If you are a Canadian interested in the U.S. stock market, you might have heard about Questrade. It is one of the top discount brokers in Canada for self-directed investors.
Questrade was the first discount broker to offer USD-denominated Registered Retirement Savings Plans (RRSPs).
This allows Canadian traders the chance to fund their accounts with USD and trade U.S.-listed stocks and exchange-traded funds (ETFs) while avoiding unnecessary expenses during currency conversions.
Questrade facilitates currency exchanges between CAD and USD at favourable exchange rates to help Canadian investors access their favourite securities trading in the U.S.
In this post, I will discuss Questrade exchange rates and the process of transferring USD to Questrade to help you avoid hefty conversion charges.
Questrade Exchange Rates
There is a fee added to the exchange rate whenever you need to exchange currencies from CAD to USD or the other way around. Since exchanging currencies is one of the services offered by Questrade, you should expect to pay a small processing fee in the exchange rate to get your desired currency.
While making the exchange, Questrade embeds a processing fee of 199 “pips” within the exchange rate. A pip is a unit of measure used in the foreign exchange market. A single pip is effectively equal to 0.01%. So this effectively makes the conversion rate around 1.99%.
The best thing about working with Questrade is that you will not need to worry about exchanging to and from CAD and USD multiple times since it allows you to hold both in your account.
Why Invest In The US Stock Market At All?
Have you yet to invest in U.S.-listed stocks and ETFs and wonder why so many Canadians do it? There are several good reasons to invest in the U.S. as a Canadian investor.
The first reason is that the U.S. has two of the most significant stock markets worldwide: the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ).
Second, investing in U.S. stocks and ETFs lets you gain exposure to some of the world’s largest companies like Apple Inc., Microsoft, and Amazon.com. Lastly, investing in U.S.-listed securities also allows you to diversify your portfolio and enjoy investing in securities that align with your financial goals.
Why Should You Transfer USD To Questrade
Questrade is one of the best trading platforms for self-directed Canadian investors. The comprehensive trading platform makes becoming an investor a far more convenient affair than traditional exchanges and financial institutions do.
Aside from that, Questrade offers several account types to choose from and low-cost investing options that make trading more affordable. You can also use the platform to purchase ETFs for free and use the discount broker to buy and sell stocks for as little as $4.95 per trade.
If you are an investor looking to use the advantages of Questrade while trading U.S.-listed securities, Questrade’s capability to hold two currencies in your account can be the most cost-effective way to pull that off. Additionally, you can get $50 in free trades when you start investing with Questrade.
Transferring From Your USD Account To Questrade
There are several methods to fund your Questrade account in USD. I will discuss using a pre-authorized deposit (PAD) or a wire transfer to achieve this. These are the two most popular methods that self-directed Canadian investors use to fund their Questrade accounts with USD.
Using Pre-Authorized Deposit
Here are the steps you need to follow if you plan on using PAD to fund your Questrade account in USD.
- Login to your myQuestrade account, click “Funding,” and select “Pre-Authorized Deposit”.
- Choose the option to “Add New Bank Account” and select the option to set it up manually.
- Once you set up your account, Questrade will ask you to fill up the different fields for all the required information. You need to fill up several required fields here, including the deposit date, frequency of deposits, and the end date for the deposits.
- Questrade requires your banking information and a PAD agreement on file when you set up a PAD manually. Thus, you should upload your banking information and PAD agreement before the deposit date if you want to avoid delays while funding your Questrade account with USD.
- Once you submit a PAD, you can see the status on your myQuestrade account by clicking on “Funding” and selecting “Pre-Authorized Deposits History.”
Another thing you should remember while setting up the PAD manually is that you need to upload a void check or a direct deposit form for your bank account. Go to myQuestrade, select “Account Management,” and then click on “Upload Documents” to upload the void check or direct deposit form.
Using A Wire Transfer
Here is a look at the following information you will need if you are planning to wire transfer USD funds to Questrade through a Canadian financial institution:
5700 Yonge Street, G1 – Ground floor
Toronto, ON M2M 4K2
Make sure to include your Questrade account number and name.
Questrade has an account with the Royal Bank of Canada (RBC) to process its wire transfer requests. You should send your USD directly to the RBC bank account below to complete wire transfer requests and fund your Questrade account with USD.
Royal Bank of Canada
Yonge & Hollywood Branch
5001 Yonge Street
Toronto, ON M2N 6P6
Swift Code: ROYCCAT2
Transit Number: 02874
Note that you can also include your Questrade account number and your name in the wire transfer request.
Using Wire Transfer or Pre-Authorized Deposit – Which Is Better?
Wire transfers are usually the quickest method to fund your Questrade account with USD because they arrive sooner, taking only one or two business days. You also don’t need to worry about a minimum or maximum transfer limit you can receive in your Questrade account.
In contrast, PAD effectively lets you fund your Questrade account with USD for free. However, the funds might take two to three business days to arrive for a PAD request lower than $10,000 CAD or USD. If the PAD amount is $10,000 CAD or USD or higher, you can expect it to take up to seven business days to come through.
Some banks offer free wire transfers for a specific amount of cash, depending on the account type you have. You need to check with your bank or financial institution to get more information on wire transfers because they might involve daily maximum limits and fees.
Still, you can choose wire transfers or pre-authorized deposits based on your preferences.
If you don’t mind a slightly longer waiting time, you can choose to go with PAD to fund your Questrade account in USD. On the other hand, if you prefer making the transfer more quickly and don’t mind paying any transfer fee for the wire transfer, you could consider using wire transfers to fund your Questrade account in USD.
Funding USD In A Registered Account or Margin Account
Using Questrade lets you hold both CAD and USD in your account without worrying about exchanging back and forth between the two currencies.
However, while you can hold dual currencies in your account, there is a difference if you want to fund USD in a margin account and a registered account.
The currency settlement for a margin account is the trade currency. It ensures that the currencies stay on their respective sides, depending on the trade.
For a registered account, you can easily check on the currency settlement. Just go to myQuestrade, select “Account Management,” and click on “Currency Settlement.”
Selecting the currency settlement preference allows you to control how the money is deposited into your registered account when you receive cash, sell securities, or transfer funds into your account from another financial institution.
If you set the currency settlement preference to CAD, Questrade will automatically convert all the cash into CAD. It will also convert everything into USD if you set the currency settlement preference to USD.
On the other hand, you can also choose to set it to “Currency of Transaction” if you want to ensure that the currencies stay on their respective sides, like in margin accounts.
If you are funding your registered Questrade account in USD, you should know that the platform still reports your contributions to the Canada Revenue Agency (CRA) in CAD.
You can contact Questrade via phone or chat to confirm the CAD equivalent of your USD contributions. Knowing the amount will help you make a more well-informed decision for your future deposits and let you remain within your contribution limits for the registered accounts.
Getting the best conversion rates is important because every dollar counts when it comes to investing. Questrade exchange rates are some of the best ones for CAD to USD conversion. Questrade is also one of the top trading platforms that you can use as a Canadian investor.
You can learn more about the discount broker in my Questrade review to understand why it is so popular.