# Best way/time to convert CAD to USD for a short trip?



## DollaWine (Aug 4, 2015)

Hi everyone, I'm going to be taking a short road trip through the US next month and will need to get some USD. I've budgeted all expected expenses (gas, food, etc) and I should be good with about $600 CAD. Is there an ideal time to convert to USD (is the loonie getting better or worse in the short-term?), or an ideal place that will charge the smallest amount of fees? I bank with Scotia but am curious if other places charge less for conversion. Thanks!


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## tim_yonkers (May 21, 2017)

You can keep an eye on currency converter everyday. I think you will be able to pick the correct time.


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## AltaRed (Jun 8, 2009)

All major banks charge similar exorbitant forex fees... plus a handling charge to get USD into their branch. I strongly suggest simply using an ATM when you are physically in the USA to get a few hundred USD at a time to meet your needs.

A change of 1 cent in the loonie would be quite a bit of change in a month's time span. One percent on $600 is $6. Forget about timing. It could go up or down. No one knows.


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## Eclectic12 (Oct 20, 2010)

YMMV ... when I did it at a white label US ATM, there was a $7 USD charge for using the ATM. The Canadian side fees were still charged.

If the Canadian bank has an ATM network in the US, then the fee is much better.


Cheers


*PS*

The bit about a change of 1 cent in a month being rare looks odd to me. It seems that from May 14th to May 22nd, the loonie moved from basically 72 cents to 74 cents. There's also the two week period in starting the Feb 24th that it shed two+ cents.

Probably not worth timing for a small amount as $600 though.


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## Mukhang pera (Feb 26, 2016)

I discovered quite by happenstance some years ago that Bank of America and BNS are in bed together. I have accounts with the former, not the latter. You can use a B of A card any any BNS ATM (and vice versa) sans paying an ATM fee.


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## AltaRed (Jun 8, 2009)

Mukhang pera said:


> I discovered quite by happenstance some years ago that Bank of America and BNS are in bed together. I have accounts with the former, not the latter. You can use a B of A card any any BNS ATM (and vice versa) sans paying an ATM fee.


Now there is valuable info! Not that it matters to me since I maintain a USD domiciled account, but it would be helpful when in Hawaii (no WF there).


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## AltaRed (Jun 8, 2009)

Eclectic12 said:


> The bit about a change of 1 cent in a month being rare looks odd to me. It seems that from May 14th to May 22nd, the loonie moved from basically 72 cents to 74 cents. There's also the two week period in starting the Feb 24th that it shed two+ cents.
> 
> Probably not worth timing for a small amount as $600 though.


Here is a 1 yr chart http://www.xe.com/currencycharts/?from=CAD&to=USD&view=1Y and here is a 1 month chart http://www.xe.com/currencycharts/?from=CAD&to=USD&view=1M I'd say it is statistically a crap shoot over a period of weeks. YMMV


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## james4beach (Nov 15, 2012)

Mukhang pera said:


> I discovered quite by happenstance some years ago that Bank of America and BNS are in bed together. I have accounts with the former, not the latter. You can use a B of A card any any BNS ATM (and vice versa) sans paying an ATM fee.


Yes this is an amazingly useful feature. It's called the Global ATM Alliance.


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## DollaWine (Aug 4, 2015)

Mukhang pera said:


> I discovered quite by happenstance some years ago that Bank of America and BNS are in bed together. I have accounts with the former, not the latter. You can use a B of A card any any BNS ATM (and vice versa) sans paying an ATM fee.


Good to know!! Thank you


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## lagagnon (Apr 13, 2017)

Personally I consider international travel to be just that - international - and you have to just wear the exchange rates and conversions. If you are not prepared to do that then keep your travels within Canada. The wailing and nashing of teeth by Canadians travelling abroad and worrying about forex gets very tiresome and boring. As does the continuous comparison of costs of goods. If you worry about minor stuff like that you will ruin your holiday. There's precious little you can do about it, other than:

1) reduce number of times you do exchanges (the downside is more cash on hand)
2) buy the currency well beforehand in better forex circumstances (if you can plan that far ahead) or have an account in that currency as well as a credit card. Most Canadian banks offer those in USD.


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## My Own Advisor (Sep 24, 2012)

Is there an ideal time to convert to USD (is the loonie getting better or worse in the short-term?)

Probably not, sorry  

At the end of the day, it's the cost of travel and experiences. Don't sweat it too much! Enjoy!


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## WGZ (Feb 3, 2017)

I'm thinking of using Calforex and plan to painfully convert around 1000 CAD. It's pretty bad that I consider it staying between 70-75 to be "good" as it gets for now, and the foreseeable short term economic future.


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## mark0f0 (Oct 1, 2016)

There's really no reliable way to predict forex movements over very short periods of time. Longer-term the CAD$ should rise considerably, but short-term its obviously not been.

For such minimal amounts travelling in the United States, I personally suggest using a credit card that charges minimal forex, such as the Amazon.ca VISA card. And using only a modest amount of cash.

A strategy I personally use is to spend the dividends from my USD$ investments by withdrawing them directly to a USD$ savings account that has been appropriately linked. So theoretically, aside from a $1 cash withdrawal fee, I am not actually exchanging any foreign currency, and hence, am not paying any forex fees or spreads. The long term goal should be to build up income streams in all currencies that you perceive a need to spend in your lifetime.


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## humble_pie (Jun 7, 2009)

mark0f0 said:


> A strategy I personally use is to spend the dividends from my USD$ investments by withdrawing them directly to a USD$ savings account that has been appropriately linked. So theoretically, aside from a $1 cash withdrawal fee, I am not actually exchanging any foreign currency, and hence, am not paying any forex fees or spreads. The long term goal should be to build up income streams in all currencies that you perceive a need to spend in your lifetime.




this is the right idea. One needs a stream of USD income from USD investments.

several USD credit cards & at least one USD bank card are now available to canadians ... MPera advises that bank of america cards work without fee at scotiabank terminals ... jas4 confirms that this is part of some Global Alliance, which if it has other no-fee USD bank cards for canadians he might be kind enough to explain.

long-term, every investor's goal should be to build up some USD holdings in accounts from which withdrawals can easily be made. Even a TFSA can be one of those accounts. The goal is a) hedge portfolio risk with foreign currency holdings, & b) obtain USD income for USD expenditures. These expenditures can include travel, purchasing goods or buying more USD securities.

don't forget that many canadian investments also trade in US markets, so if the capital gain/loss consequences are positive & a particular interlisted security is looking toppish, investigator can journal the holding into US broker account & sell it - or even a small part of it - for USD with no FX fee.

also check scrupulously whether a canadian stock one happens to own is actually paying its dividends in USD, while the broker silently helps itself to FX fees if the shares happen to be held in CAD account. If it turns out that one does own such stocks, journal them to USD account. The accumulating dividends will be another welcome source of FX-free greenbacks.

for larger amounts, learn to gambit (arbitrage) currencies.

all in all, there is no reason to ever pay any FX fee to any broker or to any bank. These days, there are so many workarounds.

(dollaWine, if you are a startup investor, these strategies might be a bit out-of-reach at the present moment. They should become long-term portfolio goals as the years pass, though. In the meantime, MOA has the very best suggestion for you: Enjoy your trip!)


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## ian (Jun 18, 2016)

IF you travel frequently outside of Canada (which we do) or often buy products or services in foreign currencies there are a number of ways to save on currency conversion. We calculate our annual savings to be in the neighbourhood of $500-$700 each year. Money that would otherwise go to our bank.

Most of this savings is from avoiding the onerous hidden FX fees/admin fees that Canadian banks charge on foreign credit card purchases and ATM withdrawals. We also keep a US dollar account and deposit US denomination cheques in this account.

When it comes to FX charges and foreign Visa/ATM transactions, the bank is NOT your friend.


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## AltaRed (Jun 8, 2009)

Indeed. I have USD investments generating USD dividends which I can move to a USD chequing account from which I can use my debit card or pay for my USD purchases using a USD credit card connected to my USD chequing account. No forex...ever. Not quite true since my Int'l purchases in Euros or whatever get forex'd to either my USD account, or CAD account as I choose.


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## Spudd (Oct 11, 2011)

I second the advice to use credit card as much as possible - if you have or can get one of the low-forex ones such as the Amazon.ca visa or the Rogers Mastercard. For cash money I find those corner foreign exchange shops to generally give better rates than the bank. 

If you use the ATM in the States you'll get charged the regular 2.5% forex just like if you went to the bank here and got money.


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## ian (Jun 18, 2016)

You will pay 2.5 or higher, often a little more, if you use your bank atm in a foreign country.

We pay 1 percent. We use our Chase Visa card and take a cash advance. We maintain a credit balance on the card while travelling outside the country so that the cash advance does not attract any cash advance interest fees. Works like a charm....just as long as you keep the card in a credit position.


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## Numbersman61 (Jan 26, 2015)

We have a condo in Arizona. Fixed costs are about a $1,000 $US per month. I know it's high but we don't put cable or cell on vacation since someone in family usually ends up there for a few days even in summer
What I did was buy Enbridge rate reset Preferred shares which pay dividends in US$ when dollar was at par. Even though the shares enb.pr.u are trading at 23.30 (I paid $25) the dividend rate changed from 4% to 4.887% on June 1. Based current price, yield is 5.24%. A big advantage is that dividends qualify for dividend tax credit.


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## OnlyMyOpinion (Sep 1, 2013)

humble_pie said:


> this is the right idea. One needs a stream of USD income from USD investments... long-term, every investor's goal should be to build up some USD holdings in accounts from which withdrawals can easily be made. Even a TFSA can be one of those accounts. The goal is a) hedge portfolio risk with foreign currency holdings, & b) obtain USD income for USD expenditures. These expenditures can include travel, purchasing goods or buying more USD securities...


Humble - I decided last month to become an unsophisticated investor again. That is to say I sold all the USD stocks in our USD side TDDI trading acc and transferred cash back to the CDN side. 
Why do such a crazy thing? Well, we haven't and now don't expect to be able to do the US traveling we planned 2 years ago, and the annual tracking and T1135 reporting is eliminated - part of a progressive simplification of our accounts I'm undertaking.
We still have ex Canada market exposure through MAW104 and VXC.
USD income exposure is important if a person is spending USD on a regular/repeated basis, but for us it doesnt seem to be in the cards. We kept the USD bank account with about 20k, beyond that we'll have to go the exchange route if the need arises.


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## humble_pie (Jun 7, 2009)

OnlyMyOpinion said:


> Humble - I decided last month to become an unsophisticated investor again. That is to say I sold all the USD stocks in our USD side TDDI trading acc and transferred cash back to the CDN side.
> 
> Why do such a crazy thing? Well, we haven't and now don't expect to be able to do the US traveling we planned 2 years ago, and the annual tracking and T1135 reporting is eliminated - part of a progressive simplification of our accounts I'm undertaking.
> 
> ...




sounds crazy like a fox, particularly if US markets plunge as some/many are predicting.

i think simplifying more towards CAD is a vital step as one grows older & one's expenses will be concentrated in CAD. In several posts you've done a good job, onlyMO, showing what to simplify & the benefits that would be gained, such as no more T1135 reporting.

if one wants to look ahead to estate planning, then holding US securites indirectly via canada-based entities such as Mawer 104 will also prevent any nonsense about having to file an alien non-resident estate tax return with the IRS (i don't know if the IRS has gotten around to requiring those yet, but they will in time. Via the brokers.)

in my post though, i was writing to dollaWine whom i perceived to be a younger investor, in that he thought $600 was plenty sufficient for a short trip through the US of A ... each:

generally speaking, investors should get their US holdings up to desired ratio, then keep the level more or less for most of a lifetime, then begin to dial down the foreign currency content as one approaches senior years, no?


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## AltaRed (Jun 8, 2009)

humble_pie said:


> generally speaking, investors should get their US holdings up to desired ratio, then keep the level more or less for most of a lifetime, then begin to dial down the foreign currency content as one approaches senior years, no?


Somewhat off-topic to the thread, but to carry on with this theme, I don't see any need to dial down ex-Canada equity content any more than one typically might reduce overall equity asset allocation as one ages. I think one would want some diversification of markets...just in case Canada implodes somewhere along the way. We should remember that if the loonie really plunges, much of our consumables will rise in price accordingly due to them being imported. For example, our gasoline prices track USD prices.....so a 50 cent loonie will result in sticker shock at the pump. So goes our food, electronics, autos, etc, etc. IOW, I want some hedge against goods inflation (due to imploding loonie).

Now how one does it is another matter. Clearly VXC or XAW are excellent options for those who do not want to mess with post-death IRS tax returns, T-1135 reporting, etc. Alas, that is not going to help me since I cannot realistically absorb the cap gains tax hit on an accelerated basis. That said, my ex-Canada holdings are mostly XWD/XEF... plus 3 US listed Vanguard ETFs. Keeps it pretty simple even if I have to fill out Cat 7 on the T-1135 form. The overall plan is to reduce my 3 Vanguard holdings over time as I utilize USD, and that may take care of the problem eventually.


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