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Guide to cross-border banking for Canadians
Learn how to find the best cross-border bank account in Canada, and how to manage cross-border banking safely and affordably.
With a US dollar account in Canada, you can hold and use USD without converting it to CAD each time and losing money on the exchange. This makes it useful for cross-border banking needs like travel, business payments, investing and online shopping in US dollars, while also giving you more control over when you can convert currency.
This guide breaks down USD accounts available in Canada and what to know when sending money between Canada and the US.
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What is cross-border banking?
Cross-border banking means using banking services to manage money between two countries, typically Canada and the United States, since they share a border. It lets you hold or transfer money in multiple currencies, send or receive international payments and access your finances while abroad. Cross-border banking makes it easier, and often cheaper, to handle money internationally for travel, work, business or sending funds overseas.
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Do Canadian banks offer US dollar accounts for cross-border travel?
Yes, many Canadian banks offer US dollar accounts specifically designed to support cross-border banking needs. These accounts are mainly designed for holding, spending and exchanging USD, helping Canadians avoid frequent currency conversions when traveling, shopping or conducting business in the US.
However, they don’t have the same functionality as full US-based bank accounts. For example, they may not support ACH transfers (a common US payment system), won’t work with peer-to-peer transfer apps like Venmo or Zelle and can have limitations when setting up US-based subscriptions or billing that requires a local account.
As an alternative, some fintech platforms, like Wise, offer US account details, including a local routing and account number, to provide more flexibility for receiving or sending payments in USD.
Reasons to open a US dollar account in Canada
Why open a US dollar account in Canada? There are plenty of reasons, such as:
- If you get paid in USD. If you run a business that operates in the USA, opening a US dollar account lets you receive payments from customers and convert them to CAD when the exchange rate suits you.
- If you frequently travel to the US. A cross-border banking account makes it easy to access US dollars when you need to make purchases in the US.
- If you shop online and make USD purchases. You can use a US dollar account to make purchases in USD. Particularly if you’re making a large purchase, such as buying a property, the money you can save by not having to swap between CAD and USD could be substantial.
- If you need to pay bills in the US. With a US dollar account, managing bill payments in the USA is easier and more affordable.
- If you invest in US markets. You can use a US dollar account to buy and hold US stocks or ETFs without constantly converting between CAD and USD, reducing currency conversion fees.
USD accounts in Canada vs USD accounts in the US
In this guide, we’ve looked at US dollar accounts with Canadian banks, but another option is opening an account at a US bank. While the account-opening process is a little more complicated than opening an account with a Canadian bank, and you may need proof of a US address, non-US citizens can open accounts in the US.
A US bank account can be more useful if you regularly live, work or pay expenses in the US. It gives you better access to local payment systems, makes it easier to pay US bills and allows you to use services that require US bank details.
However, having a US account doesn’t automatically eliminate all fees, and it does not build a US credit history unless you also use credit products like loans or credit cards.
What are the benefits of cross-border banking?
- Avoid exchange rate fluctuations. Opening a USD account means you’re no longer at the mercy of fluctuating exchange rates or the exchange rate markup imposed by your bank to convert USD to CAD.
- Exchange USD to CAD when it suits you. You can convert your US currency into Canadian dollars whenever you want, taking advantage of attractive exchange rates. You can also convert the currency with a specialist foreign exchange service to lock in a better rate.
- Hold USD. With a cross-border banking account, you don’t need to convert USD to CAD if you don’t want to. Instead, you can just hold US dollars in your account until you need to spend them, avoiding currency conversion costs altogether.
- Avoid international transaction fees. Credit card foreign transaction fees are typically 2.5% of the transaction amount, but using a USD account allows you to avoid these hefty fees.
- Earn interest on your USD. Some accounts also pay interest on your money, helping you build a bigger USD balance. Just don’t expect the rate to be as high as what some Canadian accounts offer.
Disadvantages of cross-border banking
- Limits on the types of transactions you can perform. Many USD accounts aren’t designed for day-to-day banking, so there are often limits on the type and number of transactions you can make and how you can access your money.
- Low interest rates on some accounts. The interest rates on some US dollar accounts are quite low, so they won’t do much to help you build a bigger balance.
- Watch out for fees. Some accounts charge a monthly fee or additional fees for performing specific transactions, so check the fine print closely.
- Exchange rates still apply. Even though you hold USD, the value of it can still fluctuate if you convert it back to CAD or from CAD to USD.
How to send money from Canada to the US
If you have a US dollar account in Canada, you may be able to send funds in USD directly, helping you avoid the cost of converting from CAD to USD. You can then send US dollars to the US in a few ways, such as sending a bank transfer, writing a USD cheque or even withdrawing US currency so you can send a cash transfer.
However, if you have Canadian dollars, there are several ways to send money to the US.
Top 4 ways to transfer money from Canada to the US
If you need to transfer money from Canada to the US, consider these four options:
- Money transfer service. International money transfer services like Wise specialize in moving money across borders. They offer better exchange rates and lower fees than banks, and often support a wide range of payment methods. Compare international money transfer services to find the best value.
- Bank transfer. Many people opt to send an international wire transfer through their bank. This is a safe and convenient option, but high transfer fees and bank exchange rate markups mean it’s not as cost-effective as other transfer methods.
- Cash pickup transfer. If you need to send money to the US from Canada quickly, you may want to consider a service such as Western Union that allows your recipient to collect the money you send as cash. This makes it possible to complete the transfer within minutes, but you’ll need to watch out for exchange rate markups and transfer fees.
- PayPal. PayPal offers a quick and convenient way to send money overseas. But fees and weak exchange rates mean it’s not the most affordable option.
Looking for cross-border bank accounts for business?
- Low $6 monthly account fee
- Unlimited online transactions
- Unlimited mobile and ATM cheque deposits
- Sole proprietorships and corporations accepted
- $500 sign-up offer
- Multi-currency global accounts
- FX & payout to 150+ countries
- For registered Canadian corporations only
- USD, GBP, EUR accounts
- Multi-currency credit card
- Pay bills in 37 currencies
- Avoid FX fees
- For registered Canadian corporations only
How to choose the right bank account to meet your cross-border banking needs
There’s a lot to consider when choosing a cross-border banking account for USD, including:
Fees
While some US dollar accounts don’t have any monthly fees, many do. Check the monthly fee that applies and find out whether the fee will be waived if you meet a minimum balance requirement.
You’ll also need to check the fine print for details of any other fees that apply. These could include transaction fees, cheque fees, ATM withdrawal fees and more.
Availability and ATM access
Check how you will be able to access the funds in your account. For example, can you write USD cheques? Is there a debit card attached to the account? Does the bank operate ATMs that allow you to withdraw US currency? How can you transfer money from your USD account to another account?
Make sure the account you choose offers easy and convenient access to your money.
What’s included
It’s worth remembering that monthly transaction limits often apply to US dollar accounts. Check the terms and conditions to find out how many transactions you’re entitled to, and what transaction fees will apply if you exceed the limit.
Also check whether you get access to additional features like US cheques and bank drafts, and whether the account offers overdraft protection.
Interest rates
If you’re searching for a USD savings account, check the interest rate that applies to your balance. Is the interest tiered so that a higher rate applies to larger balances, or is it a flat rate for all accounts?
Insurance
Foreign currency deposits are eligible for coverage from the Canada Deposit Insurance Corporation (CDIC). Check to make sure your bank is a CDIC member for extra peace of mind before opening an account.
Dive deeper: How Canadian banks protect your money
Exchange rate costs
Even with a USD account, converting between CAD and USD may still involve exchange rate spreads or fees, and banks set their own foreign exchange markup rather than using the mid-market rate. These rates can vary between institutions and may affect the overall amount you receive when converting currency.
Promotions and perks
Finally, compare any promotions or rewards that are offered with the account. For example, you may be able to access discounts on other products from the same bank, such as an annual fee rebate on an eligible credit card.
How to open a US dollar bank account in Canada
You can typically apply to open a cross-border banking account online, but some banks will require you to visit a branch to complete the signup process.
You’ll need to be the age of majority in your province or territory and provide:
- Your name and date of birth
- Your residential address
- Your phone number and email address
- Your social insurance number (SIN)
You may also be asked to complete tax-related forms, such as a W-8BEN, to confirm you’re a non-US resident. This is used for tax reporting on any interest you earn.
What documents are required to open a US dollar account in Canada?
You’ll need to provide two pieces of government-issued identification, such as a driver’s licence and a passport, to prove your identity. You may also be asked to provide proof of address, like a utility bill or bank statement.
Bottom line
Cross-border banking can make it easier to manage money between Canada and the US, whether you’re travelling, working, investing or sending payments in USD. A Canadian USD account offers a simple way to hold and use USD without converting it each time, while US bank accounts or fintech alternatives may provide better access to American payment systems and services. The best option depends on how often you need to move money across the border and how much flexibility you need.
Frequently asked questions about cross-border banking
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