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Save Money with USD to CAD Foreign Exchange using Norbert’s Gambit

With the U.S Dollar (USD) gaining strength in the global currency game, it has resulted in the Canadian Dollar (CAD) losing some ground.  While this means that shopping in USD is more expensive for Canadians, it’s great news for those who have some of their nest egg or generate income in USD.

While it’s a great time to own USD, how does someone convert USD to CAD without getting gouged by the bank?  The answer – Norbert’s Gambit.

I wrote an article about Norbert’s Gambit using the DLR and DLR.U ETFs as a cheap way to convert CAD to USD.  Basically you would

  1. Buy the DLR ETF in CAD;
  2. Ask the discount brokerage to journal your CAD DLR position to USD DLR.U (usually by phone and free of charge, others are automatic); and,
  3. Sell DLR.U in the US market. 

Voila, you now have USD without the big FX fees (up to 2% of total conversion).  While the process may take up to 5 days to complete, there is very little currency risk as your foreign exchange rate (FX) is locked in as soon as you buy DLR.  Here’s an article providing a little more detail on the DLR/DLR.U conversion with Questrade.

Using DLR/DLR.U is a cost effective and low risk way to convert CAD to USD, but not as great when converting from USD back to CAD.  The reason is that going in reverse order, buying DLR.U and selling DLR, exposes you to FX volatility.  In other words, while waiting for your shares to journal over (up to 5 days), the FX rate (ie. the value of DLR) can changed dramatically.

So back to the question, how do we use Norbert’s Gambit to cost effectively exchange USD to CAD with minimal risk?  This strategy will allow FX at around spot rate and involves;

  • Buying and selling highly liquid “inter-listed” stocks (ie. stocks listed on both the TSX and NYSE); and,
  • Using a discount brokerage account that automatically journals (ie. moves) shares between CAD and USD (RBC Direct Investing or BMO InvestorLine).  The automatic journaling of shares is an important feature as it reduces the risk and amount of FX movement while you are holding the shares.

Inter-listed Stocks

Here are a list of potential high volume, low bid-ask spread stocks that are inter-listed on the TSX and NYSE(generated from TMX.COM).  Personally, I like using the big banks, the higher the share price, the better.

TSX/US Symbol Issue Name

AGU/AGU Agrium Inc.
BMO/BMO Bank of Montreal
BNS/BNS Bank of Nova Scotia (The)
CM/CM Canadian Imperial Bank of Commerce
CNR/CNI Canadian National Railway Co.
CNQ/CNQ Canadian Natural Resources Limited
CP/CP Canadian Pacific Railway Ltd.
CVE/CVE Cenovus Energy Inc.
ENB/ENB Enbridge Inc.
ECA/ECA Encana Corporation
IMO/IMO Imperial Oil Limited
MFC/MFC Manulife Financial Corporation
POT/POT Potash Corp of Saskatchewan Inc.
RCI.B/RCI Rogers Communications Inc. Cl B NV
RY/RY Royal Bank of Canada
SLF/SLF Sun Life Financial Inc.
SU/SU Suncor Energy Inc.
TCK.B/TCK Teck Resources Ltd. Cl B SV
TRI/TRI Thomson Reuters Corporation
TD/TD Toronto-Dominion Bank (The)
TRP/TRP TransCanada Corporation

Instructions on Converting USD to CAD

1.  Using a BMO or RBC discount brokerage account, buy an inter-listed stock (listed above) with high volume/liquidity and with a low bid/ask spread.  Since we are converting from USD to CAD, buy the USD version of the stock at the “ask” price.  You can also use this trick for converting CAD to USD but you would do the opposite and buy the CAD version of the stock.  Lets use an example of buying RY on the NYSE @ $72.83 USD (Nov 14, 2014).

2. After executing the BUY trade, immediately initiate a SELL in the opposite currency.  In this example, if you bought RY on a US exchange, immediately sell RY at the “bid” price on the TSX (ie. in CAD).  On Nov 14, this would have resulted in obtaining $82.21 CAD, this works out to be about spot rate (ie. no extra FX fees) depending on the bid/ask spread.

3. You may notice that the balances in your brokerage account may seem a bit “off”.  Effectively, you have shorted a stock thus sometimes showing a negative balance, but the system will sort itself out within a week or so.

Final Thoughts

While using this strategy is a cost effective method of eliminating the hidden fees that discount brokerages charge for FX conversion, there are some caveats.  First, you need to have an account with a discount brokerage that offers automatic journaling of shares.  Without this, you are exposing yourself to FX and share price volatility.  In addition, you need to pick an inter-listed stock with low volatility.  To help reduce volatility, do a quick “news” search of the company for that day and avoid this strategy during company earnings.


Gas Rewards Programs Compared

Almost everyone needs to buy gas and I suspect most Canadians have participated in a rewards program affiliated with their favourite brand. But, are these rewards actually worthwhile? Are you getting a half decent return on your spending and, more importantly, do these rewards deserve your precious loyalty?

In fact, some of these programs DO provide half-decent value while others probably aren’t worth the time it takes to collect them. You’d be better off focusing on all the other ways to save on gas. I’ve done an analysis to separate the wheat from the chaff and the results are below ordered roughly form best to worst.

1) Grocery Store Gas Bars (Grocery Store Discount Coupons)

Typical Return: 2.7%

Max Return: 8.1% (select locations in Alberta and possibly elsewhere)

Several gas bars give you a discount at the grocery store when you fill up. In my region, Superstore affiliated stations (branded Refuel or At The Pumps) give you 3.5 cents/L off your next grocery store purchase. At today’s prices that’s a roughly 2.7% return on spending.

Sobeys also has their Fast Fuel locations with a similar 3.5¢/L rebate. In addition I’ve seen the same 3.5¢/L discount at Co-op but I’ve also seen them double it to 7.0¢/L, but not always.

In other parts of Canada where oil is justifiably cheaper, like Alberta, these rebates can be much higher. I’ve heard stories of discounts as high as 10.5¢/L by using your PC MasterCard and at Co-op in Calgary, which works out to an 8.1% return. In extremely rare cases coupon values can even soar as high as 15¢/L, but that isn’t obtainable for most people.

Check with grocery store affiliated gas bars in your area and see what kind of discount they offer you.

2) Canadian Tire Gas Bars (Canadian Tire Money)

Typical Return: 2.6% (with 10x multiplier coupon)

Max Return: 3.8% (with 15x multiplier coupon)

You can earn Canadian Tire Money (CTM) while pumping at one of their stations and although that might not sound very enticing at first to all except die hard Canadian Tire fans, it can pay off with it a little work.

To get an optimal return on your spending, here’s what you do:

  1. Buy a Canadian Tire gift card either online, in-store, or at the gas bar itself with your credit card to earn rewards or cash back. If you buy it at the gas bar, you should get the gas bonus on your credit card if it has one.
  2. Use the gift card to buy your fuel so that you qualify to earn CTM. Credit card purchases do not qualify for the phony money, but gift cards do.
  3. Pick up a multiplier coupon either in-store near the checkout or customer service, at the back of the flyer delivered to your home, or print it online.
  4. Pump your gas and collect your CTM when you pay with your gift card and give them your multiplier coupon.
  5. Once you’ve collected a reasonably large amount of CTM, take it in-store and use it to buy a gift card for the exact amount of CTM you have.
  6. Use the gift card purchased with your CTM to buy even more gasoline and collect more CTM.

How much is all this hassle worth?

Well, I’ll ignore the savings from your credit card because that depends on which card you have and it isn’t specific to Canadian Tire. I think the lowest multiplier coupon they offer is 6x and the highest is 15x but anything above 10x is pretty rare and frequently reserved for Canadian Tire Options MasterCard cardholders (not really a good credit card – don’t bother).

At 6x with a 60L fill up you will get $1.20 in rewards working out to a 1.5% return on spending at today’s gas prices. At 10x that increases to $2.00 and a 2.6% return, which we’ll call the average or typical expected return. If you’re lucky and score a 15x coupon, that works out to a 3.8% return. Not too shabby.

3) Esso (Esso Extra or Aeroplan)

Typical Return: 1.5% (regular fuel redeeming for car washes)

Max Return: 9% (supreme gas with 2x bonus applied)

Esso has some of the best rewards earning opportunities available and is the only gas station that I know of to offer 2 distinct rewards programs – you can choose to earn either Esso Extra points or Aeroplan miles. You will earn 1 esso extra point per 1L purchased or 1 Aeroplan mile for every 3L.

But how much is that worth?

Well, in my guide to Aeroplan, I have pegged the value of 1 Aeroplan mile at 2.8 cents which is the rough value you get when redeeming your miles for a flight coast to coast across Canada (25,000 miles for a $700 flight before taxes and fees). Comparatively, I value an Esso Extra point at about 2 cents which is the approximate value received when redeeming your points for a regular car wash (499 points for a $10 wash).

With some easy math, you can see that works out to 2 cents in rewards per litre purchased with Esso Extra and less than a cent for Aeroplan. Plus, it’s a lot easier to save up 499 points for a car wash than it is to save 25,000 miles for a free flight when buying gas. We have credit card sign up bonuses for that after all.

At today’s prices, that works out to about a 1.5% return on your spending.

If you’re buying premium, then that triples to a 4.5% return and if they are having a 2x points promo you can go as high as a 9% – not bad!

I’ve ranked Esso higher than some of the other options with a slightly better typical return because they have many stations nationwide, they offer flexibility in terms of rewards, and they have a high max return percentage.

4) 7-11 (Big Bucks)

Typical Return: 2.6%

Select 7-11 stores seem to have a rewards program that gives you $1 in 7-11 Big Bucks for every 30L of gas you buy. I don’t believe this is offered at every station though, so you’ll have to check with your local 7-11 and see if they have it.

Unfortunately, the $1 MUST be spent in a 7-11 so that really limits your reward opportunities. However, apparently some stores will let you buy prepaid credit cards with the big bucks allowing you to use them to buy things at any store. If you fill up in 30L increments, this works out to a 2.6% return on spending.

I’m ranking 7-11 below some other options because of limited availability and limited reward redemption options.

5) Husky (myHusky Rewards & CAA Dollars)

Typical Return: 2.4% (regular fuel, redeeming for car wash, including CAA dollars)

Max Return: 3.6% (supreme gas, redeeming for car washes, including CAA dollars)

Husky locations have the unique advantage that you can earn two types of rewards simultaneously on the same fill up. First, you can earn myHusky Rewards which accrue at 1 point/L on regular and 2 points/L on supreme. They can be redeemed for gasoline discounts, gift cards, coffees, car washes, and a whole host of other items through their online catalog.

The most typical reward would be to redeem for gas, which gives you a return on spending of 0.5% for regular and 1.0% on supreme. If you redeem for a regular car wash (approx $10 value), then your return on spending increases to 1.2% or 2.4%. It works out to about the same percentages if you use your rewards for coffee.

However, your value increases if you are a CAA member because you also earn up to 1.5¢/L in CAA dollars. You have to purchase 250L/month to qualify for the maximum accrual rate which is doable for many. You can then use your CAA dollars as a discount on your annual CAA membership among other things. That’s an additional 1.2% return on spending for a combined return on spending of roughly 2.4%.

6) Ultramar (Reveal-A-Deal and ValuMax)

Typical Return: 1.5% (Ultramax card in Atlantic Canada)

Max Return: 3.8% (Reveal-A-Deal mostly in Quebec)

Ultramar appears to have very region and time-specific promotions for their rewards. They have both the Reveal-A-Deal summer promotion (focused on Quebec but also available in ON, NB, NS, and PEI) and the ValuMax card only available in the atlantic provinces.

Reveal-A-Deal used to be a coupon book you would either get in the mail or order online through their website that would contain coupons of various values with a minimum 25L purchase of gasoline. Coupon values ranged from $1-$2 each with a total value per book of $8-$10. If you could get your hands on multiple books, you could always use the $2 coupons for maximum value.

In 2014, they changed it (at least in Quebec) so you would get an electronic card when shopping at Metro grocery stores that would randomly give you your discount when swiping your card while topping up at Ultramar. With this new system, it is no longer possible to choose which discount you get and ignore the smaller ones. You still get $10 in total value out of each card, but you can’t cherry pick your deal anymore. So if you always fill up in 25L increments to maximize value, you get a return on spending of 3.8%. However, since Reveal-A-Deal only happens seasonally, it’s hard to call this return “typical”.

Alternatively, the ValuMax card gives you a straight 2¢/L cents if you fill up with a minimum of 25L. Anything under that and it is 1¢/L. At today’s price that’s a return on spending of 1.5%.

7) Shell (Air Miles)

Typical Return: 0.4%

Max Return: 4.1% (supreme gas with 10x bonus applied)

Canadians love Air Miles and the fact that you earn them at Shell is a big draw to fuel up there – but is it actually worth it?

You earn 1 mile on your first $20 in purchases (including gas) and additional miles are earned at the rate of 1 mile for every $30 in purchases. Yup, that’s right, the earning potential gets worse the more you buy … bogus, I know. That alone annoys me so much I am loath to fill my tank there.

So if you buy $80 in gas and other stuff, that will net you 3 miles. How much is that worth? 33 whole cents (if you use Air Miles cash as your reward). WOW! CHA-CHING! That’s a whopping0.4% return on spending if you manage to pump exactly $80.

If it’s that pathetic then why would anyone bother? Well, fortunately, they redeem themselves by offering up to 10x the miles during bonus periods. In fact, there is one going on now on V-Power fuel. I buy supreme anyway for reasons I won’t get into here, so that ups the reward to $3.33 on $80 spent making it a respectable 4.1% return on spending.

8) Petro Canada (Petro Points)

Typical Return: 0.5%

Max Return: 3.1% (exactly 250L of supreme in 1 month combined with Petro Points MasterCard)

I tried collecting Petro Points for a while but I had to give up eventually because it took a crazy long time to earn enough for a reward. I think just saved enough points to get a $10 gas card and then I quit the program for good.

However, apparently there are some ways to maximize the program that improve it somewhat.

Here’s how you earn:

  • 5 points/L on Regular.
  • 7 points/L on Plus.
  • 10 points/L on Supreme/Ultra.
  • 20 points/L on car washes and in-store purchases.
  • 750 bonus points when you purchase 150-249L/month.
  • 1000 bonus points when you purchase 250+L/month.

The best value for redemption is a basic car wash, similar to Esso Extra. I’m valuing that at $10, but it could be higher or lower in some regions. So, at today’s prices that works out to a 0.5% return on spending. If you jump up to supreme, then you’re looking at a 1% return. If you qualify for the 1000 bonus points and you buy exactly 250L of gas, then your return would be 1.5%. If you use the no-fee Petro Points MasterCard on top of that you’re looking at a 3.1% discount.

One interesting redemption option for Petro Points that may result in higher returns is transferring them to Cathay Pacific Asia Miles and then redeeming them for flights. If you have an Asia Miles airline that flies out of your airport, this might be something to consider.

9) Pioneer (Bonus Bucks)

Typical Return: 0.6%

Max Return: 1.8% (supreme)

Pioneer gas stations have a straightforward rewards program that gives you a certain amount of bonus bucks for every 10L in fuel you purchase. It works out to be slightly less than 1¢/L, which can be spent on future fill ups or anything in-store.

To calculate rewards return, I’ll use a typical 60L fill up of regular gas. That results in 50 cents in rewards on a $78 purchase, which is a return on spending of 0.6%. However, you get a 3x bonus on supreme/platinum jumping it up to a return of 1.8%.

10) Irving (Air Miles)

Typical Return: 0.4%

Max Return: 2.1% (with 5x bonus applied)

Irving, a big provider of oil and gas in Atlantic Canada, recently got into the Air Miles game and their standard earning rate is 1 mile per 20L pumped vs the 1 mile per $20-$30 spent at Shell.

However, I wouldn’t rank them as highly as Shell because at today’s prices their accrual rate is lower and gets even worse as the price of gas rises. They do have the rare 5x bonus miles promotion as well, but they are few and far between. Shell’s promotions are much more frequent.

At the regular accrual rate, that works out to roughly a 0.4% return on spending if fill up at 20L increments. At the 5x rate, it increases to 2.1%.

11) Chevron (More Rewards)

Typical Return: 0.23%

Max Return: 0.64% (redeeming for upgrading Big White gift cards)

Chevron is a More Rewards partner, the same rewards that are famously linked to Save On Foods grocery stores. You earn 1 More Rewards point for every $1 you spend at Chevron.

In my previous article about More Rewards you can see that 1 More Rewards point ranges in value from 0.07 cents to 0.83 cents. A fairly typical and obtainable value would be 0.3 cents, so I’ll use that for calculations. At today’s prices that works out to a return on spending of about 0.23%. The maximum return is upgrading Big White gift cards (ski hill), which gives a return of 0.64%.


Where Do You Buy Your Gas?

Everyone has their own reasons for fueling up at particular place, so what’s your reason for buying where you do? I’m sure I missed a few brands as well and I’d love to hear about those in the comments.

About the Author: Stephen Weyman is passionate about saving money and writes practical guides to help you save money on everything you buy and do over at


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