If you travel often to the United States, you’ve probably been frustrated at some point by currency-related transactions. Maybe you take out U.S. cash before you cross the border, which takes time and costs money. Or maybe you use a Canadian-dollar credit card when south of the border and get hit with nasty currency conversion fees.
One option to alleviate these frustrations is to open a new U.S.-dollar chequing account.
What is a U.S.-dollar chequing account?
A U.S.-dollar chequing account works just like a regular chequing account. You can use it make withdrawals, make debit card transactions, or to write cheques. Most banks that offer these accounts will include a small number of transactions each month. But you typically won’t pay a monthly fee if you maintain a balance of between $200 and $1,000.
Why consider a U.S.-dollar chequing account?
Simply put, you can save money. A U.S.-dollar chequing account allows you to avoid those substantial currency conversion fees that happen when you use a debit card to purchase goods and services in the U.S.
There are, of course, some other advantages as well. For one thing, you can earn some interest on your money. Another advantage to having one of these accounts is that they can protect you against possible declines in the value of the U.S. dollar. Granted, it’s not the account itself that protects you, but the fact that you have U.S. dollars in the account.
Imagine the following: A year from now, the Canadian dollar has fallen 10% vs. the U.S. dollar. Any Canadian that doesn’t have U.S. dollars will probably pay more when shopping in the U.S. But those who do have U.S. dollars will have insulated themselves against the loonie’s fall. Mind you, if the Canadian dollar goes up, the reverse is true.
It’s important to note that there are a few drawbacks to having a U.S. chequing account. First, any money in the account isn’t protected by the Canada Deposit Insurance Corporation. So, if that’s an important consideration for you, one of these accounts probably isn’t for you. Second, if you make more than 10 transactions a month, you’ll likely pay at least $1 for subsequent transactions. Finally, if the Canadian dollar rises, the value of your U.S. dollars will fall, which means your purchasing power will decline.
The bottom line
As you can see, a U.S.-dollar chequing account has both pros and cons. Do some research and find the account that has the features you want before choosing one that meets your needs.
Do you have a U.S.-dollar chequing account? What benefits have you enjoyed by having one? Let us know in the comments below!
This post is brought to you by RateHub.ca, a website that compares mortgage rates, credit cards, high-interest savings accounts, chequing accounts, and insurance with the goal to empower Canadians to search smarter and save money.