Currency conversion can be a big expense for Canadians who love to travel. Since the US Dollar is the global reserve currency, it is the most common currency for people to exchange into. So what is the cheapest way to convert Canadian funds to US funds?
There are some very select ways to avoid foreign exchange fees completely, but these options are not available to everyone. For example, if you’re a bank employee then you may be eligible for free foreign exchange (FX) on your accounts where you only have to pay the actual exchange rate that the bank pays. Another example would be if you’re a high net worth individual who the bank has waived FX fees for.
For the rest of us, foreign exchange fees are an unavoidable part of life. Here are three ways to minimize foreign exchange costs when exchanging CAD to USD.
1. Norbert’s Gambit
The first tried and tested currency conversion strategy is called Norbert’s Gambit. The premise is to find a security that is listed in both US dollars and Canadian dollars. You then buy the security in one currency, transfer it over to the same security that is priced in the other currency, and then sell it.
This method of converting Canadian to US funds can sometimes take up to five days. If you need the foreign currency right away then this probably isn’t the right method for you to use. However, if you have time then this will save you some serious money if you’re converting large dollar values.
If you’re interested in trying this out, then check out our step-by-step guide.
2. FOREX Brokers
These companies specialize in currency exchange, and offer the cheapest way to change CAD to USD if you don’t have the time or investment accounts to run Norbert’s Gambit. Our favourite FOREX broker is Knightsbridge FX.
Their large FX volume allows them to get great rates from the big banks, and they pass those savings onto their customers. To change CAD to USD with Knightsbridge, just follow these steps.
- Create an account
- Get a quote from Knightsbridge
- Transfer the CAD you want to convert to the broker
- Get USD transferred to your account
*Note: we are not affiliated with Knightsbridge FX. They’re just the broker we found easiest to work with.
3. Use a No FX Fee Credit Card
If you don’t need the USD in cash, then the cheapest way to change your CAD to USD is to use a credit card with no foreign exchange fee. With these credit cards, you only pay the actual exchange rate that the banks themselves pay. There are no additional fees or charges.
You spend the USD, and get charged CAD on your credit card statement.
The two most popular credit cards in Canada with no foreign exchange fees are the Scotiabank Passport Visa Infinite, and the HSBC World Elite Mastercard.
If you’re thinking of doing this, then we would recommend getting a Scotiabank Ultimate account, and then signing up for the Passport Visa Infinite as you will get your annual fee waived.