If you travel to the United States regularly or trade US-listed stocks and exchange-traded funds, you might want to learn more about US dollar accounts in Canada. These accounts minimize currency conversion fees which seem small but add up fast.
Opening a US dollar account in Canada is quick and straightforward. You could pay a fee of $1.00 to $10.00, which is waivable if you maintain the minimum balance. During account opening, you will need an account number, a social insurance number, and identification documents like a passport or Driver’s license.
Some financial institutions allow you to have a dual currency account, where you can bank your Canadian dollars on one side and US dollars on another.
To help you understand US dollar accounts, we look at how they work, their advantages, and some options.
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A US dollar account allows Canadians to transfer or receive foreign transactions in US dollars. When you receive any money, you can withdraw and exchange it with the local Canadian dollars or use it in US dollars to transact.
Having a US dollar account helps you to avoid high exchange rates. You can also use a broker to get the best exchange rates and earn the most from your US dollars. Alternatively, you can wait until the market has the best exchange rates to exchange your money.
People who travel to the US benefit from these accounts because they don’t need to exchange currencies, evading conversion fees. It also allows you to use your credit card without worrying about a 2.5 percent transaction fee.
Canadians can choose from many US dollar accounts available. When opening one, consider factors like monthly fees, transaction fees, and other interest banks charge. When opening a US dollar account in Canada, some accounts to consider are;
The TD bank allows its users to open a TD Bank US Daily Chequing Account. It does not charge monthly fees, and you pay a transaction fee of $1.25. You can also opt for the Borderless Plan account.
TB bank’s US daily account offers zero transaction fees for users with a balance of over $1500. Also, to earn the daily 0.01 percent interest, you must have a balance of $1000 and above.
TD Bank users can easily open this account online using the bank’s app. The disadvantages of having the TD Bank US Daily Chequing Account are low-interest rates compared to other banks and the high transaction fee of $1.25.
However, you can get more benefits with the Borderless plan. For example, it offers its users unlimited free transactions, and you can get free traveler’s cheques. Users also get waivers on their Visa Card fees.
Tangerine US savings account is another common US dollar account for Canadians. Unlike the TD bank US dollar account, you won’t pay monthly fees here and benefit from free unlimited transactions.
The bank does not require you to have a minimum balance, so you can freely open an account. You will also earn interest at a rate of 0.10 percent. However, to withdraw money, you must visit a Tangerine Café location, and the cafes are only in big cities.
The BMO offers the BMO US Dollar Premium Rate Savings Account to Canadians. Users don’t pay monthly fees, and you earn an interest of 0.05 percent. BMO has two US dollar banking options. You can open a US Dollar chequing or savings account.
The BMO US dollar chequing account allows you to deposit money, pay bills and make purchases using the US dollar. If you have a basic chequing account with BMO, you won’t pay a fee to open the US dollar account.
The bank’s basic chequing account charges a monthly fee of $4.00, and you get 12 free transactions. However, you will get a fee waived if you maintain a minimum balance of $2000. In addition, seniors get a discounted plan, where they don’t pay the monthly fee.
BMO’s US Dollar Savings Account is similar to the chequing account. However, you will earn an interest of 0.50 percent on all balances in your account.
Canada’s RBS offers the RBS US High-interest savings to its customers. You can also open the RBC personal account, which is easier to access if you already have an account with the bank.
If you frequently travel to the US, the US personal Account for RBC will be excellent for you. It allows the users to access US dollars through branch withdrawals, and you also get six free transactions every month, after which you pay a $1.00 transaction fee.
You don’t need a minimum balance to have a US personal Account. However, the bank charges a monthly fee of $2.00, which does not depend on the amount you have in your account. In addition, you will pay a bank draft fee of $7.50.
Opening a US personal account is fast and straightforward. You can do it online, and you don’t require an RBC account to get the US dollar one.
An alternative to the US personal account from RBC is the US High-Interest eSavings account. The advantage users get from this account is an interest rate of 0.15 percent. In addition, you won’t pay a monthly fee, but the transactions cost $3.00. This account only offers one free withdrawal per month.
A borderless plan account from TD bank or a US personal account from RBC has many advantages. Some services you will enjoy with these accounts are;
If you have clients in the US or own a business and get customers from America, you can receive payments in dollars. The account also helps you avoid foreign exchange fees which can be costly.
Some financial institutions with US dollar accounts offer interests to their users. However, some state that you must keep a certain balance in your account to earn the interest.
You will less likely pay monthly fees with a US dollar account. Some financial institutions also waiver these fees if you meet specific standards. Therefore, check the terms and conditions on monthly costs with your bank.
Sometimes payments can be delayed, and you need cash urgently. Some US dollar accounts allow you to get an overdraft, although you could pay a fee. To be safer, check the terms of overdrafts with your bank.
Some things you won’t like about owning a US dollar account in Canada are;
Some banks need you to have a certain minimum balance in your account. Unfortunately, these amounts are too high for new business owners to afford, discouraging them from getting a dollar account.
Although some banks offer interest, the rates are too low compared to the standard savings accounts. As a result, these become less beneficial to account holders, demotivating other people to open the accounts.
There are many US dollar accounts to choose from. For example, you can open an account with big banks like RBC, BMO, or TD. These accounts enable you to receive US dollars and avoid expensive foreign exchange fees. You can also earn interest.
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