Back in 2014 we put out an article that discussed why No Foreign Transaction Fees have not proliferated here in Canada. In that article we state the following:
In general the Canadian credit
card market is one of the most sophisticated and ahead of the times,
our cards have pretty much maxed out on the rewards and benefits they
offer. That’s why the trend in the last couple of years has been first
year free, enhanced travel benefits (think The Platinum Card from Amex,
the Amex Air Miles Reserve, TD and CIBC Aeroplan Visa Infinite
Privilege) as the adders or differentiators for new or revamped cards. Now that those
are being maxed out what’s left? No Foreign Transaction fees is one for
that matter and as we stated a few years ago the first majorcard issuer to go this route stands to take a big chunk of the Canadian
market. Will they lose revenue? Possibly as we don’t know the actual
numbers card issuers make off the fee but possibly not, there could
be an equal trade off, the loss of revenue from foreign transaction fees
could be made up by volume as the more cardholders you have the more
transactions there are and of course the banks make money off each of
those transactions.
Well, the time has come and a major Canadian bank has finally taken the plunge and in fact they make a play on our words from our 2014 article in their marketing material. The new cards is the Scotiabank Passport Visa Infinite Card. The card officially launched today, although some news leaked about the card just over a week ago (we even gave it a mention in last week’s podcast). This card is coming out strong and is just a further signal from Scotiabank that they want to become Canada’s rewards bank.
The card is taking many aspects of cards in the market right now and copying them or making them even better. Let’s look at Scotia’s marketing on this card first and give ourselves a pat on the back as here is Scotia’s comment on the No Foreign Transaction fee:
- No FX mark-up on foreign transactions made on purchases abroad. Only the exchange rate applies. Most cards charge 2.5% and currently, no other major financial institution in Canada offers a credit card with no FX Mark-Up.
Here are the rewards and benefits of the card outside of the No Foreign Transaction Fee and in brackets the card this card is trying to compete against:
- 2x the points on grocery, dining, entertainment and daily transit (including buses, subways, taxis, Ubers and more) – we see this as taking quite a few cards in the first three categories but most notably American Express’ Cobalt Card as it was the first card to have a multiplier on Transit
- Priority Pass Annual Membership with 6 lounge visits – we see this as a direct challenge to the BMO Rewards World Elite Mastercard:
Complimentary airport lounge membership with six free visits per year. Customers can use the visits for themselves or anyone else they are travelling with. No other Canadian credit card under $150 annual fee currently offers more than four lounge visits per year.
Well what do you know, the BMO card is $150 per year and offers 4 lounge visits. - The card will earn 1 Scotia Rewards point per dollar spent outside of the categories listed above.
- The card also provides an annual bonus of 10,000 points if you spend $40,000 or more on the card per year.
- The sign up bonus for the card is 25,000 Scotia Rewards points, that is worth $250 towards any travel and it comes with Comprehensive Travel Insurances: Travel Emergency Medical, Trip Cancellation and Trip Interruption.
- Annual fee of $139 and
supplementary card fee of $50. Update: the first supplementary card will be free and any others after that will have a $50 fee.
My initial thoughts on this card are that it is a really strong well rounded offering even though the points earn rate is a little bit lower when compared to some of the best cards out there. You can look at this card earn rates as follows: 2 points per dollar equates to a 2% return towards any travel and the 1 point per dollar is 1%, all other redemption options offered by Scotia are lower than this. One has to look at how this card compares to the new Brim Financial World Elite Mastercard as it going to offer a straight 2% return with a strong insurance package and no foreign transaction fee although it does not have the Priority Pass benefit. You will definitely need to work the numbers to see which card makes sense for you. Off the bat, if you travel at least once per year or more than the Scotia card makes a lot of sense with the Priority Pass benefit but if you don’t travel much but shop online a lot outside of Canada then a card like the Brim Financial card would make more sense.
We have always said there has to be some give and take when a card comes out and offers a lot of benefits, especially when it comes to no foreign transaction fee and this card shows it. By offering No Fx Fees the card offers a lower points earn rate than other cards out there that it competes with, but that’s not saying the earn is bad. 1 to 2% for any travel is pretty healthy considering you can save 2.5% on all your foreign purchases and throwing in the Priority Pass benefit worth US$261 for an annual fee of only $139? That’s a pretty darn good deal. This card is a well rounded travel rewards card – one that I will consider for our family since we are losing our main Visa card, the Chase Marriott Premier card later this week.
As is always the case with new cards, we’ll have lots more coverage of the card over the next few weeks including our full on Rewards Canada review, the card being added to our comparison charts and updating of a lot of features that this card may fit in!