If you spend USD with a Canadian credit card or bank account, you may not realize you are charged an additional foreign transaction fee with every transaction (usually about 2.5%). Additionally, if you receive a USD payment to a Canadian account, you will be charged a similar fee to convert it to Canadian Dollars.
How do you avoid this fee? Well, I actually recommend two different approaches depending on your situation:
1) If you regularly shop in the States but don't need to receive USD, I actually recommend a credit card with no foreign transaction fees. These cards are rare in Canada but will ensure that no matter where you are in the world you can avoid that pesky 2.5% the majority of credit cards charge.
2) If you need to receive payments in USD or simply want to hold US Dollars instead of Canadian in your account, I would recommend you get a US Dollar bank account, and this article should help you find your ideal USD bank account! If you are looking to transfer USD to CAD (or vice versa) and get a better conversion rate than the banks, I recommend TransferWise.
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Canadian USD Accounts vs. US Bank Accounts
All the major banks in Canada have USD accounts available to Canadians, however, it is important to note that four Canadian banks - RBC (RBC Bank), CIBC (CIBC U.S.), TD (TD Bank), and BMO (BMO Harris) have a presence in the states, and will allow you to open up an American chequing or savings account. These differ from traditional Canadian USD accounts as they operate out of the states and are often rather disconnected from your Canadian bank account (i.e. more complex to open or harder to transfer money). But, if you need to withdraw from American ATMs or visit bank branches while in the states, these are the accounts you want. For everyone else just wanting to receive or store USD, I recommend against these accounts and instead recommend you go with a USD account based in Canada.
Best Overall USD Account in Canada
|Tangerine US Dollar Savings Account||- No Monthly Fees- No Minimum Balance- 0.20% Interest Rate|
For most Canadians just looking to receive occasional payments in USD, I recommend the Tangerine US Dollar Savings Account. It has no monthly fee or minimum balance, and even features the highest available interest rate at 0.20%. They publicly post the exchange rates on their website for easy access and comparison. But if you are looking to transfer USD to CAD (or vice versa) and get the best conversion rate, I recommend TransferWise.
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Other Options for USD Accounts in Canada
Here is the table we created that we used to compare all USD Accounts in Canada.
|USD Accounts in Canada|
|Account||Monthly Fees||Transactions||Interest Rate|
|BMO U.S. Dollar Premium Rate||$0||Based on Your Banking Plan||0.05%|
|CIBC US$ Personal Account||$0||$0.75 Each||0.05%|
|National Bank USD Progress Account||$0||Cost Varies||0-0.10%|
|RBC U.S. High Interest eSavings||$0||1 Per Month ($3 Each After)||0.05%|
|Scotiabank US Dollar Daily Interest Account||$1/month or $200 Minimum||2 Per Month ($1.25 Each After)||0-0.15%|
|Tangerine US Dollar Savings Account||$0||Unlimited||0.20%|
|TD Borderless Plan||$4.95/month or $3,000 Minimum||Unlimited||0%|
|TD U.S. Daily Interest Chequing Account||$0||$1.25 Each||0.01%|
Best US Bank Account Available to Canadians
|TD Bank Convenience Checking||- No ATM Fees at TD ATMs- $100 Minimum Balance to Waive $15/Month Fee - No Monthly Fees for Ages 17-23|
If you live or work in the United States for at least part of the year, it'll likely make your life easier to get a US Bank Account. I personally recommend that if a bank you already deal with has US presence (i.e. BMO, TD, CIBC, or RBC), then generally it will be more straightforward to get a US bank account with them. However, if I had to choose one account it would be the TD Bank Convenience Checking account. There is no account fee with a minimum balance of just $100 USD (otherwise it's $15/month). Additionally, there are no ATM fees at TD ATMs, which are scattered across the east coast. If you are looking for a more complete ATM network, check out the RBC Bank accounts, or BMO Harris which are a part of the AllPoint ATM Network (Which has over 30,000 ATMs across the US).