Converting USD to CAD: how to pay almost no currency conversion fees

[Do you convert more than $10k from USD to CAD or vice-versa annually? If so, read below for tips to save hundreds or thousands of dollars on currency conversion fees.]

Some people don’t realize it, but banks make quite a bit of money with currency exchange, with some of them charging you over 3% of the amount you convert. Assuming you have $10,000 to convert, this means over $300 in fees for a single transaction. Fortunately, not all banks charge as much, and there are other options where you can pay as little as 0.01% of the amount converted. See below for a discussion of these options.

First option: banks

By default, people will look to their bank to do their currency conversion. Here’s what their spreads (difference between the rates at which they convert USD to CAD and the one at which they convert CAD to USD) were on 2012-11-05, along with the amount you’d give them just to have them convert $10,000 USD to CAD.

Bank Spread You lose…
CIBC 6.67% $334
Scotia 5.75% $288
BMO 5.30% $265
TD 5.28% $264
RBC 5.20% $260
Desjardins 4.98% $249
HSBC 3.80% $190
ING Direct 2.90% $145

It turns out that if you want minimum hassle and don’t convert money that often, ING Direct is a good choice. It’s very easy to open a business or personal account online, and you can deposit cheques by simply writing your customer and account numbers on them and mailing them to ING Direct. It’s not as convenient if you need to receive wire transfers in USD, as they don’t allow that, but you can have a USD bank account at regular bank, link it with your ING Direct account and transfer funds to do the currency conversion at ING Direct.

Second option: forex brokers

Some businesses specialize in currency conversion and differentiate themselves by offering better rates than the banks do, among other things. While reading on the subject, I came across Knightsbridge FX and XETrade. Their spreads usually vary between 1% and 2%, which means that you’d lose $50-$100 to spread to convert $10,000. You also need to pay a wire transfer fee (approx $20) to fund your account with Knightsbridge, but it’s still a nice improvement over what you’d pay banks.

Third option: Interactive Brokers

Interactive Brokers is a trading platform that lets you convert currencies and which can be linked to both USD and CAD-denominated bank accounts based in Canada. They have a minimum monthly fee of $10, but their fee for currency conversions is hard to beat: 0.01%, with a $2.50 minimum. This means that any amount under $25,000 can be converted for a flat $2.50 charge.

With that said, IB is not for everyone:

  • They have fairly lengthy paperwork. I estimate it took me 3-4 hours to set up the account.
  • They require a $10,000 minimum deposit to open an account.
  • Their $10 minimum monthly fee means it makes no sense to use them if you’re going to save less than $120 per year in fees with them.
  • Their tools are designed for traders and can be confusing for laymen, especially at first.
  • If you fund your account via EFT to save on wire transfer fees, you cannot withdraw the funds to a different bank account (e.g. to your CAD account if the funds came from the USD account) for 45 business days, or approx. 2 months*.

If you don’t mind these limitations, however, they can be great. If you have $50k to convert in a year, I estimate that Interactive Brokers can save you $1,180 compared to doing currency conversions at RBC and $605 compared to doing them at ING Direct. Not that bad for a 4-hour account setup and maybe an extra 2 hours to get familiar with the tools…

* They have cheap commissions on stock purchases, though, so you can buy some bond ETFs like XBB while waiting for the hold to expire to withdraw funds to your bank account.

My setup

I get payments from US clients both by wire transfers and by cheques.

I have a business USD account at RBC and maintain a $2,500 balance to avoid the $9 minimum monthly fee. Wire transfers and cheques are deposited in that account.

That account, as well as my CAD account, is linked with my Interactive Brokers account so I can move money between them via EFT.

When I need to convert money, I transfer it from RBC to Interactive Brokers, convert it to CAD there, and send it to my CAD bank account once the hold period expires. I sometimes buy stocks with the CAD funds while waiting for the hold to expire.


This is the best setup I found for my situation, but as noted above, the best solution depends on your needs. If you have questions or would like more information about the options above, feel free to let me know in the comments.

24 thoughts on “Converting USD to CAD: how to pay almost no currency conversion fees

  1. Hey Pierre,

    Thanks for the tips. Will save me quite a bit in fees.

    Regarding the big banks, don’t they vary the fee depending on the amount to be converted? The higher the amount to be converted the smaller the fee. I believe the spreads listed above would be considerably smaller if you were to convert say $50k all at once. Of course they won’t come near to the Interactive brokers rate.



    1. Hi Paul,

      Glad I could help!

      The rates I listed in this post were based on converting $10,000. I assume that banks have better rates for larger amounts, but based on what I read, forex brokers like Knightsbridge FX will still be cheaper than banks on amounts $100,000+. For someone who wants to convert a large amount and don’t want to go through the hassle of opening an Interactive Brokers account, it’s certainly worth making a few phone calls to see which bank/forex broker works best for their specific needs.

      Hope this helps,


      1. Hey Pierre,

        Thanks for the reply. I have a question regarding Interactive Brokers. Since I already have a brokerage account with another firm, I was thinking that I could setup my account with Interactive Brokers for the sole purpose of converting my large U.S dollar balance to Canadian dollars and then closing my IB account once this is done. The question I have is, is there a minimum term contract that I’d be required to adhere to or would I be able to cancel my brokerage account after the first month? If this is possible, I would only be require to pay $10 for the first month plus 0.01%. Even if I’m required to adhere to a one year term at $120, it would still beat the big banks rate.



        1. I don’t know if Interactive Broker has a minimum account holding period or not. I know that they waive the minimum monthly fee in the first 3 months, though (or at least they did for me). You should probably contact them if you’d like to make sure.

          Given that you’re trying to convert a lump sum, it may be worth calling Knightsbridge FX (1-877-355-5239) to see what they can do for you… I don’t know the amount or how much they’d take, but it could be just a tad more expensive than IB for you, and way simpler.

          Otherwise, the Norbert Gambit could also work for you… it all depends on the amount and where your funds are currently located.

          Hope this helps!


  2. Great insight. Banks have been having high rates for so many years. I used KnightsbridgeFX and was able to pay them using bill payment, which was free. I needed to send money to the US immediately, so I took advantage of their free outgoing wire transfer. I think any of the options mentioned above will save money vs. the banks.

  3. Hi Pierre, great post. I’m an IB customer, I’ve a t-margin account, and I’d like to convert EUR to USD, but don´t know how to… I just use IDEALPRO for desired amount? my account is on EUR base currency also. I think that if I sell xxx EURUSD them I will have a virtual USD position, but in cash it will keep on EUR cos the EUR base currency… if you can help with a step-by-step procedure, will help a lot, since TWS is very tricky and IB knowledgebase is very limited.

    Thanks in advace… 🙂

    1. Thanks for your feedback, Gary.

      I’m not too familiar with converting EUR to USD, but I assume that it’s very similar to converting USD to CAD. You can therefore probably follow the instructions in section 2 of my new blog post, but by replacing CAD with EUR:

      Just make sure you’re converting the proper amount through the preview window so you don’t end up converting 1296 euros to USD while you only wanted to convert 1000, for example.

      Hope this helps! Feel free to reply to this comment with an update once you’ve done your conversion if you’d like to share some pointers with future readers.

  4. Hi Pierre, thanks for your fast reply.

    I’ve converted EUR to USD using the FXCONV option in the TWS platform. I’ve just SELL 1000 EUR MKT FXCONV and got 1290 USD cash. Just use FXCONV market on IB TWS platform always to cash convertion. Now I’ll wait the settlement period in order to do the wire… Thanks for your idea, worked. Best regards. Gary

  5. Hi Pierre, thanks for the post, great helps. One thing confuses me though is do I need a RBC USD account if I just want to trade nasdaq stocks in IB? Or I just EFT/wire the CAD to them and let them to convert? And if I want to withdraw, how do I get the money back and pay the taxes… Thank 🙂 I’m struggling between IB and Questrade…

    1. Hi Howie,

      You don’t need a USD account if you only want to deposit and withdraw funds to your IB account in CAD. You’ll be able to easily convert your CAD to USD once it’s at IB, and you may then buy stocks on NASDAQ. When you need to withdraw money, you may sell the stocks, convert some of your USD balance to CAD, and transfer these funds back to your CAD-denominated bank account.

      I’m not super familiar with the taxation of US stocks in non-registered accounts, but my understanding is that you’ll pay capital gains taxes based on the value of the stock in CAD at the time of purchase/sale, as well as taxes on dividends. I recommend doing a bit more research on this before you start investing on NASDAQ, though.

      Hope this helps!


  6. I live in the US and have a large (~45k) check made out to me in candian funds drawn on a canadian bank.

    My bank said if I deposited the check I would get about 0.93 to the dollar… the current exchange rate is about .97-.98…. this would cost me a couple grand off the market rate.

    Which of these options would work for the fact that I don’t HAVE the money yet but rather have a check made out to me? Opening the ING account? Etc?

    Thanks in advance.

  7. Great article Pierre… I been using Globex 2000 ( and with their new website they offer rates comparison with major banks, currency calculator and also the ability to reserve your rate online and to pick up your order from one of their locations.

  8. I might have found a better option. RBC offers a better option: RBC VIP Banking

    For $30 per month, you can have a CA$ bank account in Canada, a US$ bank account in Canada, and any credit card (such as the US$ credit card) without any other fees. I would still have to inform myself about the fees for the US$ cross-border bank account in the USA, which would allow to receive funds in US$ from PayPal.

    If all your income comes through your US$ account, $30 a month is nothing compared to a 2.5% difference of your overall income!

    From the information I got, here’s the cool thing.

    1. The VIP package has a reduced conversion rate when transferring from one account to the other. Based on what they told me, the spread seemed to be 1¢! Not sure what it is in %, but this information needs to be confirmed and experimented with.

    2. The VIP package lifts the $5 service fees when withdrawing from an ATM, which means you can withdraw money from any ATM world-wide without extra fees and with low conversion fee. It’s better to withdraw from debit card.

    3. With a US$ credit card, you can receive income in US$ and spend it in US$ without any conversion. Based on what I understand, in non-US country, it’s better to withdraw money without fees and pay cash than to pay by credit card with 2.5% conversion fee.

    However, I can’t yet open such an account for myself as I’m abroad and can’t present myself at the bank. Someone can definitely look further into this and post what they find and experience.

  9. Hi Pierre,

    My question is related to foreign home purchasing. Hopefully you can provide some guidance. I plan on purchasing a home in Canada using American currency (USD ). For the down payment, should I convert the money to Canadian dollar or should I issue a check?


  10. I have Bank of America. Last week, I wired about $7k from US to C$ in Canada. The market rate showed about 1.21. But Bank of America give me 1.09. Does Bank of America have worse rate than TD, ING, etc? I need to make a few about another $70k. Please advise whether I should get a bank in your list. Thanks, Ann

    1. Yikes. I would assume that US banks have even less of an incentive than Canadian ones to provide a competitive exchange rate on USD/CAD, since that’s a smaller portion of their forex volume.

      If the funds are wired to a Canadian bank, you could ask Bank of America to wire the funds in USD, and they’d be converted by the receiving bank in that case. Not a great rate, but better than what BofA currently gives you.

      Another option would be to call a forex broker (like Knightsbridge FX mentionned in my post, but there are many others) and ask them for a quote. They may be able to give you instructions to give to BofA for the wire transfer (basically, funds would be wired to the forex broker, and they’d then deposit them in a Canadian account).

      There are also other options, such as the Interactive Brokers setup I mentioned or Norbert’s Gambit (involves buying/selling stocks that are listed on both Canadian and US exchanges – you can google “Norbert’s Gambit” for more info), but the two above may be simpler.

      Hope this helps!

  11. Just bought a property in Florida. I tried knightsbridgefx with the deposit and everything went fine and then did the closing through them too. They have a minimum of $5k though so you need to do larger amounts. They were really helpful in getting me setup quick and they also did the wire transfer to the usa for me. It was my first time doing something like this. When I compared with my bank, the bank was so far off, I was so glad I came across them. No wonder the banks are making so much money, their rates are so bad.

  12. Hi Pierre,

    Just wondering if you have any updates to your setup over the years? I’m in a similar situation to you: I receive USD wire transfers from clients. I’m looking at minimizing the cost of the incoming wire transfer fees as well as the currency conversion costs.

    1. Sorry for the delay – my setup has not changed; I’m still happy getting USD funds in my RBC US account and then sending it to IB to convert to CAD, and EFT back to RBC in CAD. Hope this helps!

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