# I'm Paid in USD - What's the best way to exchange?



## dotnet_nerd (Jul 1, 2009)

I'm on an IT contract in the US (living at home in Ontario) and am paid monthly about 7,500 USD. (This might increase too as I may be bringing in a subcontractor)

The best exchange rate I can get is through my TDCT or TDW account which charges 1.5% premium over the FOREX rate. So I'll waste $1350 over a year in fees.

I thought of funnelling the payments through an Interactive Broker account. Are there any better ways to land large USD sums into Canada without getting gouged?

I wouldn't mind using a trading account, since a lot of the money I'll invest anyway. But I've read bad things about IB.


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## Xander (Apr 3, 2009)

For larger chucks of USD you could use a 3rd party brokerage for converting USD to Cdn. 
I used to use Custom House Currency exchange in Hamilton but there are dozens of brokers now in Toronto as well. I currently use TD's foreign exchange group out of Toronto and convert between $50,000 & $200 000 per transaction. Their charges are between 5 & 7 basis points as apposed to the 150 point you mentioned.
Even for transactions of 5-10 grand once a month or so you should be able to do way better that 150 points.

Hope this helps.


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## m3s (Apr 3, 2010)

Interactive Brokers is the best I've found

You can also try Knightsbridge but their rates are based on the amount you exchange and cater to people buying RE etc so 7,500 is not a lot unless you waited until end of the year. I'm not sure they will even match IB anyways


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## humble_pie (Jun 7, 2009)

basically for someone like yourself w regular USD payments coming in, there are only 2 broad avenues:

1) an IB account, because they offer forex trading;

2) learn to gambit & establish a bmo or a roybank account for that purpose, since online gambitting can be easily accomplished on their websites.

one can gambit at tdw but one has to phone the licensed rep to place the order for the sell side. There is a higher agent-handled commish plus the inconvenience & delay. All this is fine for a few trades per year, but not fine imho for somebody with regular USD coming in.

gambitting is the art of buying an interlisted canadian stock in one currency - in your case in USD on US exchange - and then selling it in the other currency - in your case in CAD on toronto. It's arbitrage. It's easier said than done.

the new canadian dollars will be free of any foreign exchange fee. They will be spanking new dollars in the currency of your choice, and the exchange rate you will have paid will be the wholesale rate with no forex fee whatsoever.

a great deal of information has already been published. This forum is a principal source, if you search under "gambit." Another important source is Canadian Capitalist blog. Search "norbert's gambit" also through google.

trivia that will be important to you: using DLR/DLR.U as the currency exchange will not work for the direction USD ----> CAD that you are taking. It's fine for CAD ----> USD, but not for you. You will have to learn to carry out a true gambit.

or IB.

best of luck.


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## dotnet_nerd (Jul 1, 2009)

Thank you all for your suggestions. I love this forum and have learned a lot from it! 

I think I'll go with IB despite the bad customer service reviews I've read.


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## dotnet_nerd (Jul 1, 2009)

UPDATE:

I'm still struggling with this issue.

Interactive Brokers won't work, at least not in a simple, seamless, cost-effective way.
They don't allow an ACH link from a US bank to an Interactive Brokers *Canada *account. It would be a breeze if I had an IB *US *account.

I would have to initiate a wire transfer from my bank which would entail a $40 fee and the hassle of phoning the branch each time. This defeats the purpose.

I looked into Customs House, which is now Western Union. Their rates suck just as bad as the retail bank rate of 1.5% over Forex.

I can't believe there isn't a "point-n-click" way to transfer money easily from USA to Canada in this hi-tech age without jumping through a bunch of hoops.

And the Norbit Gambit idea is great, but it still doesn't solve the problem of how to fund my Canadian trading account from a US bank.

Still looking....


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## Spudd (Oct 11, 2011)

How about xe.com? They let you send the money via EFT once you have it set up - looks fairly decent. No idea if the rates are any good...

http://www.xe.com/fx/how.php


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## marina628 (Dec 14, 2010)

I am sitting on quite a bit of USD now and I bank with TD Bank. My bank gave me the employee rate last month when i converted $20,000 USD to Cad .I have done the Gambit with personal funds but now just watch the exchange rates and pick best times to sell.If you have a good relationship with your bank they have ways to save you some money along the way.
I just complained about all my fees I was paying on my business account after a discussion on CMF and I got a $182.50 credit back from my bank manager.BTW they also gave me zero interest overdraft of $1000 on this account .I know it is not much but it all adds up.


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## dotnet_nerd (Jul 1, 2009)

Thanks!

@Spudd
xe.com looks ok but they don't support ACH transfers. My US bank doesn't offer a lot of frills with their internet banking. They only easy way to transfer money out is through Bill Payments, setting up an ACH link or old fashioned paper cheques.


@Marina628
I was in the same boat with paying too much in business banking fees with TD. I switched to a FREE corporate account with HSBC and haven't looked back.


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## blin10 (Jun 27, 2011)

dotnet_nerd said:


> UPDATE:
> 
> I'm still struggling with this issue.
> 
> ...


why does it defeat purpose? if you transfer 50g's and do gambit that $40wire+$20($9.99x2)=$60 fee...if you convert it with your bank on 50g's they will take roughly %2 free, that's $1000... you will save roughly $940


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## slacker (Mar 8, 2010)

If you are able to write a cheque from your $USD account in US, and cash that $USD cheque at your Canadian brokerage USD trading account, that ought not incur any currency conversion fee. Check with both sides first, of course.

Then you can do the Gambit at a convenient time. Of course, the gambit isn't really economical until you're dealing with > $10k, so it's not a perfect solution.


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## dotnet_nerd (Jul 1, 2009)

blin10 said:


> why does it defeat purpose? if you transfer 50g's and do gambit that $40wire+$20($9.99x2)=$60 fee...if you convert it with your bank on 50g's they will take roughly %2 free, that's $1000... you will save roughly $940


Yeah, I suppose that works. It's just that I'm doing 2 withdrawals per month. So that's 80$/month or $960 per year just in wire fees.

I wouldn't even need to do the gambit. I can simply exchange the $$ through IB. 

The tricky part is getting USD across the border into Canada without paying service charges and fees.

Here's the irony of it. I'm an IT guy working on an IT project. But instead of an internet solution what I'll end doing is simply writing old-fashioned cheques to myself drawn on my US bank account.


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## slacker (Mar 8, 2010)

I've heard 3rd comments from IB that they do not like people using their trading account exclusively for currency conversion purposes. Not sure if there's any truth to this.


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## dotnet_nerd (Jul 1, 2009)

slacker said:


> If you are able to write a cheque from your $USD account in US, and cash that $USD cheque at your Canadian brokerage USD trading account, that ought not incur any currency conversion fee. Check with both sides first, of course.
> 
> Then you can do the Gambit at a convenient time. Of course, the gambit isn't really economical until you're dealing with > $10k, so it's not a perfect solution.


Exactly, that's what I'll be doing. I posted before seeing your idea Slacker (I missed seeing we're on page 2)


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## dotnet_nerd (Jul 1, 2009)

slacker said:


> I've heard 3rd comments from IB that they do not like people using their trading account exclusively for currency conversion purposes. Not sure if there's any truth to this.


I haven't heard that.

But I will be trading with them quite a bit. I like their commission structure especially for doing covered calls.


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## FrugalTrader (Oct 13, 2008)

My understanding with IB is that if you withdraw to an account that is different than te deposit account, they will delay the transfer. I don't recall the exact delay, but I believe it is around 30 days.


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## Sampson (Apr 3, 2009)

Doesn't TD allow you to transfer funds charge free among their US and Canadian operations?


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## houska (Feb 6, 2010)

If you can meet the conditions, HSBC's Premier service works pretty well for this. You qualify for a Premier account (a regular chequing acct) in one jurisdiction, then set one up in the other jurisdiction. Then you can at any point transfer money instantly electronically using Global Money Transfer (premium seems to be about 1%) or for amounts over approx $25k go through your banker by faxing a transfer request and get the 1% down to about 0.5%. As a bonus, you get a US chequing acct and a US Mastercard that has no bank-imposed forex conversion fees.

I'm going by memory on the 1%,0.5%,$25k above but it's directionally correct.

To qualify, you need to bring and maintain $100k in assets to HSBC. We certainly don't have that cash hanging around idle, and HSBC's regular investment products suck. However, money kept in their discount brokerage counts too - and while their discount brokerage is no great shakes and would actually be quite poor for an active trader, if your investment style is passive / ETFs it's quite adequate.

The accounts and credit cards are fee-free and you even get foreign ATM fees rebated. Net-net, it's less cost effective than the gambit strategies if *all* you want/need is the fx transfers, but more convenient and can be competitive if it lets you save fees elsewhere (bank accts, credit card fx, etc).


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## dotnet_nerd (Jul 1, 2009)

Sampson said:


> Doesn't TD allow you to transfer funds charge free among their US and Canadian operations?


Haha I wish! My US bank _is_ TD which I opened in Florida. TD has expanded aggressively in the southeast buying up Riverside when they went bellyup. (I guess to compete with RBC and Centura).

But TD Bank US and TD Canada Trust are about as connected as Venus is to Pluto. One teller I spoke to didn't even know the 'T' stands for Toronto.

So no, I cannot link the accounts or transfer between the two.


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## dotnet_nerd (Jul 1, 2009)

houska said:


> If you can meet the conditions, HSBC's Premier service works pretty well for this. You qualify for a Premier account (a regular chequing acct) in one jurisdiction, then set one up in the other jurisdiction. Then you can at any point transfer money instantly electronically using Global Money Transfer (premium seems to be about 1%) or for amounts over approx $25k go through your banker by faxing a transfer request and get the 1% down to about 0.5%. As a bonus, you get a US chequing acct and a US Mastercard that has no bank-imposed forex conversion fees.
> 
> I'm going by memory on the 1%,0.5%,$25k above but it's directionally correct.
> 
> ...


Hmmm. Thanks Houska. 

This is becoming a really interesting thread.


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## james4beach (Nov 15, 2012)

This is an old thread but it came up in a search of mine, and I thought I'd share my own experience. I'm paid in USD into a US bank.

Here's what I do, and it's been working great. I write a cheque payable to myself, drawn from my US bank in US dollars. I walk it over to Canada (or mail it to my branch) and deposit it into my US$ chequing account.

In my case I'm depositing into my TD Borderless account which has no fees if you maintain 3k USD minimum balance. Because of my RRSP & margin with TD, and because the deposits are regular and familiar to my branch, the bank usually doesn't hold my cheques... often I am getting _instantly cleared US$ deposits_.

I then use the gambit to convert to CAD. The end-to-end process is incredibly efficient. Writing the cheques to myself costs nothing, the TD US$ account costs nothing, and the reverse gambit is as cheap as 0.15% to 0.20% *net FX fee vs spot market rate* for as little as $10k... for larger amounts it gets ridiculously cheaper.

You can do what I'm doing with any US$ account at a bank where you also have a brokerage account (e.g. RBC, Scotia, etc). One suggestion I have is that your US-based bank which you're writing cheques from should be a very large institution. Canadian tellers and branch managers seem to feel more comfortable when they see cheques from TBTF banks such as Citibank, (JPM) Chase, Bank of America, Wells Fargo, etc.


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