If you’re one of the (smart) Canadians who has US credit cards, you’ll feel the struggle of paying them off. You can’t pay US credit cards with Canadian dollars. At some point, you need to convert Canadian dollars into US dollars, which will always have a conversion fee.
In this post, I’ll explore and rank my preferred methods of transferring Canadian dollars to US dollars to pay US credit cards.
1 – Transferwise
Transferwise is a UK-based company that facilitates currency transfers to dozens of currencies, including Canadian and US dollars. It offers the best balance of convenience and price. They charge a ~1% currency conversion fee, which means for every $CAD 1 you convert to USD, you’ll lose approximately one cent to Transferwise.
The cheapest way to use Transferwise is by direct debit from your Canadian account, which then deposits the funds into your US-based account. This normally takes up to a week, so it’s important to plan your US bill payments accordingly.
2 – TD Canada Trust Visa Direct
I use TD Canada Trust in Canada, and opened a US-based TD Bank (USA) account online. I know RBC has a similar service, but I don’t use RBC (USA), so I can’t speak to their service.
If you have a TD account in Canada and the US, you can transfer funds instantly online from Canada to the US using Visa Direct. It appears that this costs ~ 2.7%. While this is more expensive than Transferwise, transfers are instant. If you’ve forgotten to pay your bill or are running out of time, this should be your back-up option.
TD reimburses the transaction fee, but the foreign exchange fee still applies.
3 – Norbert’s Gambit
Norbert Schlenker, a BC-based investment manager, invented what many call the Norbert’s Gambit. This is by far the cheapest method to convert Canadian dollars into USD, but also the most laborious, and best reserved for large transfers.
First, you need an investment account, the best being RBC Direct Investing which lets you complete Norbert’s Gambit online.
Essentially, you’re going to buy US dollar listed ETFs in Canada, sell them, and then use the proceeds to buy US listed ETFs. PWL Capital has a great step-by-step guide on how to use Norbert’s Gambit. Your fee can be as low as ~ 0.20%, which is by far the cheapest for any currency conversion option that I know. However, it’s rather complex, and frankly only worth the time if you’re transferring large amounts to the US.
My favourite option to convert Canadian dollars to USD is with Transferwise, because it balances cost and convenience better than other options. If you bank with TD, their Visa Direct program gives you same-day transfers, but they are the most expensive of all options. Finally, if you’re transferring large sums, you should look to use Norbert’s Gambit to save the most on currency exchange fees.
Do you have a favourite option to convert Canadian dollars to USD?