Whether it’s cash for a day trip to Buffalo or larger sums for a winter in the sun, readers are on the hunt for better foreign-exchange rates.
They responded to a previous column about how to get a better deal than the one the bank offers, offering advice of their own. Here are some of their tips:
More non-bank exchange services: The article focused on Knightsbridge Foreign Exchange and the Canadian Snowbird Association as examples of non-bank services. Both are Canadian-owned and -operated.
But there are others. Eleanor Batchelder, an American expat, has used Canadian Forex and XE Trade, both of which have offices here and are subsidiaries of large non-Canadian companies.
“In my experience, one always gets a better deal from any of these services than through a commercial bank,” she wrote.
CanadianForex is owned by OzForex, a publicly traded Australian company.
Ken Wills, based in Toronto and head of corporate foreign exchange for North America for the firm, says 60 per cent of its Canadian business is from individuals. While CanadianForex prefers a $2,000 minimum, Wills says they do accept smaller sums.
He says customers can expect quotes that are 2 to 3 per cent better than bank rates. But don’t be fooled by the rate quoted on its home page; that’s the mid-market rate that applies to businesses converting millions, not you.
You can’t find your rate without opening an account and asking for a written quote.
XE Trade was founded in Newmarket in 1992 and was acquired in July by Euronet Worldwide, a Nasdaq-listed company based in Kansas. The local office did not respond to a request for more information about its operations.
Like Canadian Forex, the rate quoted on its Web site is the mid-market rate, not the rate you might get. You must sign up with the service to get an actual quote.
Several readers mentioned Kantor Currency Exchange. While the other exchange operations operate online, Kantor has five Toronto-area storefronts, including ones in Mississauga and Hamilton.
It was founded in 2001 to help Toronto’s Ukrainian community and has gradually expanded. Only 30 per cent of its customers now come from that community, says Roman Halushchak, a founder of the company.
Halushchak says most transactions are small and the exchange’s clients tend to be people going on holiday. It can also handle bigger sums, through wire transfers or by setting up accounts.
Kantor’s Web site is more transparent than Canadian Forex or XE Trade. Kantor’s currency tool gives the rate you will pay today.
Credit cards that cut fees: When you use a Canadian credit card in the U.S., you pay a foreign exchange fee and a second transaction fee many people aren’t aware exists.
Some credit-cards issuer waive the transaction fee on U.S. purchases. The Amazon.ca Rewards Visa is one such card, and it does not have an annual fee. The Mariott Rewards Visa waives transaction fees but costs $120 a year. More details on these cards are found at the RewardsCanada Web site.
As one reader noted about the Amazon card: “Can't beat the exchange rate when traveling with no extra charges on purchases and returns.”
Send U.S. dividends to a U.S. dollar account: Many investors own American stocks. Bill Murphy, who lives in Woodstock, Ont., keeps the dividends in U.S. funds. He has the money deposited into a U.S. dollar account he holds with his bank brokerage at RBC Dominion Securities.
Murphy says he doesn’t pay fees and can convert the money into Canadian funds when he wishes or keep it in U.S. currency.
Norbert’s gambit: Several readers advocated this esoteric way to avoid foreign exchange fees on stock transactions, named after Norbert Schlenker, the Canadian who came up with it 20 years ago.
The technique involves buying interlisted shares in Toronto and selling them simultaneously in New York. The difference is the exchange rate without a markup.
It’s legal, but it is not fee free, nor is it instantaneous. A TD Bank spokesperson says if you’re using their services, the trades must be executed by calling their trading desk and take three days to settle. “There is a commission on both sides of the transaction — when you buy and when you sell,” she said.