Buying, saving and spending U.S. dollars

How Canadians can get the most bang for their ailing loonies.

Gail Bebee 1 February, 2016 | 6:00PM
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Canadians love their winter escapes to southern climes. While the warmer weather is welcome, the sticker shock for a getaway this year is not. Prices at many popular destinations are tied to the mighty U.S. dollar, and Canada-U.S. exchange rates are the lowest in years. A falling loonie also means that shopping at American retailers, in stores or online, is increasingly expensive. More than ever, Canadians need to find ways to stretch their funds when they are buying, saving or spending U.S. dollars.

Using a debit card at an ATM in the United States is an easy way to withdraw U.S. currency from your home bank account, but you pay for the privilege. Buried in the exchange rate is a foreign-currency conversion fee which is usually 2.5%. Your bank will add an international ATM usage fee (typically $3 in the U.S. and $5 elsewhere) on each withdrawal.

The foreign bank that owns the ATM may levy a usage fee too. If you pay for a premium banking package, these ATM fees may be waived. Customers of Scotiabank, a member of the Global ATM Alliance, can avoid the usage fees if they use their ScotiaCard, Scotiabank VISA or Tangerine Client Card to withdraw funds at ATMs of other Global ATM Alliance members such as Bank of America. In the U.S., TD Canada Trust customers do not pay usage fees for withdrawals at TD Bank ATMs and certain Presto! ATMs.

Buying American money at an airport kiosk or the local branch of one of our big banks may be convenient, but currency-exchange services almost always offer a better deal. Some of these firms, including Ultimate Currency Exchange in Ottawa, promise better rates than any Canadian bank. Others such as Knightsbridge Foreign Exchange, which has a transaction minimum of US$2,000, have best-rate guarantees.

An online search will locate currency-exchange firms near you. However, your choice is not restricted to storefront locations in your area. Some of these businesses offer online transactions. For example, you can order up to $2,500 in Canadian dollars online from Interchange Currency Exchange and have your order delivered anywhere in Canada for $10. Electronic funds transfer to your U.S.-dollar bank account or to pay bills may also be available. Due diligence is essential before using these services.

The Canadian Snowbird Association Currency Exchange Program is ideal for people who spend part of the year in the U.S. and have ongoing U.S. currency requirements. On a monthly basis, CSA pools participants' Canadian funds and makes bulk purchases of U.S. dollars at exchange rates that are two to three cents per dollar better than what financial institutions may charge. The funds must be deposited into a U.S.-based chequing account. There is a one-time enrollment fee of $5 and a charge of $2 ($5 for non-members) each month a transfer is made.

If you won't be spending your U.S. dollars right away, stashing them in a U.S.-dollar savings account can be worthwhile. This is also a good place for any greenbacks left over from your vacation. The major Canadian banks pay very little interest on such accounts. Smaller financial institutions offer better rates.

For example, Tangerine Bank's no-fee, no minimum balance daily-interest savings account in U.S. dollars pays 0.25%. A similar account at Hubert Financial, the online division of Sunova Credit Union in Manitoba, sports the relatively lofty interest rate of 0.75%.

If you use a Canadian credit card to pay for goods or services priced in U.S. dollars, credit-card companies typically charge a 2.5% conversion fee when converting the purchase price to Canadian dollars. You can avoid these fees by paying with a U.S.-dollar credit card.

The major Canadian banks all offer U.S.-dollar credit cards. Cardholders pay an annual fee in the $30 to $65 range, so these cards are worthwhile only if you make substantial U.S. dollar purchases. Actual savings will be reduced if you must convert Canadian dollars (and pay the foreign exchange mark-up) to settle your U.S.-dollar credit card bill.

A few Canadian credit cards do not charge foreign-currency conversion fees: Rogers Platinum MasterCard, Marriott Rewards Premier Visa and the Rewards Visa. My preferred choice is the Amazon card. Cardholders earn 1% to 2% cash back on purchases, and unlike the other cards, there is no annual fee. A foreign-currency transaction is converted to Canadian dollars at the exchange rate set by Visa International. Judging from the Visa exchange-rate calculator, rates are very competitive.

Canadian residents who visit the U.S. frequently or live there part-time may want the convenience of dealing directly with a U.S. bank to access U.S. cash, write cheques, pay bills and shop with a U.S. credit card. Cross-border banking available from TD Bank or RBC is tailor-made to fit this need. You can open an account at either bank's U.S subsidiary without having a U.S. address or Social Security number. Unlike many American banks, your Canadian credit history is considered when applying for a credit card.

With Canadian and U.S. accounts at the same bank, you can manage all your accounts together online and easily move funds between the two. Bank fees are low if you choose the right plan. For example, there is no monthly maintenance fee if you keep a balance of US$100 or more in a TD Bank Convenience Checking account. Credit cards without annual fees are available from the U.S. division of both TD Bank and RBC.

Canadian residents who shop around may be able to find inexpensive banking services at other American-based banks, especially smaller banks and credit unions. A U.S. address and Social Security number are usually required to open an account.

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About Author

Gail Bebee

Gail Bebee  Gail Bebee is an independent personal finance speaker, teacher and the author of No Hype--The Straight Goods on Investing Your Money. She can be reached at; her website is

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