Make the Most of Our Strong Currency
June 28th, 2008 | by Editor |Our spending power in other countries has rarely been more attractive, particularly in the U.S. Here are some currency tips from Canadian Financial Planners to help you get the most from the mighty Loonie.
Exchange currency locally
It’s usually best to wait until you arrive at your destination before exchanging currency. While most major airports feature a currency exchange desk, you are likely to get a better rate directly from an ATM machine affiliated with a major bank.
Know the service fees
A recent article in The Globe and Mail highlighted some little-known costs of cross-border shopping. Whether you use your credit card, your debit card or you make a withdrawal from a U.S. bank machine, you’re typically subject to conversions done at a wholesale rate and then marked up by 2.5%.
In addition to a high currency conversion rate, there may be additional fees on purchases as well as returns. While Canadian debit cards will work at most retailers, consider that BMO charges 50 cents per debit purchase outside Canada, RBC charges 75 cents and Scotiabank charges $1.50. TD has the best fee structure in this area; they treat U.S. debits the same as Canadian ones.
Typically, your best bet is a credit card. You may earn loyalty points on your purchases, you have zero-liability if your card is stolen, and there are none of the extra fees that debit transactions and bank machine withdrawals usually involve.
You can avoid currency exchange fees by using a U.S.-dollar credit card. These cards rack up charges in U.S. dollars, which you then pay in U.S. dollars (done most easily from a U.S.-dollar bank account.
Cross-border car shopping
If you’re considering a vehicle purchase, you may want to give U.S. car dealers a look. While it’s not true for all makes and models, you can find much cheaper sticker prices south of the border. For example, one Globe & Mail article indicated that a Subaru Tribeca costs about $35,000 from a U.S. dealer, compared to roughly $55,000 in Canada.
As of Nov. 30, 2007, more than 166,000 Canadians had purchased cars in the United States, shattering the record of 112,826 set in 2006. A survey of auto buyers conducted by Maritz Canada Inc. found that 74% of those planning to buy a vehicle in the next 12 months would consider heading south. Those surveyed believed a $20,000 car would cost $3,200 less in the United States, a $30,000 car would be $5,180 cheaper and a $40,000 vehicle would cost $7,500 less at a U.S. dealership.
Be sure that you’re familiar with the requirements for importing a vehicle into Canada. This process is generally straightforward but can get delayed for days if things are done improperly.
Check border crossing volume
Want to know the wait-time before you head out for the border? Canada Border Services Agency provides border crossing wait times, updated hourly, at:
http://www.cbsa-asfc.gc.ca/general/times/menu-e.html
(Online) Shopping in the south
You don’t have to drive miles to get the most of our spending power. Many U.S. retailers have robust e-commerce sites and several shipping options for Canadian customers. Because of the North American Free Trade Agreement (NAFTA), Canadians do not have to pay duty on most American and Mexican manufactured items.
But be careful. Just because you buy an item from a U.S. store does not mean it was made in the United States. It’s quite possible it was imported into the United States first and, if so, you may be charged duty when it comes into Canada.
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