Thousands of retired Canadians are busy making their plans to head south before the snow flies and purchasing American currency is just one of many tasks on a long to-do list. And because most are living on a fixed income, older Canadians need to ensure they get their best possible exchange rate.
While tracking exchange rates closely in the months and weeks leading up to departure is important, where you exchange your money is also key. Although the published exchange rates found in newspapers and online reflects what rates banks use when exchanging large sums of currency, individuals buying U.S. funds can pay as much as 3 per cent higher, according to a recent Huffington Post blog. These fees help offset administrative costs and the bank’s initial expenditure in purchasing foreign currency.
Buying cash for occasional trips to the U.S. at your local bank won’t add up to much, but if you spend a significant amount of time south of the border you may want to consider using a foreign exchange company that offers lump sum exchange rates at much less than banks charge.
Buying in bulk allows foreign currency exchange companies and groups like the Canadian Snowbirds Association to offer rates between 1.5 per cent and 2.5 per cent lower than banks. Small fees for transfers and enrollment may apply but no international transfer fees will be charged to your U.S. bank.
Exchange services such as Toronto’s Knightsbridge Foreign Exchange allow customers to purchase U.S. dollars online any day of the week and will provide alerts when the Canadian dollar is more favorable against U.S. currency. According to the company’s website, clients who convert $10,000 into U.S. funds with the exchange can save up to $250.00 over banks.