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USD savings accounts in Canada
June 27, 2015
3:50 pm
Peseta
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Hello everybody,

I have done as much online research as I could about USD savings accounts in Canadian banks, but cant find anything better than Tangerine's 0.25% (which used to be 0.50%) offer. Is this really the best deal that there is out there?

Any insight would be much appreciated.

Peseta

June 27, 2015
4:04 pm
semi-retired
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Hubert pays .75% for their USD savings account.I don't know how they are for transferring it in & out.

June 27, 2015
4:09 pm
Norman1
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If one is willing to look beyond the Canadian banks, Hubert Financial has a high-interest US$ savings account that currently yields ¾% per annum.

The drawback of the account seems to be that there isn't a way to do US$ withdrawals from it besides a US$ wire transfer. Such a wire transfer will cost $22.50.

Direct US$ deposits into the account may be an issue as well.

June 27, 2015
4:32 pm
Norman1
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ZenBanx, mentioned in this discussion, is another offering.

According to their rates page, the US$ portion of the account currently pays ½%.

Again, not obvious how to deposit US$ in.

June 27, 2015
5:53 pm
Loonie
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It may depend to some extent on what your purpose is in buying USD.

If you want to hold USD as an investment because you think CDN will decline further or just because USD has less dependence on resource economy, then the interest rate isn't all that important, as none will be significant anyway at this time. You would then be looking at convenience and security as significant factors.

If you are looking at it as a convenience for out-of-country expenses, you might be better off with one of the Big Banks which has various conveniences for people who visit the US a lot. I believe forum member GS had something to say about that a while ago. I think he used RBC but can't remember for sure.

Big Banks will offer more convenience, but Manitoba credit unions such as Hubert may offer more security. All deposits, including US$ deposits, in MB credit unions are covered by their deposit insurance, whereas CDIC does not cover foreign-denominated accounts in the banks at all.

A key question is what it would really cost you to get the money in and out of this account. This may be more significant than the interest rate. If they force you to take it out in CDN$, then you will lose a lot in the service charge in the exchange rate, which adds up and will undercut any interest you might make unless you leave it there for a long time. It's also likely that you will have to pay the same service fee to buy the USD in the first place.

I considered opening a USD account at Hubert, but in the end decided it wasn't worth the nuisance factors. I kept the old one at TD, which pays next to nothing, is convenient, and doesn't have much money in it.

June 27, 2015
6:05 pm
kanaka
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Quite a bit ago Hubert said they were coming out with some improved options for the USD account. Still waiting.

Also keep in mind the big 5 do NOT cover US dollars with CDIC. While most credit unions do.

Also keep in mind there are ways to avoid the 2.5% currency exchange fees by using MasterCard from Amazon or Sears. Or obtain a U.S. Dollar credit card for your bank and pay it from your US dollar bank account.

June 27, 2015
8:06 pm
Loonie
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It's true you can avoid the credit card surcharge in converting currency by using Amazon or Marriott card. However, you will pay a fee for simple currency exchange regardless, which is incorporated in the exchange rate.

Yes, Hubert did promise something forthcoming. I think the idea of foreign currency accounts is a growing area of interest due to globalization etc. (witness ZenBanx), and we will likely see more banking options in future, but there is not much right now.

June 27, 2015
9:54 pm
Norman1
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There's definitely a markup embedded into the exchange rates that is in addition to any 2.5% exchange fee. That markup is reflected in the difference between the buy rate and the sell rate.

For example, with Hubert, these are the current under-$25,000 USD/CAD exchange rates:

Amount Member selling US dollars Member buying US dollars
Less than $25,000 1.2201 1.2551

Midpoint is ½ × (1.2201 + 1.2551) = 1.2376.

The buy-sell spread is then 1.2376 ± 0.0175.

As a percentage, the spread is 1.2376 ± 1.41%.

July 1, 2015
5:45 am
Peseta
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Thanks to all of you for your thoughts and insights!

August 6, 2018
8:23 pm
con6450
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Hi! Does anyone have more update-to-date information on good USD savings and/or GIC accounts? The rates I have seen seem ridiculously low...

August 6, 2018
9:16 pm
Loonie
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Somebody mentioned on this forum the other day that TD has an ISA paying over 1% available through their brokerage if you have a brokerage account. I can't remember any more details.

A month or so ago I saw a one year GIC paying in the range of 1.1 -1.25%. However, I didn't take note of where it was as that didn't interest me. I believe it was one of the smaller Ontario credit unions.

I believe Hubert now allows direct transfers of USD between them and an external USD account.

August 6, 2018
10:27 pm
AltaRed
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con6450 said
Hi! Does anyone have more update-to-date information on good USD savings and/or GIC accounts? The rates I have seen seem ridiculously low...  

As the discussion was further upthread, it may be more important on what the plans are for the USD than the interest rate. If it is for collecting dividends off USD stocks and then used to fund USD expenses in the USA as in purchases or snowbirding, convenience is worth a heck of a lot more than the interest rate. FWIW, that is what my USD cash is for, i.e. I don't much care about interest rate. My USD cash is currently in an ISA (DYN5001) in my Scotia iTrade brokerage account.

August 7, 2018
5:48 am
Nehpets
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con6450 said
Hi! Does anyone have more update-to-date information on good USD savings and/or GIC accounts? The rates I have seen seem ridiculously low...  

See this recent Forum discussion

Hubert rate for $USD account is 0.75%

I followed Joe's advice in that discussion on the TD account, after keeping funds at Hubert this past year.

Several $USD GIC rates are listed on Rate Hub...Omnia Direct pays 1%

Stephen

August 7, 2018
7:58 am
Norman1
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Current rates for the TD Asset Managment investment savings accounts, like their US$ savings account TDB8152, can be found at TDAM: Additional Solutions.

August 7, 2018
8:09 am
con6450
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Thanks for all the replies. I also did some research and it seems HSBC.ca has 2.0% for a one year term USD. Is this too good to be true considering all other options seem to be just around 1%...?

https://www.hsbc.ca/1/2/personal/investing/products-and-services/term-deposits/us-dollar

August 7, 2018
8:57 am
AltaRed
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It depends if you are willing to tie up your USD that long. Like others have asked, what is the purpose of the USD in the first place?

August 7, 2018
9:08 am
con6450
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AltaRed said
It depends if you are willing to tie up your USD that long. Like others have asked, what is the purpose of the USD in the first place?  

Thanks for asking. For the next year it's just going to be set aside as savings (so term/GIC is okay). There may be plans after one year though.

The money is recently withdrew from US stocks, as I don't really feel like being in the market right now, so stocks are not an option.

The HSBC one seems interesting, but does anyone know any more competitive rates for one year term?

August 7, 2018
9:59 am
2017opinionsmatter
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Used to have USD saving accounts with banks. maybe <1%

Since 2016/2017 U.S. interest rates started to rise much faster than Canadian's, US money market funds such as RBF1003 or RBF1500. CIBC's CIB483 and many others are at 2.10 or even 2.15%.
Canadian equivalent RBF2010, DYN6000 or BTB100 are all just 1.35% (that is after end of July's increase)

Remember brokers all try to make money off you. So:

Obviously it's best to buy RBF funds in RBC direct investing and CIBC fund in CIBC Edge. I don't think there is any good US MM funds with Scotia. Shame on ScotiaiTrade

It's some what inconvenient to have to open all these accounts. But in 3 years you would be making 2% plus and all in US dollars. V.S doing the same in CAD, the difference would be HUGE

August 7, 2018
3:46 pm
Loonie
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If it's a true Money Market Fund, then it's not a GIC and there is no guarantee of future returns - like any mutual fund. Read the Prospectus carefully before investing.

Re: moving your funds to another financial institution. Check first to make sure that you won't have to convert to CDN in order to do so - either at the place where you have the money now or at the receiving end. Exchange fees can easily make it not worth your while. This used to be a problem in the past but I don't know if it still is.

The HSBC offer should be OK, although I didn't see any rates listed.
Remember that US funds are not covered by CDIC insurance. It would be covered at Hubert by MB CU insurance.
Make sure you specify in writing that you don't want the GIC rolled over at the end of the year. That is normally the default position.

August 9, 2018
3:48 am
sellis
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Check out PSU.U.TO. It's yielding close to 2% and does a monthly distribution in US cash. Seems to be a decent yield and you don't need to lock in for any term to get it.

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