For serious shoppers, the United States will soon be offering up the ideal set of bargain-hunting conditions: a weak greenback, recession-weary retailers and Black Friday.
The Canadian dollar will remain close to parity through the end of 2011, so it's "the perfect time" for some cross-border shopping, says Ashif Ratanshi, head of branch investments, deposits and direct investing at RBC Economics.
Whether you're shopping for new shoes or a U.S. investment property, there are ways to make cross-border transactions safer, easier and less volatile. Mr. Ratanshi, who scored some good clothing deals on a recent New York shopping trip, recommends using U.S. dollars, through a U.S. savings account, U.S.-dollar credit card - or both - to eliminate exchange-rate fluctuations.
"When you go down, if you use a U.S.-dollar credit card, you know exactly how much you've spent, and how much you've paid with respect to the exchange rate, and you're not subject to all that volatility."
If you pay a U.S. retailer with a Canadian credit card, he says, "the volatility comes in because you never know what the merchant is going to charge and what the fees are behind that exchange rate because now you're going through a number of providers."
Mr. Ratanshi offers the following tips for shopping in the United States:
1. Open a U.S. savings account.
Look for an account with low or no fees that enables you to take advantage of exchange rates when they are favourable. Some financial institutions will also allow you to purchase U.S. dollars through online banking at a preferential rate by simply making a direct transfer from your Canadian dollar bank account to your U.S. savings account.
2. Use a U.S. dollar credit card.
Frequent U.S. travellers should consider a U.S. dollar credit card, which gives cardholders the flexibility to make transactions in U.S. funds and avoid the hassles of exchange rates or daily currency fluctuations. Coupled with a U.S. savings account, it also allows holders to take advantage of favourable exchange rates over time using dollar-cost averaging and then pay off their card balance using U.S. funds from their savings account.
3. Consider alternatives to cash
Debit or credit cards and U.S. travellers cheques are easy, secure alternatives to carrying large amounts of cash when shopping or travelling. Credit cards often come with purchase protection and extended warranties.
4. Make cross-border banking work for you.
If you often travel to the United States or are one of the thousands of Canadian snowbirds who head there over the winter, consider a cross-border banking arrangement that provides access to your banking services on both sides of the border, including U.S. mortgages. Most of the big Canadian banks provide this service.
5. Pack travel insurance.
Regardless of the length or type of trip, it's important to consider emergency travel insurance as medical treatments in the U.S. can be very expensive. Frequent travellers should consider a multi-trip annual plan to save both time and money.
6. Look for easier financing options.
If you are thinking about buying U.S. real estate and you have sufficient equity in your current home, consider a loan or line of credit secured against your Canadian home to buy your U.S. property. This will eliminate the need for a U.S. mortgage approval.