If you plan on cross-border shopping this summer, you may want to bank some U.S. dollars now, while the exchange rate is in our favour. If you open a U.S. dollar account through your Canadian bank, you can apply for a U.S. dollar credit card to access your funds while in the United States - and avoid paying the conversion fee on your purchases, which is 2.5 per cent at most financial institutions.
Your bank may want to charge you a monthly chequing fee for the new account, as well as an annual credit card fee, but depending on your history or accounts already in place, these fees may be waived. If you can swing that, then having a U.S. dollar account and credit card is a no-brainer, according to Sarah Wilson, a Calgary-based certified financial planner and consultant with T.E. Wealth. Even if there is a fee, it might well be worth paying, if you travel often to the U.S.
Ms. Wilson says that if it's a one-off trip, people are often happy to go with the flow and take the exchange rate at the time of travel. If you're not one of these people, she suggests opening up a U.S. account now. You can then simply transfer the desired amount from your regular account. If you don't have enough cash on hand to transfer the total amount you think you'll need, try automatically funnelling a little bit of money into the account every two weeks until your departure date.
You might miss the most opportune time to exchange your dollars, but you'll also avoid the worst possible time to exchange. You'll average out. It's a similar approach investors take with dollar cost averaging. Adds Ms. Wilson, "some people try and become currency exchange traders and that usually has the same results as amateur gamblers - losses and gains based on absolute luck."
Angela Self is one of the founders of the Smart Cookies money group.