With Canadians doing more business with the US than anywhere else in the world, Canadians have to be mindful about spending US dollars.
USD to CAD exchange rates aren’t just terrible; they can also come with hefty fees. Consequently, many Canadians seek a bank account where they can keep USD without converting it to CAD.
In this article, I will go over the list and help you find the best US dollar accounts in Canada (USD).
- Send money easily to many different countries
- Open a USD account for free
- Excellent FX exchange rates
- No-fee US dollar account
- Earn interest on your USD
- Offers unlimited transactions per month
Reasons to Open A US Dollar (USD) Account In Canada
It’s important to determine why and when you’d need a USD account in the first place. Here are some of the common reasons to open one:
- You regularly travel to the US and need to convert your CAD to USD every time.
- You buy goods and services from the U.S. online and pay the sellers or vendors in USD.
- You invest a lot in US-based assets and have to convert your capital from CAD to USD every time, but you don’t want to spend days running a Norbert’s Gambit strategy.
- You work remotely for a US-based employer that pays you in USD.
- You want more control over your currency conversion rate and to mitigate the fees by converting heftier amounts.
- You want USD savings to receive interest income for your USD currency.
Options for opening a USD account in Canada
- Open an account with a Canadian bank’s US branch: Almost all major Canadian banks, especially the Royal Bank of Canada (RBC) and Toronto-Dominion Bank (TD), have a good US presence. This option is better suited for Canadians who either have or want to establish a more formal presence in the US (e.g., pay bills, or establish a credit history).
- Open a USD account with a Canadian bank directly: This will be the focus of this list, and we’ll go over the top choices below.
The Best US Dollar Accounts In Canada
Apart from the Big Five Banks, there are very few USD account options for Canadians.
Collectively, there are many candidates for the title of “best US dollar account in Canada (USD)”.
I’ve ranked them based on factors like fees, interest rates, transaction fees, limits, investing fees, and minimum balance requirements for this list.
1. Wise US Dollar Account (Best for International currencies)
Top Pick For: Making International Transfers
How to Sign Up: Website Link
Wise is my top pick for the best US dollar account for making transfers to accounts outside of Canada. I use my Wise account to send money to people in five different countries, including the U.S. and the U.K.
You can open a USD account for free and send and receive money inside the account at a very low rate to many other countries. I’ve even sent money to countries like Egypt and Vietnam.
It has by far the best exchange rates for any company that I’ve seen in Canada for transferring money, and Wise is very transparent about their exchange rates, unlike other companies (I’m looking at you, Paypal!)
I have American clients, and they pay me in USD, so this is the perfect account to receive that USD and then convert it to CAD to pay myself.
Here’s a full Wise review if you want to learn more.
2. TD US Dollar Accounts (Best for Everyday Banking)
Top Pick For: Everyday Banking Use
TD Bank has an impressive presence in the US, so it should come as no surprise that it offers two of the best USD accounts in Canada (if not the best). The two accounts TD Bank offers are:
a. US Daily Interest Chequing Account
If you want a no-fee US dollar account in Canada, this might be it. It offers no monthly fees and free paperless record-keeping options.
Note, though, that it comes with a transaction fee of US$ 1.5 per transaction, which you can waive if you maintain a monthly balance of US$ 1,500.
Another benefit of having a balance of more than US$1,000 is that you can earn interest on your USD funds, making it a great daily interest chequing account.
The current rate is 0.01%, regardless of the amount. You can access its online banking services and app for free, and there’s no cap on the number of transactions.
The account is ideal for people who require more immediate access to their funds and don’t want to pay a monthly fee.
b. Borderless Plan
A more powerful (albeit costly) TD US dollar account is the Borderless Plan.
It has a monthly fee of $4.95, but you can get a $1.95 rebate if you already have the “all-inclusive banking plan”.
If you maintain a daily balance of at least US$3,000, you won’t have to pay a monthly fee.
This account offers unlimited transactions per month, preferred exchange rates in USD, and a full, annual $39 fee rebate on a TD US Dollar Visa card subject to credit approval.
Although it doesn’t generate any interest in your USD funds, the bank is practical and covers almost the full spectrum of a typical Canadian’s US dollar account needs.
3. EQ Bank US Dollar Account
Top Pick For: High-Interest Savings Rates
How to Sign Up: Website here
If you are concerned about generating decent interest on your USD, then the EQ US dollar bank account might be a good fit for you.
It offers a premium interest rate on all your USD funds, which is usually by far the best rate there is in Canada.
EQ Bank has also partnered up with Wise, so you can send your money internationally and in the US at a low fee. You can also send your money within Canada, and the foreign exchange rate is good as well.
4. Questrade US Dollar Account (Best For Stock and ETF trading)
This one is for investors who want to buy American stocks or ETFs. The U.S. stock market is home to arguably the most robust and profitable companies in the world.
Many Canadians want to invest in household name stocks, such as the big tech giants in California or the big banks in New York.
My suggestion to you, if you’re in this camp, is to open up a Questrade US dollar bank account. With this discount broker, you only get charged the currency exchange fee when you convert it. You won’t keep on getting charged every time you do a transaction.
It’s easy to transfer your money into Questrade and to move it within accounts as well.
5. Tangerine US Dollar Accounts
Tangerine offers an even broader range of US dollar accounts, including a business account, individual account, and business GIC account.
It doesn’t offer a US dollar chequing account, but its impressive interest rates, no-fee structure, and $0 minimum balance requirement put it quite close to the top.
Despite this, Tangerine has no physical branch, although you can use its 3,500 automated banking machines (ABMs). It also doesn’t offer Interac e-Transfers, although it’s a common theme with US dollar accounts in Canada.
6. RBC US Dollar Accounts
Aside from its impressive US presence, RBC also offers chequing and savings US dollar accounts in Canada.
RBC’s Direct Checking account allows you unlimited transactions between RBC CAD accounts and USD accounts. The first ten debit transactions are free, but you have to pay $1 for debit transactions after that.
There is no minimum balance requirement and no fee for the first year; after that, the annual fee is $39.50. The FDIC also insures funds up to US$250,000.
On the other hand, RBC’s Premium Checking account comes with a heftier annual fee of $99.95, unlimited transactions, and 50 free cheques.
There are some cashback offers from large retailers in the US, too, but both chequing accounts offer access to a broad 50,000 ATM no-fee network.
The Personal Savings account comes with no annual fees as long as you maintain a US$300 balance. The interest rate is 0.05% at best, and you can easily transfer money between your Canadian and US RBC accounts. It also requires a minimum deposit of US$100 to open.
Aside from that, you can also open a Preferred Money Market Savings account with US$1,000 and earn 0.15% for sums less than US$50,000 and 0.2% for more.
You also get up to 6 debit transactions per month for free. Both accounts come with US$250,000 FDIC insurance.
RBC also offers business US dollar accounts and CDs.
7. Scotiabank US Dollar Account
Scotiabank offers a US dollar daily interest account with a tiered interest structure.
You earn no interest for balances under US$1,000, 0.01% for funds between US$1,000 and US$4,999, 0.025% for funds above that and below US$9,999, and 0.05% for funds above US$10,000.
If you can maintain a daily closing balance of $200 or more, the bank won’t subject you to monthly account fees.
But even if you don’t, the US$1/month fee is highly competitive.
It comes with two free debit transactions per month and charges US$1.25 per additional transaction. You can also buy USD drafts without any additional fees using this account.
8. CIBC Bank US Dollar Bank Account
If you’re looking for a no-fee account with no free transactions, CIBC US$ personal account is the way to go. It charges you US$0.75 per transaction (which is lower compared to other banks) but doesn’t offer any free transactions.
So, even if you write a cheque, make a purchase, or pay a bill using this account, you will pay US$0.75 per transaction. The interest rate is at 0.05%.
9. National Bank US Dollar Account
The National Bank offers a USD Progress Account with a fee structure that’s a bit complicated. Although there are no fixed monthly fees, there are a lot of transaction fees.
Cheques and pre-authorized debits carry a US$1.25 fee, whereas most branch transactions are free, except for bill payments. USD Bill payments made through this bank carry a $2 fee.
Its interest rate of 0.1% looks promising at a glance, but you need at least $5,000 in your USD Progress Account to start earning any interest.
10. BMO US Dollar Accounts
BMO offers a US Dollar Primary Chequing Account and a US Dollar Premium Rate Savings Account for people who travel to the US a lot.
If you maintain BMO’s required minimum balance for its US Dollar Primary Chequing Account, you don’t have to pay any monthly fee.
It also comes with rudimentary overdraft protection features and a chequebook. On the other hand, its US Dollar Premium Rate Savings Account offers a 0.05% interest rate on any balance.
11. Desjardins US Commercial Bank Account
Desjardins provides a comprehensive US Commercial Bank Account solution through its Florida-based subsidiary, Desjardins Bank.
This account is designed to meet the banking needs of Canadian businesses that frequently operate in the US, such as:
- E-Commerce companies
- Wholesale or import/export companies
The bank makes it quick and easy to open an online account and provides personalized service throughout the process if you have any questions.
Desjardins also offers an online financial management tool that allows businesses to access their accounts anytime, anywhere.
This tool allows users to:
- View chequing account balances
- Account statements and previous transactions
- Easily transfer funds between accounts (domestic and international)
Desjardins Bank also offers a US Dollar Build-Up Savings Account.
This allows businesses to streamline their transactions in US dollars and save on foreign exchange fees.
It comes with tiered daily interest and unlimited regular transactions when a balance of US$1,000 or more is kept. There’s also an option to provide business members with member dividends.
Lastly, the bank also offers a Visa US Business card that’s specifically tailored for businesses that have transactions in US dollars.
This card allows businesses to avoid currency conversion fees and comes with features like travel insurance coverage, zero liability in the event of unauthorized use, and other features.
Weaknesses Of A US Dollar Account In Canada
Even the best US dollar bank account in Canada (USD) is not for everyone.
If you have limited financial interactions across the border, don’t travel at all or very rarely travel to the US, don’t have an income stream flowing into Canada from the US, or if your e-commerce needs can be satisfied in the country, you might not have a reason for maintaining a US dollar bank account in Canada.
The simple reason is the cost-benefit analysis.
The amount you save by not going through the terrible conversion rates when you have a US dollar account will unlikely be high enough to justify the financial cost of maintaining a US account.
For large one-off transactions in USD, you can go with a no-fee account that offers a few free transactions a month and has no account-minimum requirements.
If you’re an investor, Norbert’s gambit is your friend if you want to keep USD in your Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP).
Furthermore, you should be aware of the weaknesses of a US dollar bank account:
- Very few US dollar accounts are meant for daily or routine transactions.
- Most US dollar bank accounts in Canada come with a high per-transaction cost, making them impractical for frequent purchases from across the border.
- The savings rate for USD won’t outshine local savings accounts and rates in CAD, even if you take the relative strengths and weaknesses of USD and CAD into account.
- There are very few credit and debit card options.
- If CAD grows stronger than USD, the exchange rates might tip in your favour, and converting CAD to USD for transactions might be slightly cheaper than making transactions directly with USD.
Tax Implications Of US Dollar Bank Accounts
A USD account can help you avoid costly foreign transaction fees, which makes them an excellent choice for Canadians who frequently travel to the US or “snowbirds” who spend their winter retirement in the warmer southern US states.
However, there are some potential tax implications that you should be aware of.
Tax on Currency Conversion
If a Canadian converts the US dollars from their US dollar account back to Canadian currency, they may face tax consequences.
The CRA considers any foreign-currency gains or losses in excess of $200 as a capital gain or loss to be reported on one’s tax return. If you’re exchanging smaller amounts, this typically won’t be an issue.
However, if you’re exchanging larger sums of money, you could inadvertently incur a “gain” of $200, which your US dollar bank account will report to the CRA. If you fail to recognize or report this gain, it could result in a tax return audit.
Potential IRS Inquiries
The US Internal Revenue Service (IRS) may ask to explain the source of the funds in a US account if you are a Canadian resident.
Those with a smaller USD account balance typically won’t have to worry about this. However, if you’re holding a larger balance, then the IRS may wish to inquire about the legitimacy of the funds.
In order to prevent money laundering and other financial crimes, the Bank Secrecy Act requires international banks to keep detailed records.
However, unless the money in the account was sourced in the US, you won’t be required to pay additional US taxes on it.
Investing Strategies With A US Dollar bank Account
As a Canadian investor with US dollar holdings, you’ll have a range of opportunities available to you.
These options can provide certain benefits, such as the potential for positive returns and the ability to diversify your portfolio beyond the Canadian market.
Let’s explore the variety of investing strategies for US dollar accounts that can help you optimize your holdings.
Investing in US Stocks
US stocks offer a vast selection of investment opportunities across various sectors.
As one of the world’s largest and most liquid stock markets, the US stock market can provide excellent opportunities for diversification and potentially higher returns.
However, investing in US stocks also carries risks such as market volatility, regulatory differences, and potential foreign withholding tax on dividends.
To learn more, check out my guide on how to buy US stocks in Canada.
Bonds and Term Deposits
Bonds can offer steady income streams and diversification from equity risk, while US dollar term deposits can guarantee your capital and interest for a specific term, providing stability and predictable returns (similar to Canadian GICs).
ETFs and Mutual Funds
US ETFs and mutual funds offer exposure to a wide range of assets, sectors, and markets without having to research and select individual stocks.
This method makes it simple to diversify and manage your US dollar portfolio.
You can invest in US dollar-denominated funds directly using your US dollar account.
The Importance Of Having Control Over CAD to USD Conversion Timing
If you have to convert CAD to USD very frequently, having a US dollar bank account might be favourable. That’s because it allows you to control when to convert and keep USD in your US dollar bank account, and you can take advantage of the favourable rates.
As an example, in July 2020, you would’ve gotten an average of CA$1.3536 for US$1. On the other hand, in June 2021, the rates were quite different, i.e., CA$1 = US$1.2232.
The timing could lead to significant differences in how much USD you end up with.
I hope this list of US dollar accounts in Canada has given you enough information on finding the best US dollar account in Canada (USD) for your needs.
But before you start looking into different USD accounts, make sure you actually need it.
Check out the best no-fee banking options in Canada here.