I have a business trip coming up and since it snowed heavily last night in Ottawa, I dropped into the nearest TD Canada Trust Branch instead of a RBC Branch (where we hold all our chequing accounts) to exchange some Canadian dollars into US dollars. We have our investment accounts with TD Waterhouse and I was really surprised when the teller offered the TDW exchange rate for the conversion. I’m not sure if it makes any difference but I estimate paying a 2.25% conversion fee, which is comparable to the rates charged by specialized foreign exchange dealers.
Airport Currency Exchange
You should avoid the currency exchange booth at the airport as much as possible because it usually is the absolute worst place to exchange your loonies into Greenbacks. For example, here’s an indicative exchange rate at the Ottawa International Airport recorded in March 2014:
1,000 Canadian Dollars will fetch 852.37 US Dollars.
852.37 US Dollars will fetch 879.56 Canadian Dollars.
The two-way exchange rate at your local airport currency exchange will therefore cost you $120 per $1,000 or 12 percent.
Your Local Bank
If you walk into your local bank branch and convert your loonies into US dollars you will pay a steep fee, albeit one that is much less than you would pay at the airport. For example, here’s a quote obtained from TD Canada Trust in January 2014.
1000 Canadian Dollars will fetch 897.67 US Dollars.
897.67 US Dollars will be converted into 963.02 Canadian Dollars.
The two-way exchange rate at your local bank branch will therefore cost you $37 per $1,000 or 3.7 percent.
You can do slightly better if have a brokerage account with the bank by asking the teller to give you the discount broker rate.
Your Discount Brokerage Account
If you have a discount brokerage account, you can obtain a slightly better exchange rate than you can at your bank. Here’s a quote obtained from TD Direct Investing in January 2014:
1000 Canadian Dollars converted to 900.50 US Dollars.
900.50 US Dollars converted into 971.50 Canadian Dollars.
The two-way exchange rate in your discount brokerage account will cost you $29.50 per $1,000 or 2.95 percent.
If you are not pressed for time and you want to exchange larger amounts, the smart folks at Financial Web Ring have a recipe for converting currency for close to the spot rate. How do you pay for your cross-border shopping trips? Do you have a strategy for paying the cheapest exchange rate?
