best way to convert Canadian$ to US$

path · Post by **path** » Tue Feb 28, 2006 2:29 am

Recently I was gifted 25K Canadian from my father

When I went to the Bank of America to cash the cheque they were going to use a cconversion rate of 0.8388.
At the time the official Bank of Canada conversion rate was 0.8757.
This is a difference of 0.0369 which is $922.50 ($25K*0.0369).

I was shocked.
I realize that
* the Bank Of Canada rate is not the official rate of all banks
* and that banks needs to make some money
but $900 to convert $25k is ridiculous.

I cancelled the transaction and started checking out my options.

My father has a US bank account at his Canadian bank.
The Canadian bank quoted us a conversion rate that would save me $500+ dollars.
So we plan on
* ripping up this check
* depositing a new cheque into his US account
* then transfer US funds to me

QUESTION 1
Does anyone eles know the best way to convert Canadian $ to US $?
IE; Avoid a 4% conversion fee.

QUESTION 2
When I retire - and start pulling money down from my Canadian RRSP - what will be the best way to do this to avoid high $ conversion costs?

Thanks in advance

nelsona · Post by **nelsona** » Tue Feb 28, 2006 8:24 am

Anyone from canada sending you money, should do the conversion in Canada, and send you a US cheque, or draft. This will always be cheaper than doing the conversion at a US bank.

There are other more sophisticated ways of doiing this, but they all require some form of account in Canad in your name, so start you should have a Cdn bank account.

There was no need to get rid of your bank account when you left Canada.

path · Post by **path** » Thu Mar 02, 2006 3:02 am

Update

I ripped up the Canadian check and had my father issue us a US check - from a US checking account set up at his Canadian Credit union.
This was a huge saving :

DATE = mon feb 27
BANK OF CND EXCHANGE RATE = 0.8757
BANK = bank-of-america
BANK OF AMR EXCHANGE RATE = 0.8388
SPREAD = 0.0369

DATE = tue feb 28
BANK OF CND EXCHANGE RATE = 0.8769
BANK = canadian-credit-union
CND CREDIT UNION EXCHANGE RATE = 0.8670
SPREAD = 0.0099

The difference on the spread is 0.027.
On $25K cnd that translates to ($25K*0.027) = $675

US bank charges $922.50 to convert $25K
CND bank charges $247.50 to convert $25K

Thu Mar 02, 2006 9:44 am

It may be to your advantage to use a money broker, like:

Jameson International Foreign Exchange
1-800-363-7363 - Ask for Steve Hayhoe

He normally gives you a better rate than the banks, and also pays the wire fees.

Rickerbucks · Post by **Rickerbucks** » Thu Mar 02, 2006 3:09 pm

Just FYI.

I work at a full service brokerage firm and for amounts under $60K our 'spread' is 1.9 cents. (as oppossed to the 2.7 cents from the CU). for amounts over $60k we phone directly to the excange desk and then take a spread of our choosing. typically .25 - .50 cents for me.

Fri Mar 03, 2006 6:05 pm

Why don't you post your contact parameters here, Rickerbucks, for our readers information.

Rickerbucks · Post by **Rickerbucks** » Fri Mar 03, 2006 9:58 pm

Thanks Mark, but I want to keep a low profile. I'm happy to point people in a direction. I've been an advisor for 20 years and have a lot of experience with cross border investment issues. I was licensed in the US for almost 10 years

I work at TD Waterhouse Private Investment Advise but I think most brokerage firms have pretty competative exchange rate. Having said that, most advisors are in the business of building a long-term relationship not being a currency exchange broker so you probably have to keep that in mind.

I just point out that when you want to do $USD - $CDN exchange and if you are dealing with a broker, give him a call for a quote. I know that some clients simply don't appreciate that we can be fairly competative with this service.

Norbert Schlenker · Post by **Norbert Schlenker** » Sun Mar 05, 2006 3:05 pm

You might want to read through this thread for some more low cost ways of converting US$ to C$ and vice versa..

Rickerbucks · Post by **Rickerbucks** » Sun Mar 05, 2006 4:54 pm

If people have some specific questions for me they can PM me. I'd be happy to chat via PM.

nelsona · Post by **nelsona** » Mon Mar 06, 2006 7:49 am

Norbert has offered an intersting scanario in the past for exchanging Cdn to US.

Unfortunately it requires Cdn residency, since a Cdn broker cannot transact for a US resident, so it will not work.

flames9 · Post by **flames9** » Mon Mar 06, 2006 8:32 am

http://www.customhouse.com/
When I was transferring smal amounts of $$$ from my CDn account to my American account I used the Custom House. Was free and better rates than the bank. There are better placers to get better rates of course, but this was hassle free and could do it at my pwn time. My wachovia branch here in the USA would of course cash a CDn personal cheque that I wrote to myself, but the exchange rate was poor, and most of the tellers were clueless on how to do the transaction! I had to wait for the head teller to be able to do the transaction correctly.

Norbert Schlenker · Post by **Norbert Schlenker** » Tue Mar 07, 2006 1:17 pm

nelsona wrote:Unfortunately it requires Cdn residency, since a Cdn broker cannot transact for a US resident, so it will not work.

Actually, it appears that TD Waterhouse in the US allows Canadian dollar accounts. See this post at the FWR forum, e.g., where Oliver indicates that he uses TDWHUSA to buy and sell Canadian shares in Canadian dollars.

Rickerbucks · Post by **Rickerbucks** » Tue Mar 07, 2006 2:45 pm

Well to be technical, this is TD Waterhouse USA maintaining accounts for US residents in $CDN, NOT TD Waterhouse CANADA. EVERYTHING about those accounts, from a regulatory perspective, is "in" the USA.

A subtle but definately important difference.

Of course, TW Waterhouse USA has now merged with Ameritrade to become TD Ameritrade.

Rickerbucks · Post by **Rickerbucks** » Tue Mar 07, 2006 2:47 pm

Sorry Norbert I noticed after re-reading your post you did seem to recognize the differrance but I wanted to make it a little clearer. i'm afraid I'm unable to edit the post above apparantly.

ledz · Post by **ledz** » Wed Mar 08, 2006 7:28 pm

Riverbucks et al,

What do you think of xetrade.com? Seems pretty good when compared to my TDCanadaTrust US->CAN bank account exchange rate. Are online brokerage rates (TD brokerage) better than xetrade.com? Also I have until summer to exchange about 100k from US to CAN for my house downpayment. What is the best way around? I am thinking to do it gradually over the months to leverage any change in the exchange rate, but it seems to be going down ever. Should I go for a one-time transaction to get the best rate at that point?

thanks a lot!