  Once the funds are received, the money is exchanged (at the rate that you had when you initiated the transfer) and is deposited into your US account.

My Latest Transfer

In my latest TransferWise transfer, I sent $6,200 CAD to make payment against my new US American Express Platinum Business Card.  The minimum spend on this card is $10,000 USD in the first 3 months so I’ve been concentrating all my spend on this card.  I wouldn’t recommend this card as your first US card but as a second or third, it’s a great option.

Onto the transfer!

I made the request on July 4th with TransferWise.

The funds were withdrawn from my Canadian chequing account on the same day.

And received in my US chequing account two days later.

As you can see, the process is very straightforward and fast.  What I love about the whole process is the transparency … something you don’t get with banks.

Sign Up Bonus

If you sign up for TransferWise and use my referral link, you will receive a £500 (~$815 CAD /  ~$650 USD) transfer fee free!  If you get the AMEX Premier Rewards Gold, that means that of the $2,000 minimum spend required to get your sign-up bonus, you would only pay TransferWise fees on $1,350 USD ($2,000 USD – $650 USD)!

To sign up for TransferWise, you can use the URL below:

http://bit.ly/PointsNerdTransferWise

Up Next

I don’t think there will be a follow-up part to this series unless you have additional questions that warrant another post.  If the questions are specific to an area of the series, feel free to leave a comment in that series post.  I do my best to respond to every comment.  I hope you enjoyed this series because it took a lot of trial and error for me to figure this out on my own.  Hopefully, it makes the path for you easier.