US Dollar Chequing Accounts for Canadians: When They Make Sense

Holding US dollars makes practical sense for many Canadians. Whether you work with American clients, shop frequently across the border, or invest in US securities, a USD chequing account can save you money and simplify your finances. Let’s look at when these accounts prove most valuable and what you should know before opening one.

Why Consider a USD Chequing Account?

For most residents of Canada, having a CAD chequing account is perfectly enough. However, a USD one can be more convenient in some situations.

The most compelling reason to open a USD chequing account is to avoid constant currency conversion fees. Every time you convert Canadian dollars to US dollars or vice versa, banks charge a markup on the exchange rate — typically 2.5% to 3.5%. These fees add up quickly, especially if you handle US dollars regularly.

For example, if you earn USD 5,000 monthly from US clients and immediately convert it to Canadian dollars, you might lose USD 125-175 each month in conversion fees. That’s up to USD 2,100 annually — money you could save with a USD account.

Who Benefits Most?

Several groups of Canadians find particular value in US dollar chequing accounts:

Cross-border workers: If you earn income in US dollars, keeping it in its original currency helps you avoid unnecessary conversion costs. You can pay US-dollar expenses directly from this account and convert funds to Canadian dollars only when needed.
Online sellers and freelancers: Many e-commerce platforms and clients pay in US dollars. USD accounts let you receive payments without immediate conversion, giving you flexibility in timing your currency exchanges.
Frequent US travellers: If you travel to the United States often, an account in their currency eliminates the need to exchange currency before each trip. You can withdraw US dollars directly from US ATMs, typically with lower fees than currency exchange services.
Investors in US markets: For those who buy US stocks or ETFs, a USD account helps avoid double conversion fees. You can keep dividends in US dollars and reinvest them without converting them to Canadian dollars first.

Key Features to Compare

When selecting a USD chequing account, consider these important factors:

Monthly fees: Some banks waive monthly fees if you maintain a minimum balance. Compare these thresholds and fees across different institutions.
Transaction limits: Check how many free transactions you get monthly. Some accounts restrict the number of withdrawals or transfers before extra charges apply.
Cross-border access: If you plan to use the account in the US, confirm whether the bank has ATM partnerships there. This can save you money on withdrawal fees.
Online banking integration: Ensure the account integrates well with your existing banking setup. You should be able to transfer funds and pay bills easily.
Exchange rates: Even with a USD account, you’ll occasionally need to convert currency. Compare exchange rates between banks — some offer better rates to their clients.

Practical Tips for Account Management

To make the most of your USD chequing account:

Time your conversions: Watch exchange rates and convert larger amounts when rates are favourable. This strategy works better than multiple small conversions.
Keep sufficient balances: Maintain enough funds to meet minimum balance requirements and avoid monthly fees. Calculate your typical monthly USD expenses to determine an appropriate buffer.
Use linked accounts: Many banks let you link USD and CAD accounts. This setup helps you transfer funds quickly when needed and might offer preferential exchange rates.
Monitor transfer fees: Understand the costs of moving money between accounts, especially for international transfers. Some transfer methods cost significantly more than others.

Common Mistakes to Avoid

Don’t fall into these common traps when using a USD chequing account:

Keeping too much cash: While you want to maintain minimum balances, keeping excessive amounts in a chequing account means missing out on interest you could earn in a USD savings account.
Ignoring exchange rates: Some people convert currency regardless of the exchange rate. You can save money on larger conversions if you take some time to understand rate patterns.
Overlooking tax implications: Remember to track your foreign currency gains or losses for tax purposes, especially if you’re self-employed or running a business.

Final Thoughts

A USD chequing account isn’t necessary for every Canadian, but it can be a smart financial tool for the right person. Consider your circumstances — how often you handle US dollars, your regular expenses in USD, and your cross-border activities. If you find yourself frequently converting currency or dealing with US-dollar transactions, the savings in conversion fees alone might justify opening an account.

Take time to research different banks and their offerings. The right USD chequing account should complement your financial habits and help you manage your money more effectively. It should not add complexity to your banking.