# USD purchase - how to beat the rate....



## thepitchedlink (Feb 17, 2014)

Hey guys and gals. I've got a purchase in the States that I will have to go down and pick up in a few months. With the crappy exchange rate I'm wondering if there is a better way for me to get the $ together to make the purchase. It's about a 4000$ CDN price tag.....is there any way that I can maybe get a better rate over the next few months to take the sting out of the purchase? 

thanks 
Pitched


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## FrugalTrader (Oct 13, 2008)

Have you considered using a credit card like Chase's amazon card to eliminate the FX surcharge?


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## thepitchedlink (Feb 17, 2014)

No...explain a bit for me please....


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## FrugalTrader (Oct 13, 2008)

Providing the vendor accepts credit card, the amazon visa card (http://www.amazon.ca/Amazon-ca-Rewards-Visa-Card-Chase/dp/B00AFGCPZ2) will charge you the FX spot rate. Regular credit cards (and banks) will charge you spot rate + 2.5%.


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## thepitchedlink (Feb 17, 2014)

right. thanks very much


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## praire_guy (Sep 8, 2011)

Here's a thought:

The,difference of 2.5% on 4k is like a hundred,bucks. 

If a hundred bucks is that big a deal, then perhaps you can't afford,to buy whatever it is you paid 4 k?

Kinda like people dumping 5k on a sunny trip somewhere and then bitching about a 25 dollar baggage fees


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## Fain (Oct 11, 2009)

praire_guy said:


> Here's a thought:
> 
> The,difference of 2.5% on 4k is like a hundred,bucks.
> 
> ...


Even if someone can pay 4k easily doesn't mean that they won't search for cheaper deals or an efficient card. The 2.5% would be a yearly savings assuming yearly trips. I could have saved a good amount of $$$ when i was backpacking through Europe 4 years ago.


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## Fain (Oct 11, 2009)

FrugalTrader said:


> Have you considered using a credit card like Chase's amazon card to eliminate the FX surcharge?


Does this help build a U.S. credit rating since it's issued by Chase?


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## FrugalTrader (Oct 13, 2008)

It is issued by a Canadian division of Chase. I do not believe that U.S companies can issue Canadian credit cards without a Canadian division.


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## scorpion_ca (Nov 3, 2014)

You can also use Sears MasterCard with no foreign currency transaction charges.

http://www.searsfinancial.ca/CreditCards/CompareCards.aspx


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## atrp2biz (Sep 22, 2010)

^ Sort of. Based on their example, they still charge a premium of ~70 bps since the FX rate they are using is "set by MasterCard International Inc.".


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## james4beach (Nov 15, 2012)

If you have USD lying around, then you can either
(1) pay cash
(2) use a USD credit card... do any of these have no annual fees?

Though I'd say the Amazon card sounds like a good solution to your problem


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## My Own Advisor (Sep 24, 2012)

FrugalTrader said:


> Providing the vendor accepts credit card, the amazon visa card (http://www.amazon.ca/Amazon-ca-Rewards-Visa-Card-Chase/dp/B00AFGCPZ2) will charge you the FX spot rate. Regular credit cards (and banks) will charge you spot rate + 2.5%.


+1 

Own it


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## thepitchedlink (Feb 17, 2014)

praire_guy said:


> Here's a thought:
> 
> The,difference of 2.5% on 4k is like a hundred,bucks.
> 
> ...


That's not much of a thought actually, but thanks for doing the tough math for me.....I choose to look for ways to save a bit of money on everything I buy....that way I can always afford the things that I want/need


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## Malindi (Feb 16, 2015)

*Chase*

I have the card as well, love it. Not only does it not charge the +2.5%, they also give you back 1% and automatically credit it back after every $2,000 CAD you spend ($20). Great deal.


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## agent99 (Sep 11, 2013)

thepitchedlink said:


> That's not much of a thought actually, but thanks for doing the tough math for me.....I choose to look for ways to save a bit of money on everything I buy....that way I can always afford the things that I want/need


I had the same feeling about that "thought"  Isn't this the Frugality sub-forum anyway, or am I in the wrong place?

To answer the original post. If you own a dual listed stock , all you need to do, is choose one that doesn't have a capital gain, and sell it on the US side. We do this to move money into our US$ BMO bank account, and then use our BMO US$ Mastercard for payments. Only reason we do this, is to lock in an attractive exchange rate. We also have the Amazon.ca Chase card - with it, we pay whatever the goin FX rate is. With either card, cash withdrawals in USA from ATMs can attract high fees. We take US$ travellers cheques to cover cash needs (Bought using our US$ bank account). Stores like Walmart will give you cash back if you buy using a travellers cheque.

Even if you don't have one of those dual listed stocks, if you trade through an on-line broker (some are better than others), you can still do it. Buy say 100 shares of TD on tsx for C$5454 and then sell 100 shares of TD on NYSE for US$4458. BMOIL will do the journaling of the shares automatically and all you will pay is 2 brokerage fees (2x$9.95) Other brokers may want you to call them and some may not allow you to do the two trades one right after the other. So be careful because share price chnages could hurt. Also choose stocks with high liquidity, otherwise you buy/sells may not go through.


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## mf4361 (Apr 11, 2015)

Amazon.ca credit card uses Visa's conversion rate, which is about 0.3-0.7% more than spot FX rate. Other cards impose 2.5% on top of Visa's rate. So it's still a nice saving. 

Norberts gambit is great only for large transactions (>$10k) since commission is fixed and is only available in some brokerages. For example, Virtual Brokers don't allow journaling stocks. You also pay bid-ask spread twice. And instead of picking a dual listed stock, use Horizon's DLR and DLR.U, which is a ETF that tracks USD over CAD and you will not be at risk of a price change.


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## Ana (Jul 5, 2015)

This a great thread. I have heard about Chase Amazon card. The Sears Mastercard is news to me. Has anyone had any experience with it?


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## BC Eddie (Feb 2, 2014)

Ana said:


> This a great thread. I have heard about Chase Amazon card. The Sears MasterCard is news to me. Has anyone had any experience with it?


Yes, I have used the Sears MasterCard for online US purchases and whenever I travel in Europe and have never had it refused and they do not charge the extra conversion fee like most other cards. You also get 1% back (in Sears points) on most purchases and 2% back on purchases at Sears.

However I think Chase is dropping Sears at the end of this year so this option may not be around much longer.


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## mf4361 (Apr 11, 2015)

Sears is dying in Canada anyway so its rewards aren't gonna be useful. Amazon.ca or Marriott, on the other hand, will likely be around for some time.


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## thepitchedlink (Feb 17, 2014)

Hey thanks for the ideas guys, that Chase card seems like a good way to go. Here's another thought....can't believe I didn't think of it before...but what ever....that's what the forum is for, learning! So I own VTI, through Itrade. I use the US Friendly account type to convert my CDN to USD when I do a trade. Now, my VTI has been sitting there plugging away for a year or more now, doing well. I'm thinking I could sell a bit of it and use for the purchase. So how would I access the cash? I don't have a US account...yet. Can I open a us account with Scotia, then withdraw USD? Or write a cheque on a US account and have the $ withdrawn in the States.......ideas please!!!


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## thepitchedlink (Feb 17, 2014)

Hey, anyone got an ideas on this for me? Help please....


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## thepitchedlink (Feb 17, 2014)

Bump


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## Retired Peasant (Apr 22, 2013)

> I don't have a US account...yet


Just open a us account with Scotia, and withdraw as needed.


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## RBull (Jan 20, 2013)

What is a US friendly account? Your post above is not entirely clear but it seems you're looking for actual US cash to spend there.

Yes it sounds like all you need is a US $ bank account with Scotia to transfer the VTI sale proceeds to. Simple.


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## My Own Advisor (Sep 24, 2012)

RBull said:


> What is a US friendly account? Your post above is not entirely clear but it seems you're looking for actual US cash to spend there.
> 
> Yes it sounds like all you need is a US $ bank account with Scotia to transfer the VTI sale proceeds to. Simple.


+1


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## thepitchedlink (Feb 17, 2014)

RBull said:


> What is a US friendly account? Your post above is not entirely clear but it seems you're looking for actual US cash to spend there.
> 
> Yes it sounds like all you need is a US $ bank account with Scotia to transfer the VTI sale proceeds to. Simple.


A US friendly account is an "option" on Itrade accounts, they charge 30$ a quarter, but give you a good exchange rate when purchasing US listed stocks....allows you to avoid having to use Norbers Gambit to get a good rate....some other brokers charge quite a bit to do the exchange. Thanks for the replys guys....I figured it was that easy, but have never dealt with it....I don't really need US cash there, but I'd like to be able to write a cheque on a US account and use those funds for the purchase, avoiding the need to convert CAN-USD now.


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## RBull (Jan 20, 2013)

Thanks. I've only done a Norberts Gambit for my infrequent currency exchanges at another institution. 

At my institution the US account is a savings one only - no cheques, although I have a US bank as well if need be.


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## james4beach (Nov 15, 2012)

thepitchedlink said:


> A US friendly account is an "option" on Itrade accounts, they charge 30$ a quarter, but give you a good exchange rate when purchasing US listed stocks


I am currently trying out US Friendly. Yes, for $30/quarter they completely eliminate the retail forex spread. You actually get the spot market rate (or as close to it I've seen anywhere other than Interactive Brokers).

At a certain dollar threshold, that $30 fee really becomes worth it. The only problem I see is that US Friendly is only available for *registered* accounts. If you could use it with non-registered, then you could use it as a way to move USD and CAD back and forth with no forex free.


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## thepitchedlink (Feb 17, 2014)

bringing this one back up one more time....I stupidly realized that my idea of cashing in a few USD investments really isn't the best idea, as they are all held in registered accounts.

So back to how to get the best rate...the company I'm dealing with wants a cheque...it's a small business, Im not sure they take a CC. Any other ideas how to get the best exchange rate for doing that???


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## donna9 (Apr 9, 2016)

Norbert's Gambit. End of story.


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## houska (Feb 6, 2010)

The fact the vendor wants a cheque (or similar) makes it a bit harder.
If you are doing this as a one-off, then just go to your bank, convert $ at their crappy rate, and get them to issue you a USD money order.
If this will happen more often, explore opening a USD bank account *in Canada* that you can write a US cheque on (there are threads on this). Then convert either using Norbert's Gambit (as donna9 suggested) or using a snowbird fx service like KnightsbridgeFX. However either of these approaches mean some paperwork/hassle, and your USD account will I am sure have some requirements to keep it going without incurring monthly fees. Since your time has value, it may just not be worth it.
The credit card solutions people wrote about are good for irregular but fairly frequent small transactions, but won't help much for a one-time purchase where the vendor doesn't take credit cards. You could explore if you could write a credit card cheque (which will be treated as a cash advance and so may be subject to fees and interest) but am not sure Cdn-issued credit card cheques will be accepted in the US, there would again be fees, and some time/hassle opening the credit card acct, getting the cash advance cheques, etc.


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## cedebe (Feb 1, 2012)

thepitchedlink said:


> bringing this one back up one more time....I stupidly realized that my idea of cashing in a few USD investments really isn't the best idea, as they are all held in registered accounts.
> 
> So back to how to get the best rate...the company I'm dealing with wants a cheque...it's a small business, Im not sure they take a CC. Any other ideas how to get the best exchange rate for doing that???


Any chance they'd be open to Paypal? There's a small fee involved because you'd be sending money to the US, even on personal transactions, I believe, but I *think* you might be able to pay for the transaction via your cc. If the transaction is treated as a 'purchase' from the cc's perspective, it'd be worth 1% cash back... if you used Amazon.ca's card, which then might more than cover the cost of the Paypal transaction.


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