Once again, the Canadian dollar is climbing back up towards parity with the greenback. Most recently, it closed at 92 cents on the US dollar. For Canadians, this is an excellent time to purchase US dollars ahead of any trips you might need to take south of the border. Many people simply wait until they know they will be traveling, but by paying attention to the exchange rates on a semi-frequent basis you can get a better trade on your money by buying US dollars when the exchange rate is good.
And for those who don’t pay much attention to the loonie-greenback exchange rate, getting 92 cents for your dollar — while not a completely rare window of opportunity — is not a chance you should pass up on.
Check the Canadian-US Dollar Exchange Rate Online
I’ve used a number of sites for checking the latest Canadian-US Dollar exchange rate, but the one I like best recently is Forex-Markets. It gives you live, real-time quotes throughout the day as well as the weekends (since currencies are being exchanged at all hours of the day).
You might also like the following sites, which display the information differently:
You can also configure your iGoogle to display the currency rates you use most frequently. By checking these regularly, you’ll know when to convert your money. Don’t wait until the week of your vacation or trip, it just doesn’t make sense. Convert when the exchange rate works in your favour. In order to do this, you’ll want to pay attention to the currency fluctuations every couple of weeks or so, depending on how often you travel. You’ll also get to know the general trading range for the Canadian dollar and learn what a good deal on the dollar looks like.
So how do you go about buying US dollars throughout the year?
How Canadians Can Buy US Dollars
Open a US dollar chequing account and transfer the money in. This is the option I like best. Especially if you’re considered a high-quality customer at your bank (you’ve had an account there for a long time, you keep a certain balance, you have several products with them), the bank will probably give you a slightly better exchange rate than you’d find in a currency exchange outfit at the local mall or travel agency. I know I receive a discount for exchanging my money through my own bank. If you bank online, it’s even easier, because you can simply make a transfer from your Canadian chequing account into your US dollar chequing account whenever the exchange rate is in Canada’s favour.
Walk into your bank and buy US dollars over the counter. This option basically amounts to the first one. If you use your own bank, they will probably give you a good rate if you’re a customer in high standing. Check the standard rate online first, then compare it with what your bank offers you. I do not think you need to be a customer at the bank in order to buy US dollars, but I’ve never tried going to any other bank to do this.
Walk into a local currency exchange or travel agency. Sometimes I’ve just used the currency exchange booth at my local mall. It’s convenient but they might charge a higher commission fee and it will depend on the amount you are buying. (This option, of course, is best if you’re buying anything other than US dollars – the banks, I believe, have to order non-US currencies in in advance. At least this is according to my memory. I remember in Toronto once making the trip to a specific European bank in Little Italy, I believe, in order to buy Euros at the best rate and on the same day.)
Withdraw from an ATM while you’re in the U.S. This option is highly convenient but you need to plan carefully to make sure it doesn’t end up costing you an arm and a leg. Canadian banking/debit cards will work at all U.S. ATMs issued by major banks such as Chase, Bank of America and Citibank. As long as the machine has the “PLUS” logo on the list of cards it accepts, your card will work. However, there are some ATMs and in-store debit machines where our debit cards do not work because they don’t carry the Mastercard or VISA logos. This is a minor inconvenience easily fixed by simply finding a major bank’s ATM. The other point you need to consider here is that you should contact your bank to see if you can have foreign ATM withdrawal fees removed or reduced if you know you will be using this option frequently. If you’re in Europe or the UK, for example, your bank might charge $5.00 just to make an ATM withdrawal there. Finally, if you’re withdrawing money at the last minute, you are not likely to get the best exchange rate. I have also found when travelling that it is cheaper to do your money exchange while you are still at home in Canada, where it is easier to find a buyer for the Canadian dollar.
Leverage Your U.S. Credit Card For Better Exchange Rates
This is another option for “exchanging” your money that can pertain to any Canadian that also holds a U.S. credit card – for example, those who are also students or working in the U.S., or those who simply hold a Canadian but US-dollar-denominated credit card that they use for traveling purposes.
Simply put, consider charging your American expenses to your U.S. credit card when the Canadian dollar is low (i.e., when the greenback is expensive), and then paying it off when the Canadian dollar is higher.
Thus, if you’re vacationing when the Canadian dollar is high, there’s less need or incentive to use the U.S. dollar credit card (although of course you can), because you can simply use your cash without taking a big loss. Of course, if you *do* use your U.S. credit card, make sure you pay it off asap – i.e., when the loonie is still high.
To boil it down, you want to pay the U.S. dollar debt off when the Canadian dollar is high. There would be nothing worse than racking up your US dollar credit card when the loonie is low, and then paying it off with even lower Canadian dollars.
Although I’ve talked about the Canadian-US dollar relationship, theoretically these points would be valid for any two currencies, if you get paid in one currency but spend in another. It is just that I know this relationship the best and need it frequently myself. Currency planning is just one aspect of overall travel planning in general. By planning ahead, you can get better leverage of your money. Don’t be a victim of short-term market swings and economic trends that will hurt your money’s purchasing power in a foreign country.
If you have other tips that I haven’t mentioned here, please let me know. What two currencies do you use most often, and when do you buy?Related Posts
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