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New duty-free rules sure to entice cross-border shoppers

With new duty-free rules coming into play as of June 1, those who already love cross-border shopping are going to be more tempted than ever before.

You'll be able to return with $200 of tax-exempt goods if you're in the United States for 24 to 48 hours, up from $50. Visiting for more than 48 hours allows you to bring back up to $800 worth of goods duty free, up from $400.

That's a wallop of duty-free. And if you are a discount-hunter, as many cross-border shoppers are, the booty seems practically irresistible.

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Before you give in to such emotional rationales as "But it's on sale"; "It's 70-per-cent off"; "It's practically free!" (I've used or heard them all on cross-border shopping trips with girlfriends), consider this: How many times has a dress or jacket hung unworn in your closet, mocking your judgment? Even if you weren't sold on an item, you were swayed by the perceived discount.

Since you're much less likely to return a purchase to the United States, the way to discount-shop is to buy based on value. What does that mean? You calculate the cost per wear: That's the total cost of an item divided by the estimated number of times you'll wear it.

On a recent cross-border shopping trip, my boyfriend found an Armani tuxedo originally listed at $2,200 (U.S.) but marked down to $310. He rarely attends black-tie events but happens to have two in the coming year, putting his cost per wear at $155. It's roughly the same price to rent formalwear for the night, so we agreed it's good value. (Reminding him that I had to Krazy Glue part of his old tux together before the last wedding we attended sealed the deal.)

Other cross-border shopping tips:

If you go often, it's worth opening a U.S. dollar account through your Canadian bank.

You can also apply for a U.S.-dollar credit card to access your funds and avoid paying the typical 2.5-per-cent conversion fee on your purchases. If your trips are less frequent, like mine, then you likely won't mind using your credit card and paying the conversion fees.

Using your credit card provides proof of purchase if you lose your receipt, something that comes in handy if you get caught up in a clearance and – having a change of heart – need to return an item before making the trek home.

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Angela Self is one of the founders of the Smart Cookies money group. Read her weekly column on managing debt and saving money at the Globe's personal finance site.

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About the Author
Angela Self

Angela Self is one of the founders of the Smart Cookies, a group of five women who specialize in personal finance. They are hosts of a self-titled show on the W Network and the authors of The Smart Cookies' Guide to Making More Dough. More

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