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Snowbirds, consider this slight alteration to your fall travel routine.

Skip the visit to your bank to buy U.S. dollars. If you use your bank’s website for this purpose, the same rule applies. With the loonie trading in the range of 76 US cents these days, you don’t want to compound the pain of foreign exchange by paying the stiff markups charged by banks.

“I’m not a big fan of the banks,” said Terry Ritchie, a financial adviser who works both sides of the Canada-U.S. border. “They’re great for convenience. But if you can take the time and wait a day or two, there are better bets.”

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Here are the three online foreign exchange options used by Mr. Ritchie, director of cross-border wealth services at Cardinal Point Wealth Management:

-Knightsbridge Foreign Exchange Inc., based in Toronto;

-OFX: OFX Group Ltd. is listed on the Australian Securities Exchange.

-TransferWise: London-based, with nine offices around the world.

One more option for cheaper U.S. dollars is the Snowbird Currency Exchange service offered by the Canadian Snowbird Association. The exchange rates are competitive, but the technology is old school. If you want to make a transfer, Canadian dollars are withdrawn from your account on the first business day of the month. Your U.S. dollars are deposited in the account of your choosing on the fifth business day of the month.

Transfer money to Knightsbridge, OFX and TransferWise electronically and they change it into U.S. dollars and then route the funds to an account of your choosing. It could be a U.S.-dollar account at a Canadian bank, or to an account held at a bank in the United States.

Rates fluctuate during the day, so be patient. “If you don’t like the rate, refresh your screen and wait for a better one,” Mr. Ritchie said. Prefer to talk to someone on the phone? Most foreign exchange companies have a 1-800 line.

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For banks, foreign exchange is a profit-generating dynamo. They acquire currencies at preferential rates for big buyers and then sell it at a marked-up rate. One bank recently had an exchange rate of 1.3460 for clients buying U.S. dollars and 1.2755 for those selling. If you bought US$1,000, the cost would be $1,346. If you then sold that $1,000 back to the bank, you’d get $1,275.

The rates the banks offer look particularly bad when compared with the currency quotes you get online. These quotes often use what’s called the mid-market rate, which is half way between the buy and sell rates for big players such as banks.

Mr. Ritchie describes the likes of Knightsbridge, OFX and TransferWise as discount brokers and bank foreign exchange as full-service brokers. Better exchange rates than the banks are a given with online forex dealers, but mind the transfer fees that some of these outfits charge. TransferWise is very clear in disclosing its transfer fee, which varies according to the amount of your transaction. For example, I was quoted $32.84 to turn $5,000 into U.S. dollars.

If you’re familiar with online banking, using a discount foreign exchange company is easy. You may be able to add a discount forex dealer as a bill payee; if not, you can link your bank account to your dealer’s website by providing your account, branch and institution numbers (the numbers that appear on the bottom line of cheques).

Knightsbridge president Rahim Madhavji said transfers to his firm can often be done via bill payment. “You can do that from anywhere in the world, as long as you have access to a computer or a phone,” he said.

It typically takes a day for your money to get to Knightsbridge and then another day for it to be routed back to you. If you need the money sent more urgently, try a wire transfer. Knightsbridge doesn’t charge to send one of these, but the bank receiving the money may apply a fee.

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Exchange rates often improve for larger transactions. At Knightsbridge, you get a better rate on transactions of $50,000 or more. OFX eliminates its flat $15 transfer fee on transactions of $10,000 or more.

Forex Snapshot

Here's how the cost of converting $5,000 in Canadian dollars into U.S. currency compared at a variety of currency exchange options earlier this week

Dealer Rate Amount in U.S. currency Transfer Fee
OFX 1.3310 $3,756 $15
Knightsbridge 1.3185 $3,792 none
Transferwise 1.3105 $3,790 $32.84
Big Bank #1 1.3460 $3,715 none
Big Bank #2 1.3452 $3,717 none
Big Bank #3 1.3386 $3,735 none
Canadian Snowbird Association's Snowbird Currency Exchange 1.2902 (Oct. 2018 listed rate) $3,875 $2 each month a transfer is made; $5 for non-members (free for lifetime members)*
Mid-market rate used for online currency quotes 1.3106 $3,815 n/a

*$5 enrolment fee; Source: Bank and dealer websites as of Oct. 22

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