MARK ASHMAN
In August, when the Canadian dollar was trading at around 93 cents (U.S.), I wrote in this blog about the lure of shopping on American retailers' websites. There was an instant backlash. Many readers were upset to see cross-border shopping promoted at the expense of Canadian retailers.
But, I must confess, the loonie's flirtation with parity has me thinking once again about how families can get the most for their hard-earned wages. After all, maybe now a family can afford to book that Disney vacation or put a down payment on that Sunbelt retirement property.
"It's like having more discretionary income," says Cynthia Kett, a chartered accountant and certified financial planner with advice-only firm Stewart & Kett Financial Advisors Inc.
Still, while deals abound, she warns there are some real pitfalls to watch out for when chasing currency-driven deals beyond the border.
For example, if you're planning to use our higher dollar to buy real estate in the U.S., take into account all of the mitigating factors. "People have to be aware of U.S. estate taxes and the tax implications of buying a rental property," Ms. Kett cautions. "Also, while the costs of ownership may be lower now, when the U.S. dollar gains strength, those property ownership expenses will increase."
Likewise, be aware of the total landed cost of any product you're buying. You don't want to be surprised by hefty duties that would offset your expected savings.
Perhaps the biggest threat to Canadian consumers looking for deals is the temptation to overspend.
As Ms. Kett says, "Don't go crazy and spend money you wouldn't have otherwise spent. If you weren't going to take a very expensive vacation in the U.S., don't do it now."
With those caveats in mind, here are some ideas for bargain-hunting.
Book a vacation stateside
Travelling to the U.S. gets a lot less expensive when the Canadian dollar is nearing par. I've used both Priceline and Travelocity to book hotels and car rentals in the U.S. at discount prices. The strength of the loonie makes the U.S. an even more attractive option for a getaway this winter. If your schedule is flexible, look for package deals at bargain rates at Red Flag Deals and SellOffVacations.com.
Shop in the U.S.
I'm an online shopping enthusiast and U.S. retailers are making their websites more friendly for Canadians, often showing prices in Canadian currency and offering to ship to Canada for free.
Take a look at Wishabi if you want to do price comparisons between stores in the U.S. and in Canada. Wishabi has a cross border shopping system that automatically calculates all hidden fees such as brokerage, duties, exchange rate and shipping.
If you have your heart set on an item at a U.S. store that only accepts credit cards with American addresses or that doesn't ship to Canada, there is a new service to help you out. US Unlocked will provide you with a virtual pre-paid debit card with a U.S. billing address and ship you the goods.
If you're planning a drive across the border for deals, check out this cross-border shopping calculator. Based on the distance to your destination, the fuel efficiency of your vehicle, and applicable state taxes, it will calculate the cost of a product purchased in U.S. dollars.
Add U.S. stocks to your portfolio
Not only will the Canadian dollar go further at the shopping mall, it will take you further in the stock markets. Many blue chip American stocks are trading at a discount to historical earnings multiples and represent an opportunity to diversify into quality names. If the Canadian dollar continues to gain strength against the greenback, you'll benefit from the foreign currency exchange alone. Of course, the reverse holds true as well, should the U.S. dollar rebound. For the full lowdown on how to use the soaring Canadian dollar to buy U.S. stocks, check out this recent article by John Heinzl.
Wait for deals at home
Finally, if you are a die-hard "buy Canadian" kind of consumer, shop at home. But look for deals as Canadian retailers get more competitive. "That's what we saw the last time around," says Ms. Kett. "We don't necessarily have to cross the border to gain the advantage of the U.S. dollar. It's hard on retailers here, but good for the consumer."
The competition is also likely to put pressure on the Canadian tourism industry to reduce prices.
"Not only will Canadians flock to the south of the border, but the tourism industry is going to lose some of their U.S. clientele," Ms. Kett says. "Domestically there could be holiday opportunities "to try to attract the U.S. traveller."