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?

This article has 30 comments

  1. When I land in a U.S. airport I usually hit the first ATM I see on the way to the baggage claim. I wonder how badly I’m being ripped off!

  2. Jason, I do the same thing for convenience’s sake because I don’t have that much free time. I went to NYC 2 weeks ago and when I look through my records, there is the usual $3 service charge for not using your own bank’s ATM. The exchange rate I got was at parity $1 CDN = $1 USD at a time when the $CDN was trading at just above $1.05. That amounts to an extremely hefty 5% currency exchange rate charge! So, you and I get totally hosed when we used that methodology, but I really had no choice because I didn’t have time to go shopping around before I take off out of the country.

  3. I usually just put things on credit in the US. To be honest, I have no idea what conversion I’ve paid as well. I should really check into that. With regard to the USD chequing account, I presume there would be fees for that considering there wouldn’t be much money in there on a regular basis to hit the no fee limit?

  4. I use TD’s borderless account in conjunction with TD Banknorth. I checked the current rate USD to CAD – 1.0014 through TD borderless while the market rate was at 1.0137 so a charge of 1.23%. The borderless acct has a fee of $4.95 /mth but since I transfer most of my paid salary each pay period, the fee is worth the preferred rate.

    There has to be a better way I keep telling myself but I’ve not found it yet so I’d love to hear what others do.

  5. I too use the TD borderless account (US chequing account with special privileges such as a preferred exchange rate). And telly’s 1.23% estimate sounds right. 2.25% is what you’d probably pay if you didn’t have a borderless account.

    Credit cards used to be a convenient way to pay for US purchases about 2 years ago when they charged roughly 2.25% as well, but they’ve jacked that up recently to approximately 5%. So, I rarely use my credit card for foreign currency purchases.

    I find that using the ATM’s to withdraw foreign currency is an excellent alternative if you don’t have access to foreign funds (ie. Euros.. try getting Euros at a TD branch.. they told me they barely had 200 EUR on them!).. I believe the rate is also 2% or so.. I dunno why Phil S got charged 5%.. You do have to withdraw a substantial amount to make the flat fee worth it.

  6. I should add that the TD borderless account fee is waived if you are on the TD Select Service plan, which in my opinion is the best bank plan.

    Also, the link that CC provided in the article does provide for a really cool way to get nearly spot rates, but it’s only useful if you’re exchanging large amounts (ie. >$100k).

  7. On the newswire, the Bank of Canada just cut interest rates by 0.25% today and the loonie is plummeting. I guess that’s good for my line of credit, as it makes the cost of borrowing a little cheaper. But I only use my line of credit for leveraged investing anyways so that interest payment is tax deductible. On the other hand, I am mostly invested in REITs and that should increase the value of the REIT units, so maybe the lowering of the BoC rates does help me out after all.

  8. Wow, I’ve had an account with TD Banknorth in Vermont ever since they bought Banknorth a couple of years ago, and I never knew about this “borderless” option! Sounds like it’s just what I need. I’ve had a Banknorth account for six or seven years but it’s just a regular US chequing and savings account; I use it for expenses when I’m in the US, but transferring money to it from my Canadian accounts has always been expensive. I’m going to look into this “bordless” option.

  9. Canadian Capitalist

    I’ve always avoided the airport forex places. They probably have the worst exchange rates. But, I’ve used them in a pinch before (for example, when stuck at an airport and want to pay for coffee).

  10. If you’re in a big city (Toronto, Montreal, etc.) you can try the small money exchange shops. From what I have seen, they are usually about $.01 better than the bank rate, and you can sometimes even negotiate a better rate.

  11. adil,
    if you have the TD borderless acct, the annual fee for the TD USD Visa is waived. I find it very useful.

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  13. I always think the forex places charge a lot. But I have had worse with CIBC.

    In the States I take money out at the ATMs. It costs me an addition $5 per transaction. This starts to add up since I go to the States often and my company does not reimburse ATM fees (very unreasonable).

    So for my China trip I decided to order money from my bank. I got about 6.3 RMB per dollar. I dropped by the forex at the airport and they were offering 6.5! That works out to be over $20 difference for my $819 exchange. This’ll teach me not to do research.

  14. I applied for a borderless account from TD Canada Trust yesterday; thanks to the commenters for the tip on that. It looks like just what I need and will allow me to cancel my bank and credit card accounts in the US. Telly, you said you used the borderless account “in conjunction with TD Banknorth,” and that’s the part I’m curious about — I didn’t see anything in the info on the borderless account that mentioned a deal with TD Banknorth. How does that work? There are lots of Banknorth branches in New York and New England, which is where I spend most of my time when I’m in the States.

  15. I just got an idea and I called RBC about it, here’s what they told me.

    If you open a USD personal banking account at RBC (or any of the other big canadian banks) you can deposit a cheque to that account from your CAD bank account. I think there’s a $.75 fee for handling the cheque and they convert the cheque without a spread, at the exact exchange rate at that time. No commission fees and no spread.

    Can anybody confirm this?

  16. Ryan, I can’t see that working as I can’t imagine you’d get a preferred rate for a cheque over cash.

    You can apply for an account with TD Banknorth and have it linked to your TD Canadian account. Here’s what I do.

    TD Banknorth USD (must be done by phone transfer) –> TD USD Borderless (online transfer) –> TD CAD acct.

    This gives you a better rate than exchanging directly from TD Banknorth into CAD fund.

    Royal Bank also has bank accounts that can be linked with a US account (RBC Centura) but the rates aren’t as good and as Adil mentioned, the TD borderless account fee is waived if you are on the TD Select Service plan.

  17. Telly, thanks. I already have a TD Banknorth account in Vermont; that technique may come in handy.

    The TD Select Service plan seems awfully expensive…$25/month in fees unless you keep a balance of $5,000. I’d rather keep money like that in ING or another high-interest account; the interest I would earn on that amount would more than cover the monthly fees for a standard account.

  18. Unless you get wholesale/market rates, you are paying rates that have been “marked up”, and that markup is usually the main cost of buying/selling foreign exchange. The spread (%) is: (buy rate – sell rate)/(average of buy and sell rates). The markup cost can be estimated as slightly less than 1/2 the spread.

    You can buy & sell currency cheaply and easily through a universal (multi-currency) account at Interactive Brokers (Canada). For amounts more than $25k, the rates are wholesale and the comission is just 0.2bp (0.002%). The cost is considerably more for smaller amounts, but still just a fraction of what the banks and foreign exchange dealer charge.


  19. I have found that the best exchange rates for buying US dollars are the scummy payday loan shops. Among other things, they buy & sell USD.

    But always shop around.

  20. 1 CAD = ? USD
    Canada’s back on top,
    and it’s about time.

  21. I am about to do busines in the US with trading into canada. I would be doing trading with an adverage of about twenty thousand per week. Where is the best place to get your dollar value on the extange rate? Seems like the TD borderless account is the best place to do that. Anyone else got any good suggestions of where to try?

  22. September 15 and I’m investigating the same things. I don’t have a borderless bank account but here’s what I’ve uncovered:
    Mosaik Mastercard: their exchange rate plus $5/transaction (great for big purchases)
    Scotiabank Visa: their exchange rate plus 2.5%
    AMA Cashcard: their exchange rate plus $3 each time you withdraw money
    Traveller’s cheques vary substantially but currently Scotiabank is waiving the fee when more than $1000 Cdn is purchased. This “special” runs until the end of September.

    I didn’t bother asking about what the rate is when using a debit card since I rarely do that at home. I could very well be the better way to go…

  23. Pingback: Business blog » Blog Archive » Comment on Getting a Good USD Exchange Rate by Business blog …

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  25. I opened up a TD Borderless account in Canada and a TD Banknorth account in Pennsylvannia with the intention of sending money from the Canadian account to the US account on a regular basis to help pay off my spouse’s student loans (which must be paid from an account based in the US).

    Unfortunately I’ve discovered that you can only transfer money from a TD Canada to a TD Banknorth account if the TF Banknorth account is opened up in Maine.

    Since my TD Banknorth account is in Pennsylvannia I have no advantage whatsoever in using Banknorth as my US bank when it comes to transfering money from TD Canada.

    If anyone has figured out a cheap, cost effective way of transferring money to the US let me know. So far the best way I know is Paypal (linked to both the US and Canadian accounts) but it takes about 9 business days …

  26. Hi All,

    I had a similar situation since I’m a Canadian student attending an MBA program in the U.S . I ended up going through a company that specializes in FX (www.knightsbridgefx.com) and got a rate less than 1% above spot…took about a day to make a wire transfer to a U.S account…found the process pretty quick and simple….

  27. Hey guys, I work with Knightsbridge Foreign Exchange. We offer the same level of service offered to our large corporate clients, to private clients. As Kevin says, the process is quick and easy, and you will always save on transfers vs interacting with your bank.


    877-355-5239 ext. 126

  28. xe.com has the best exchange rates if you are doing smaller amounts hands down.

  29. I have had a similar experience as Hooman. I also have found the guys below to have the best rates
    Interchangefinancial.com 416 227 7799
    Also if you let them know that you have a better rate most times they will beat whatever rate you have.

  30. Need to tranfer money (30k) from my BoA account in the US to my Scotiabank Account in Canda and reading the posts above it looks like Knightsbridge and Interchangefinancial are a good options.
    Can anybody confirm if this is legit?