Moving Money Across the Border

There are a number of different ways to move money across the US / Canada border.

USD in US to USD in Canada

Let’s start with a situation where we want to move some US dollars in a US bank account to a US dollar account in Canada. This is an essential step to getting US dollars from the US to a Canadian brokerage, if (for example) you’re looking to invest them in US-domiciled ETFs.

I did some research before moving, and settled on TD Bank as a bank that would be useful in both Florida and Nova Scotia. Thus, I opened a US account before we moved, and a Canadian account after we moved. While I’ve been disappointed with some aspects of this arrangement, it does allow me to freely move US dollars across the border. Unfortunately, because I have a Canadian address on my US account, I am unable to do transfers between my accounts online — each time, I have to do it by phone. This isn’t a huge deal, though, and it actually allows me to do the transfers without any limit, which is kind of nice. There is a $5000 limit per day doing the online transfers. I technically do pay a fee to do the transfer, but it is refunded automatically the next day.

Here’s how it works:

  1. Receive the USD in your US TD Bank account.
  2. Call the crossborder banking number: 1-877-700-2913.
  3. Ask them to transfer the money to your USD Canadian TD Bank account.
    • Note: the first time you do this will take longer as you’ll have to link the two accounts.

That’s it. The transfers happen pretty fast (within 24 hours) and are free. Then, I move the money from my USD Canadian TD Bank account to my USD account at Questrade, and invest it accordingly. I have a very basic Daily Interest Chequing which has no minimum balance. I pay $1.25 per withdrawal (so, each time I shift money to QT). I

Update: I’ve started using a USD EQ Bank account to hold my extra USD. It looks like the $1.25 withdrawal fee isn’t charged for transferring money from TD to EQ. And I’m trying to figure out how to move money from EQ Bank to QT directly (rather than back through TD). I can’t set up the pre-authorized deposit for EQ yet, because their USD account doesn’t allow you to generate a voided cheque (which QT requires). Hopefully, this functionality will be added soon.

USD in US to CAD in Canada

There are several different ways to move USD to Canada and exchange them for CAD.

Wise (formerly Transferwise) – This is what I do. I fully admit, this is satisficing, not optimizing. Why do I like it? The process is straightforward and they do a great job of being transparent about both fees and timing. You can check at a glance to see exactly where in the process your money is. In addition, the customer support (when I’ve needed to use it, which has been very infrequently) has been very responsive and knowledgeable. And it is significantly cheaper than using a bank, including any of the so-called crossborder banks. The first time I did it was to send a deposit to an escrow account (meaning an account that didn’t belong to me) when we were trying to buy a house, and it worked very smoothly.

Norbert’s Gambit – If you really want to do it optimally, you might want to try Norbert’s Gambit (especially, perhaps, for sums of money upwards of $10,000). In brief, Norbert’s Gambit involves having accounts with a broker in both USD and CAD, buying a cross-listed ETF in USD, having the brokerage journal it over to the CAD version, and then selling the CAD version. One of these days, I’ll give this a try but it is certainly more complicated, and I’ve read some stories about delays and other issues with the journaling process (which typically has to be done over the phone). Plus, many of the guides to Norbert’s Gambit use an ETF (like DLR and DLR.U), the latter of which would be considered a PFIC, which I avoid. It is also possible to do it using a cross-listed stock, but then there is at least a small risk of the stock changing price in a way that erases the benefit of doing the Gambit in the first place. Still, if you really want to exchange USD to CAD the cheapest way possible, Norbert’s Gambit may be for you. Note that you’ll still need to move your USD from the US to a brokerage in Canada (as outlined above) before doing the exchange.

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