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Comparing US Dollar Bank Accounts

My article on "Shopping in the US" has gotten me thinking about USD bank accounts.  These accounts can certainly come in handy when you need a few US dollars in your pocket.  

Below is a little comparison table I created to get a feel for what the big banks are offering in term of US bank accounts. 

Note that US dollar accounts are NOT covered by CDIC.

Bank Min Balance for no fee Monthly Fee Cost per Debit
CIBC $0 $0 $0.75/debit
Royal Bank $0 $0 1 free/mo then $0.75/debit
Scotia Bank $200 $1 if balance < $200 2 free/mo then $0.60/debit
Bank of Montreal* $1,500 $4 if balance < $1,500 10 free/mo then $0.60/debit
Toronto Dominion $0 $0 $1.00/debit, free if balance > $1,000

*BMO allows USD in their regular chequing accounts.  This makes the fee structure a little more complicated to summarize but you can see all the details on this BMO page.  The fee structure in the table above is for the BMO "Practical Plan", which is a "low transaction" account.

Going through the table above, it seems that for someone who doesn't do a lot of USD transactions, Royal Bank provides the most cost effective USD bank account with no monthly fee or minimum balance and 1 free transaction / month. 

For a frequent US travellor who does a fair number of USD transactions / month, then TD will most likely be your most cost effective choice.  They will allow unlimited free transactions provided that you keep a $1,000 USD balance.

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FT About the author: FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 31 comments… add one }
  • nobleea August 2, 2007, 12:28 pm

    Unless you work in the US as well as Canada, you have to fund the account somehow. You’re going to get hit with the exchange rate spread then. And then having to keep a minimum amount in a USD account for no fees coupled with the dropping dollar, which will not be getting substantially better for the foreseeable future…Are you really going to be ‘saving’ money? Do these USD accounts have the high interest rate, or are they standard bank accounts. If they have high interest rates, how do you account for the interest income?
    I don’t travel to the US often, maybe 2-3 times a year, but I always use my CAD credit card (you get hit with the forex spread, but it is ‘free’ for up to 45 days). If I need petty cash, I’ll just get a small amount changed at the bank (small enough that I wouldn’t want to change it back should I not spend it all).
    I have a friend who got paid in USD for a small internet programming job he did a couple years ago. He opened a USD account so that he could keep it there and just withdraw whenever he travelled to the US. Well, the money’s still there, but he’s effectively lost over 20% of it as the greenback has gone down relative to the loonie.
    It seems like a fair bit of work in order to save money on the constant forex spreads, but there is an opportunity cost and exchange rate risk when keeping money tied up in a foreign currency. Given the consumerism of the states and the growing government debt and deficits, I think it’s safe to say that the future does not look positive for the greenback. If that’s the case, I’d prefer to keep my money away from it.

  • Jordan August 2, 2007, 1:47 pm

    Talk about timing FT. I just did the same research two days ago and came to the same conclusion – for a low traffic, low balance USD account, RBC is definitely the choice. My particular requirement was that I could cash cheques in it and EFT the money to my discount brokerage easily, and RBC fit the bill.

    Some other notes:
    – They will mail you a monthly statement for free (I’d hope so)
    – they do have holds on USD cheques: 10 business days for RBC cheques, and 15 for USD cheques drawn against other banks.
    – Unless you have a CDN account with them as well, you can’t access your account via online banking.
    – I haven’t tried to check my balance at an ATM yet. I have a feeling it isn’t available as ATM privileges aren’t available for this account.

    All in all, for my purposes (USD cheque cashing and EFTs) it’s as good as it gets.

  • FrugalTrader August 2, 2007, 1:55 pm

    Nooblea, yea I agree, it isn’t a great long term solution, but it’s a great way to store some USD cash to have on hand. If they don’t have a min balance, why not? The reason why I would want a USD account is to connect it to my IB account. IB offers FOREX transaction with extremely low spreads.

    Jordan, thanks for the additional info!

  • Jerry Hung August 2, 2007, 3:08 pm

    FYI on TD USD Account (Borderless one)
    1. you get Borderless plan free with Select Service ($5000 min. CAD balance)
    2. then you get free USD VISA ($25/yr fee), when you have Borderless USD account
    3. You can see Borderless account in EasyWeb, can xfer in/out of it (TD has real-time online exchange too)
    4. You can see USD VISA in EasyWeb too, but cannot make online payment for it. Have to call telephone banking, or visit branch

    Any question, let me know
    I’m a loyal TD customer, so it’s a nice bonus to have those perks

  • A.J. - IAmFacingMillions.com August 3, 2007, 11:48 am

    Isn’t there a substantial risk in holding USD particularly with the way the USD has been declining in value against many other currencies?

  • Bootsie August 3, 2007, 12:11 pm

    I don’t know…I’d say now might be a good time to hold USD, given how poorly it’s been doing.

  • Ahmed August 3, 2007, 12:20 pm

    Scotiabank added a great new online banking feature last month that allows you to exchange Canadian dollars to and from US dollars. So while the dollar is strong you can buy USD and save it in your USD account.

  • FrugalTrader August 3, 2007, 12:23 pm

    Ahmed, what’s the spread when scotia does a forex transfer?

  • Ahmed August 3, 2007, 1:03 pm

    FT,
    Here is an example from my acct.

    From Chequing CAD
    To Chequing USD
    Exchange Rate 1.09300000
    Withdrawal Amount $ 1.09 CAD
    Deposit Amount $ 1.00 USD
    Date August 3, 2007

    From Chequing USD
    To Chequing CAD
    Exchange Rate 1.01300000
    Withdrawal Amount $ 1.00 USD
    Deposit Amount $ 1.01 CAD
    Date August 3, 2007

  • Jordan August 3, 2007, 1:07 pm

    I continue to be amazed at how bad the forex spreads at the major canadian banks are.

  • FrugalTrader August 3, 2007, 1:12 pm

    Ahmed, those spreads are ridiculous! Todays exchange rate is ~ 1.053 which is approximately a 4% premium ONE WAY. You’re better off using your credit card.

  • Jordan August 3, 2007, 1:15 pm

    FT, you should consider doing a post on the spread at the big 5 vs. CUs vs brokerages. I don’t think Canadians know how much they are paying when switching currencies.

  • FrugalTrader August 3, 2007, 1:27 pm

    Jordan,

    If you’re interested in reading, I already have the forex fees that many discount brokerages charge here:
    https://www.milliondollarjourney.com/review-canadian-discount-brokerages.htm

    4% one way is robbery.

  • MoneySheep August 4, 2007, 1:40 am

    MDJ, I have a TD U.S. account with a min. $250 without fee, plus interest (minute!). Debit=$1. Have had it for years.

    FT, I agree with you about the 4% robbery. I think that when Mutual Fund charge fee of 2%, it is already a highway robbery. I followed your link with fascination. Looks like 1bp spread from IB is as low as one can get, but you have to deal with IB’s $10 charge a month. If someone plan to convert $100k U.S., do you have any possible suggestion as to where to look, for 10bp to 20bp one way?

  • Stefan August 4, 2007, 10:54 am

    Some information that was posted about TD is incorrect in that table. The “U.S. Dollar Daily Interest Chequing Account” from TD has no monthly fee if you choose the paperless record keeping option. It has only a transaction/debit fee.

  • FrugalTrader August 4, 2007, 11:04 am

    Stefan, if you click on the link indicated in the table, it explains TD’s fees. It’s $1.00/transaction if your balance is under $1,000.

    http://www.tdcanadatrust.com/accounts/compare_usd.jsp

  • Stefan August 4, 2007, 12:06 pm

    It’s true what you’ve just said: “It’s $1.00/transaction if your balance is under $1,000.”.

    What is wrong in that table, is the column named “Min Balance for no fee”. Which lists $1000 for the TD account. Which is not true.

    The name of the column is ambigous. Let’s be rigurous here.

    Effectively, it’s not true for the “U.S. Dollar Daily Interest Chequing Account”. Believe me. I have this account, with zero balance, and don’t pay anything if I don’t do any transaction.

    Or maybe you just wanted that column to mean the “total fees” (monthly fee + debit transactions). It’s ambigous anyway.

  • FrugalTrader August 4, 2007, 2:21 pm

    Stefan, AH! I see what you’re saying now. However, their web site clearly states “Monthly fees – waived w/ min monthly balance”. The next to it, they have the $4.95 plan. Their table is not clear.

    I see now, their min balance only applies to the Borderless Plan. Thanks for the heads up STefan!

  • Stefan August 4, 2007, 2:36 pm

    Their comparison table (http://www.tdcanadatrust.com/accounts/compare_usd.jsp) is ok IMHO. In that row, the first column (for US Daily Interest account) states “none”, $4.95 is for the borderless plan.
    Nevermind, sorry I’m being too analytical :).
    Thanks for the nice comparisons.

  • A.J. - IAmFacingMillions.com August 4, 2007, 4:19 pm

    @Bootsie,

    I don’t necessarily subscribe to the idea that low can’t go lower or it’s a good buy/investment just because it’s low.

    There’s a whole school of thought about throwing more money after bad and I think that thought follows exactly the same.

    The forces that have dragged the U.S. Dollar down are still occuring and I don’t see any suggestions that the forces will change. Right now, I think any movement in the other direction would be more likely due to changes in other economies than in the U.S. (in other words the other currencies weakening rather than the U.S. dollar strengthening, I know it has the same effect and is semantics, but I think there is an important distinction).

  • Bootsie August 8, 2007, 3:09 pm

    I know what you’re saying AJ but your comment “Isn’t there a substantial risk in holding USD particularly with the way the USD has been declining in value against many other currencies?” indicates that you’re recommending selling USD. I guess the argument could also be made that what’s good isn’t necessarily going to get better (i.e. the Canadian $).

    I guess we all have a tendency to market time to some extent. I am paid in USD but live in Canada so my tendency (now) is too keep savings in USD. I made the big mistake of saving USD back in the $1.60 days. I have no idea what the USD will do but I just don’t see the USD dropping below the CAD. I wish I had that currency crystal ball! :)

  • Darren September 1, 2007, 10:41 pm

    The CIBC US$ personal account gives you 2 free transactions per month before the fees start – better than RBC (and, IMO, probably the best for people like me who will just use the account occasionally)/

  • Darren September 1, 2007, 10:44 pm

    Ooops, that’s for seniors. Hahaha, sorry!

  • FrugalTrader September 1, 2007, 10:45 pm

    Darren, according to their site, they only offer seniors 2 free transactions. Everyone else has to pay $0.75/transaction.

  • Grad Student June 10, 2008, 8:05 pm

    looks like RBC now charges 2$/month

  • Jordan June 10, 2008, 10:06 pm

    They charge $2 on the chequing account, and as soon as I got that mail from them, I promptly closed my account. They did introduce a high-interest USD savings account which still has no monthly fee, which is where I’ve moved my USD cash @ RBC.

  • Kevin December 17, 2008, 10:42 pm

    Hey all,

    I’m late to the party here, but hoping someone might be monitoring this story still.

    How do I make a contract that pays me in US$ work in the best possible way for me? Right now its all good, the bank just determines the exchange and I get paid in CAN$. But I figured I’d set up a US$ account, at ATB, where my other accounts are, and get my employer to pay into that. My thought was that I could just move the money over when the rate was best, and leave it in there if it was low. Does this make sense? Thing is, I can’t transfer money between accounts online.

    Any thoughts on how to handle this US cash so I can take advantage of fluctuating exchange? The contract is about $10,000 spread out over 2-3 months.

    Thanks for any advice or help!

    Kevin
    krosm@hotmail.com

  • Glenn January 3, 2009, 7:41 pm

    Kevin,

    Try Olympia Trust http://www.olympiatrust.com you give them a $US and a $CDN account and they will do the exchange electronically overnight.

    Pros… they only charge 0.5% (vs. 2-4%) for the exchange.
    Cons… the minimum to exchange is $5,000

    Glenn

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