US dollar bank accounts

[Mikamarii]

I thought I would post this as an FYI to all the Canadians who like to spend time south of the border.

We are with RBC and have the VIP signature account and as a result, get a free US dollar account. It met our needs and was easy to exchange Cdn to Us dollars while saving the 2.5% transaction fees. It can be done online which saves a trip to the bank. We also have a USD dollar visa. This helps huge as when using a Cdn dollar Visa in the US they generally use the worst possible rate between authorized and posted transactions so you end up paying more. Having a USD dollar saves that as its in US then we just pay it off from our USD dollar account. The USD card has an annual fee of $65 US and only one card (additional cards are more). Depending on how much we use it the fee could offset any savings but we really enjoy the convenience.

Anyway, today I get an email from RBC with info on a US chequing account and US visa. This one is a little different as our current one is based out of Canada while this new one is an account based out of the US. Having a US chequing account means you get a US debit card. Having a US debit card allows debit transactions and cash withdrawals for free from an US ATM. (I'll throw in a caveat here that we never tried using an ATM with our current RBC chequing account. I've seen terms that said no fees but didn't think it was worth it as there would at least be exchange fees and likely cross border fees. I don't actually know though) For us this is huge as we ARE NOT cash people. I hate using cash. We were also told by the CS rep that there is a $5000 cash advance perk with the chequing account. Meaning if something were to happen (like lose our wallets) we could go to any bank and get a cash advance off our chequing account.

In addition to this US chequing account there is a no annual fee RBC US Visa. You can make these accounts joint which means now my wife can have both a US visa and a US debit card. She's no longer has to carry large amounts of cash when she goes shopping and isn't tied to me to use credit (hmmm maybe I didn't think this through )

The best part is the Visa is free and the chequing account is 40USD a year which was cheaper then we were paying with our previous US visa. Plus it comes with all the usual insurance benefits.

Its definitely not for everyone but works great for us as it greatly reduces the amount of cash we need to carry on hand when travelling. The savings will differ for everyone but I've always been willing to sacrafice a bit of money for convenience so this works great for us.

No I don't work for RBC or any bank for that matter haha.

 

[Sue M]

I thought I would post this as an FYI to all the Canadians who like to spend time south of the border.

We are with RBC and have the VIP signature account and as a result, get a free US dollar account. It met our needs and was easy to exchange Cdn to Us dollars while saving the 2.5% transaction fees. It can be done online which saves a trip to the bank. We also have a USD dollar visa. This helps huge as when using a Cdn dollar Visa in the US they generally use the worst possible rate between authorized and posted transactions so you end up paying more. Having a USD dollar saves that as its in US then we just pay it off from our USD dollar account. The USD card has an annual fee of $65 US and only one card (additional cards are more). Depending on how much we use it the fee could offset any savings but we really enjoy the convenience.

Anyway, today I get an email from RBC with info on a US chequing account and US visa. This one is a little different as our current one is based out of Canada while this new one is an account based out of the US. Having a US chequing account means you get a US debit card. Having a US debit card allows debit transactions and cash withdrawals for free from an US ATM. (I'll throw in a caveat here that we never tried using an ATM with our current RBC chequing account. I've seen terms that said no fees but didn't think it was worth it as there would at least be exchange fees and likely cross border fees. I don't actually know though) For us this is huge as we ARE NOT cash people. I hate using cash. We were also told by the CS rep that there is a $5000 cash advance perk with the chequing account. Meaning if something were to happen (like lose our wallets) we could go to any bank and get a cash advance off our chequing account.

In addition to this US chequing account there is a no annual fee RBC US Visa. You can make these accounts joint which means now my wife can have both a US visa and a US debit card. She's no longer has to carry large amounts of cash when she goes shopping and isn't tied to me to use credit (hmmm maybe I didn't think this through )

The best part is the Visa is free and the chequing account is 40USD a year which was cheaper then we were paying with our previous US visa. Plus it comes with all the usual insurance benefits.

Its definitely not for everyone but works great for us as it greatly reduces the amount of cash we need to carry on hand when travelling. The savings will differ for everyone but I've always been willing to sacrafice a bit of money for convenience so this works great for us.

No I don't work for RBC or any bank for that matter haha.

I have a CIBC USD Visa and checking acct. I think my Visa is free if you have a USD checking acct with them. And it’s an Aventura Gold card so comes with the usual benefits. I’m not a cash carrier either so I put everything on the Visa. I usually pre load it with some cash before I leave. It would be handy to have a USD debit card too.
How did you get the Forex waived? When I transfer funds from my CAD checking to my USD checking I’m fairly certain I pay the forex. I’m going to have to ask them when I go to the bank again.

 

[efrant]

I thought I would post this as an FYI to all the Canadians who like to spend time south of the border.

We are with RBC and have the VIP signature account and as a result, get a free US dollar account. It met our needs and was easy to exchange Cdn to Us dollars while saving the 2.5% transaction fees. It can be done online which saves a trip to the bank. We also have a USD dollar visa. This helps huge as when using a Cdn dollar Visa in the US they generally use the worst possible rate between authorized and posted transactions so you end up paying more. Having a USD dollar saves that as its in US then we just pay it off from our USD dollar account. The USD card has an annual fee of $65 US and only one card (additional cards are more). Depending on how much we use it the fee could offset any savings but we really enjoy the convenience.

Anyway, today I get an email from RBC with info on a US chequing account and US visa. This one is a little different as our current one is based out of Canada while this new one is an account based out of the US. Having a US chequing account means you get a US debit card. Having a US debit card allows debit transactions and cash withdrawals for free from an US ATM. (I'll throw in a caveat here that we never tried using an ATM with our current RBC chequing account. I've seen terms that said no fees but didn't think it was worth it as there would at least be exchange fees and likely cross border fees. I don't actually know though) For us this is huge as we ARE NOT cash people. I hate using cash. We were also told by the CS rep that there is a $5000 cash advance perk with the chequing account. Meaning if something were to happen (like lose our wallets) we could go to any bank and get a cash advance off our chequing account.

In addition to this US chequing account there is a no annual fee RBC US Visa. You can make these accounts joint which means now my wife can have both a US visa and a US debit card. She's no longer has to carry large amounts of cash when she goes shopping and isn't tied to me to use credit (hmmm maybe I didn't think this through )

The best part is the Visa is free and the chequing account is 40USD a year which was cheaper then we were paying with our previous US visa. Plus it comes with all the usual insurance benefits.

Its definitely not for everyone but works great for us as it greatly reduces the amount of cash we need to carry on hand when travelling. The savings will differ for everyone but I've always been willing to sacrafice a bit of money for convenience so this works great for us.

No I don't work for RBC or any bank for that matter haha.

I agree, you are much better off with your U.S.-based account and credit card vs the Canadian USD account and credit card you were using previously.

(By the way, you mentioned that transferring funds between your VIP account and your "U.S. Personal Account" saved you the 2.5% fee -- I think you are mistaken. The fee is there, it's just embedded in "RBC's" exchange rate (which is ~2.5% worse than the spot rate).

 

[Mikamarii]

How did you get the Forex waived?

(By the way, you mentioned that transferring funds between your VIP account and your "U.S. Personal Account" saved you the 2.5% fee -- I think you are mistaken. The fee is there, it's just embedded in "RBC's" exchange rate (which is ~2.5% worse than the spot rate).

I am definitely not an expert when it comes to banking transactions so maybe I just took the bait and believed what they sold me. From my understanding there is a difference between cash and non cash rates as cash rates involving shipping and handling fees from the banks to manage the physical money. When we travel to the states and ready to get money I transfer from my cdn account to my us account the pull cash out from the US account so I get the non cash rate. I could be getting the non-cash rate and foreign exchange fees mixed up though. I found this in RBC's website:

Exchange rates applied to cash transactions include shipping and handling charges, making the exchange rate for cash less favorable than the non-cash rate. Non-cash rates are applied to paper instruments such as cheques and drafts. Non-cash rates are also applied to incoming and outgoing wire payments and other electronic transactions. These instruments do not require physical storage or movement, and incur less time and cost for processing than cash transactions. Therefore a more favorable rate is applied to non-cash instruments.

Non-Cash Rates apply to the conversion of paper and electronic instruments such as cheques, drafts, wire transfers, etc.

The websites also boast saving 2.5% on foreign exchange fees by having a US account. Again though, I could just be falling for a little clever advertising.

 

[cdnSpinalTap]

Its definitely not for everyone but works great for us as it greatly reduces the amount of cash we need to carry on hand when travelling. The savings will differ for everyone but I've always been willing to sacrafice a bit of money for convenience so this works great for us.

I think you said it best here - everyone has to find what works for them and use that strategy. I prefer using credit cards, such as Rogers, where I get the best spot rate available (MasterCard rate) and I get an additional 1.5% back on every foreign currency transaction. I prefer this to holding a USD bank account and trying to play the daily exchange rates. I have a USD account for depositing US money when I get it (in-laws are American), but I don't trade in USD/CDN currency. I certainly could be losing percentage points here and there, but this strategy works better for me.

The websites also boast saving 2.5% on foreign exchange fees by having a US account. Again though, I could just be falling for a little clever advertising.

When I read this, I usually interpret this to mean that they are referring to the 2.5% that credit card companies add on foreign currency transactions - they claim that you save this because you are not using a credit card that does this conversion. I have a similar account to you at RBC and I can transfer money between my CDN and USD accounts at a "preferred rate", but it is not a simple +2.5% over the spot rate. The bank determines the rate based on thresholds of how much you are transferring at the time.

Now if only the Apple Credit card was available in Canada...

 

[Sue M]

I think you said it best here - everyone has to find what works for them and use that strategy. I prefer using credit cards, such as Rogers, where I get the best spot rate available (MasterCard rate) and I get an additional 1.5% back on every foreign currency transaction. I prefer this to holding a USD bank account and trying to play the daily exchange rates. I have a USD account for depositing US money when I get it (in-laws are American), but I don't trade in USD/CDN currency. I certainly could be losing percentage points here and there, but this strategy works better for me.



When I read this, I usually interpret this to mean that they are referring to the 2.5% that credit card companies add on foreign currency transactions - they claim that you save this because you are not using a credit card that does this conversion. I have a similar account to you at RBC and I can transfer money between my CDN and USD accounts at a "preferred rate", but it is not a simple +2.5% over the spot rate. The bank determines the rate based on thresholds of how much you are transferring at the time.

Now if only the Apple Credit card was available in Canada...

What is different about the Apple credit card?

 

[star72232]

What is different about the Apple credit card?

It’s not offered to Canadians, at least not yet, but they are saying it will have no fees, no late charges and no forex fees. You’ll also get cash back (amount varies depending on how you pay).

 

[Sue M]

I have a CIBC USD Visa and checking acct. I think my Visa is free if you have a USD checking acct with them. And it’s an Aventura Gold card so comes with the usual benefits. I’m not a cash carrier either so I put everything on the Visa. I usually pre load it with some cash before I leave. It would be handy to have a USD debit card too.
How did you get the Forex waived? When I transfer funds from my CAD checking to my USD checking I’m fairly certain I pay the forex. I’m going to have to ask them when I go to the bank again.

Updated**** I went to the bank today and no, my USD credit card fee ($35) is not waived. They said occasional there’s a promo for new sign-ups but it’s only for the first year.
My USD card also says no FOREX fee, but it’s only because on that card you aren’t converting currency.
The only way I know of avoiding Forex fee is if you have a cash back card that gives you 2.5% on foreign transactions or your going to Disney and buy a Disney gift card here.

 

[Mikamarii]

My USD card also says no FOREX fee, but it’s only because on that card you aren’t converting currency.

I could be using the wrong terminology but when I see “no foreign exchange fees” I compare it to using a standard cdn credit card vs US dollar. Like you said you aren’t paying it because there is no conversion. So in my mind I’m getting a better exchange rate (by transferring money to my US dollar acct) because I’m not using the cash rate and then I’m not paying the foreign exchange fees because I’m using a usd CC vs my normal cdn $ one.

If that makes sense.

 

[cdnSpinalTap]

You actually pay a higher exchange rate (assuming same day) when you transfer cash between your CDN bank account and your USD bank account than you do with the exchange rate that MasterCard charges you on that day. Depending on how you use it, a no FX credit card or a 1.5% net gain credit card like Rogers is your best bet. This is of course assuming that you are not actively trading currencies on a regular basis.

MasterCard provides the best exchange rate you can get, followed by Visa, which is slightly lower. Then your bank..somewhere down the line.

I did a little bit of a comparison. I bank with RBC and get a preferred exchange rate at different thresholds. I did a test conversion of $1000, and RBC gave me a rate of 1.3568.

I then checked the MasterCard rate (https://www.mastercard.us/en-us/consumers/get-support/convert-currency.html) and it gave me a rate of 1.33691. This was calculated with a 0% FX exchange fee, to give the absolute rates to be used for comparison.

The current Bank of Canada rate is 1.3337.

The B of C rates and the Mastercard rates could be off slightly, depending on when MasterCard grounds their rate for the day, but you can see that they are very close. A lot less than what RBC is giving me.

When you combine the lowest MasterCard rate, with a card such as Rogers, this to me seems like the best return. Again, this is assuming you are not actively trading currencies.

 

[Mikamarii]

Thanks for that info. It's really interesting how the rate varies from place to place as I've never dove to deep in to all the various rates for various payments. A few months ago we were in Mexico and we bought something in USD but I didn't have my US visa with me so used my WestJet MasterCard. Out of curiosity I did a 'fake' money transfer when I got back to the room to see what I was looking at. When the transaction was actually posted it cost me about an additional 4-5ish$ due to the rate that was used (and likely fees) for approximately 100$ purchase. Another time we asked a friend to pick us up something from the US and they paid for it using their Cdn Credit card. I don't know which one it was but when they got home they sent us the picture of the conversion rate from their credit card statement and it was definitely more than I had anticipated by transferring cash to our USD account and paying that way. This is by no means scientific just my experience.
That's one thing I like about having the US based accounts. At least when I transfer the money in I know exactly what I'm paying; that, and I don't have to carry cash around . Simplicity is the worth it for me and no surprises!

 

[cdnSpinalTap]

Does anybody have a recent gift card experience we can compare with? We would need the original gift card amount in Can dollars, the amount in USD that Disney gave you for it and the transaction date. We can then compare that to the B of C rate and the Mastercard rate.

 

[tinkerone]

Does anybody have a recent gift card experience we can compare with? We would need the original gift card amount in Can dollars, the amount in USD that Disney gave you for it and the transaction date. We can then compare that to the B of C rate and the Mastercard rate.

Right now, $25 gift card on the Disney gift card site is $18.74 so 1.3340448 or, rounding, 1.33.

I can tell you all for sure that the banks transfer rate and the buying cash rate are not the same. The transfer rate is less. 2.5% less, no, but less. Its still the best option if you are using a US credit card. BMO's US credit card has an annual fee of $35 however that is waived in the second year (and going forward) if you spend $1000 on it per year.

 

[cdnSpinalTap]

Right now, $25 gift card on the Disney gift card site is $18.74 so 1.3340448 or, rounding, 1.33.

Does this amount stay the same every day or does it fluctuate day to day with the daily exchange rate? I seem to recall when I did my last ones that it set on the day I entered them online and stayed the same until we used them. If so, we would need to know what day you entered them to be able to compare that days exchange and MasterCard rate.

I can tell you all for sure that the banks transfer rate and the buying cash rate are not the same. The transfer rate is less. 2.5% less, no, but less. Its still the best option if you are using a US credit card. BMO's US credit card has an annual fee of $35 however that is waived in the second year (and going forward) if you spend $1000 on it per year.

I am not sure what you mean by this. Are you saying that when you transfer between your CDN and USD bank accounts you pay less in exchange rate than if you were to walk in and buy USD cash to put in pocket and take away with you? That would make sense to me as there is less handling required by the bank.

 

[tinkerone]

Does this amount stay the same every day or does it fluctuate day to day with the daily exchange rate? I seem to recall when I did my last ones that it set on the day I entered them online and stayed the same until we used them. If so, we would need to know what day you entered them to be able to compare that days exchange and MasterCard rate.



I am not sure what you mean by this. Are you saying that when you transfer between your CDN and USD bank accounts you pay less in exchange rate than if you were to walk in and buy USD cash to put in pocket and take away with you? That would make sense to me as there is less handling required by the bank.

The rate on the Disney Gift Cards does fluctuate with the rate of the day. It is not locked in until you actually use it. Anything left on the card after your first use will keep fluctuating until it is used. It will never be locked in. I have been watching this particular gift card since I entered it months ago and it has gone up and it has gone down.

As for the transfer between CND and US bank accounts you do understand correctly. The transfer between bank accounts is less than you would pay if you came into the bank and purchased US funds in cash from your CND account.

 

[cdnSpinalTap]

The rate on the Disney Gift Cards does fluctuate with the rate of the day. It is not locked in until you actually use it. Anything left on the card after your first use will keep fluctuating until it is used. It will never be locked in. I have been watching this particular gift card since I entered it months ago and it has gone up and it has gone down.

If that is the case then, it is very close to the posted exchange rate for today (1.333333), with no fee.

The current MasterCard rate is 1.3353, so less than .1% more than the Disney rate and .2% more than the posted rate. If I am using a Rogers Credit card in the US, getting 1.5% back, that still works out better for me than using Disney Gift Cards. However, if I can buy my Disney Gift cards at a grocery store in Canada with my Scotia Bank Momentum Visa and get 4% back on that purchase, then that could potentially be a better scenario.

I realize we are just talking a few percent here and there, but for me these extra points really add up.

 

[FigmentSpark]

Just to mention, on the Currency Exchange site, they quoted purchasing USD1000 for CAD1364 this morning around 11am.



However, I went to my BMO account to check their price right after and the cost for that same USD1000 was going to be CAD1369.80



The Currency Exchange gives you a discount if you are converting at least CAD1000, I think. But even so, their exchange rates are dynamic while the bank's appears to be static or at least much slower to change. Naturally, I can't speak for any other bank, so maybe others can post what they find from the banks.

Of course, if you put your charge on your MasterCard or Visa at that same time, you wouldn't get the conversion for at least a couple of days, so if the rate movement is important to you, even with cashback or 0% FX fee, you're still at the mercy of the markets at time of purchase.

 

[cdnSpinalTap]

Thinking about the gift card thing further - the only difficult part I see with this is that our room charges this last January, for instance, were around $4,000 USD for 9 days. This is for a family of 5 and we put absolutely everything on the room. Pre-buying around $5,000 CDN in Disney gift cards from my local grocery store could be a bit onerous . As previously mentioned, it all comes back to convenience and what a person wants to do to save a few percent here and there.

 

[tinkerone]

The Currency Exchange gives you a discount if you are converting at least CAD1000, I think. But even so, their exchange rates are dynamic while the bank's appears to be static or at least much slower to change. Naturally, I can't speak for any other bank, so maybe others can post what they find from the banks.

Of course, if you put your charge on your MasterCard or Visa at that same time, you wouldn't get the conversion for at least a couple of days, so if the rate movement is important to you, even with cashback or 0% FX fee, you're still at the mercy of the markets at time of purchase.

What do you mean by that? The bank rate can and does change with the markets minute by minute, is that what you mean?
Also, as far as Mastercard goes, if you make a purchase today while it may not show for a couple days you will get the rate from the day you made the purchase. Is that what your saying?

 

[cdnSpinalTap]

Also, as far as Mastercard goes, if you make a purchase today while it may not show for a couple days you will get the rate from the day you made the purchase

I'm not 100% sure about this. When I make a purchase on my Rogers MasterCard, the pending amount and the eventual posted amount are never the same, indicating that different rates are used. I've never looked into what the difference was from, but I suspect they are using the rates on the day the transactions are posted.

Here is a snippet from Rogers FAQ, indicating that it uses the rate on the day the transaction is posted, not the transaction date:

All purchases made in a foreign currency are converted to Canadian dollars at the rate established by Mastercard® International on the date that your purchase is posted to your account, plus a foreign transaction fee equal to 2.5% of the transaction amount after it has been converted to Canadian dollars. To verify the Mastercard® exchange rate before you make your purchase, please visit: www.mastercard.com/global/currencyconversion.​