Do you need to buy CSD dollars or will businesses take USD?
Do you need to buy CSD dollars or will businesses take USD?
Depends, but you will be guaranteed to get a crummy exchange rate. The Canadian dollar is worth about $1.02 US these days. You might end up paying $1.05 to as much as $1.10 US/CAD at local businesses.
Also, even if you do use American dollars, you'll get Canadian change back.
To be respectful to your host country, when in Rome...
Many businesses will accept American currency as a courtesy to American tourists. Businesses that choose to accept US dollars set their own exchange rate, so you may find the rate different from store to store, and the rate will NOT be in your favour. You will receive your change in Canadian funds. Coins, as a general rule, are accepted at face value…at par.
Automated equipment, i.e. vending machines, public transit machines, parking meters, etc - basically anything where you insert coins / bills... will only accept Canadian currency.
Most places will take credit cards, however there may be fees over and above the exchange rate charged by the credit card issuer. Some credit cards have a Foreign Usage Fee tacked on for usage outside of the issuing country. Check with your card issuer for exact details.
You could always use your bank card to withdraw money from an ATM. Check with your bank to find which Canadian banks they have an agreement with and then utilize that Canadian bank’s ATM for the fewest / cheapest fees & surcharges.
For some money saving tips, have a look at the traveller article “Canada – Banks & Money” here on TA.
You can spend your US dollars in Canada. Most Canadian merchants will accept them in preference to losing a sale.
You will pay an unfavorable exchange on them, though. Other writers have implied that you're being cheated when this happens. (Some almost seem grouchy, don't they!) They're not really ripping you off, though.
Here's the problem for the Canadian merchant:
The exchange rate you see in the newspapers, about US$1.02 = CDN$1, is not what the merchant gets when he takes your greenbacks to his bank. The bank charges the merchant an unfavorable retail exchange rate, several points worse. The merchant also pays the bank a foreign exchange commission, usually 2 1/2 percent. By the time the bank is done with the merchant he's actually getting nicked for a rate more like US$1.08 = CDN$1, and that under the best of circumstances.
Not only that, but the little guy never knows for sure what rate the bank will actually apply when he gets to the bank. There's been volatility, as you know, as your government tries to borrow another $2 trillion to burn through. So, to avoid taking a loss on the deal, he'll likely charge you a rate like US$1.10 to CDN$1. You'll probably grouse about being ill-used and complain that the newspaper says it should be more like $1.02, but the reality is different.
What I'd do is dig out my trusty credit cards! Credit cards always command the best exchange rate, something resembling the bank's wholesale rate. The bank will charge you its foreign exchange commission, perhaps 2 1/2 percent, but from your point of view it's better than US$1.10 = CDN$1.
Now, again from the merchant's point of view, he's going to pay the credit card company a 6% commission. This is when you reach for your wallet and say something like, look, I can save you 6% if you'll just accept my US cash at a more reasonable rate.
Best wishes at the check-out and let me assure you that, grouchiness notwithstanding, American tourists are always sincerely welcome at Canadian cash registers, no matter what color your money!
Most credit card merchant fees are in the 2 to 3% range, not 6%. American Express is usually a bit above 3%.
In my area, most merchants are giving USX at $C1 = US .90. There are a few giving 91 cents on the dollar. In other words, your US $10 bill is worth only C$9.00 (or $9.10), at the till. I don't know if the Saint John area is similar, but I suspect so.
Convenience does have a cost! (That is basically what you are paying for.)
For merchants, paying out USX also raises the issue of additional cash-handling errors on the part of their staff, who have to calculate the conversion at the till. One other consideration from the merchant's point of view is the additional bookkeeping that taking a foreign currency entails... bank deposits are a bit more involved, having to deal with two currencies, and then, a day or two later, they have to reconcile the daily sale totals to the actual deposit totals, to account for the differences. I can say, from years of doing books in a resort town, that the small amount a merchant comes out ahead on USX through the year does not compensate well for the extra hassle.
The other issue, which has been alluded to, is respect. If you look at the postings for all of Canada, you will find that at any time, there are at least two or three topic threads running, similar to your enquiry. Perhaps Americans have been "spoiled" to some degree, because unlike the Canadian dollar, your currency is readily accepted in many countries. While merchants are more than happy to accept your dollars, no matter which currency it is, not using Canadian dollars tends to feed some of the negative stereotypes of Americans. (However, some Canadians may not be aware that it is a much more difficult and involved process to walk into a US bank and get Canadian dollars than it is to get USD at almost any bank in Canada ... although using your ATM card once you have arrived in Canada has by and large eased that difficulty.) By using Canadian dollars, you will appear to be more respectful, and you won't stand out so much as a foreigner.
Hoping not to get into an esoteric debate, Jasper, about the number of credit cards that can be balanced on the head of a pin, but ...
My Citibank MasterCard pays ME 2% cash back on every dollar I spend. Since I'm sure Citibank doesn't go without making a bit for itself on the transaction, I think you'll find that the merchant unfortunate enough to get my business pays Citibank around 6%.
(By the way, don't take this comment as shilling for a particular credit card. I understand that Citibank is getting out of its Canadian MasterCard business this very month of August 2011, so it's impossible for me to shill for them!)
cbc.ca/news/story/2009/04/16/f-cardfees.html pegs the merchant discount fee at 2-4%, not 6%. While premium cards (including cash reward cards) do charge the merchant more, don't forget the bank also makes money off credit card interest payments.
I'm sorry, but I think trying to negotiate the exchange rate (I believe that's what you're suggesting above) is a really bad idea, for three reasons. One, the merchant knows their costs for handling credit cards and cash better than you do, and presumably took that into account when setting the rate -- nothing you can say will change that calculation. Two, you're often dealing with a cashier, not the owner, who has no authority to vary the rate. And three, haggling over exchange rate could well lead directly to the sort of behaviour that gets so many people riled up in these discussions, insisting that you're entitled to spend your foreign cash at a rate you consider reasonable. That's just not true. If you don't like the rate and don't want to use a credit card, politely decline and spend your money elsewhere.
I have personally seen where people argued about the rate, demanded to pay with foreign coins, and demanded change back in their foreign currency. I suppose the customer is always right, but they can sure leave a foul impression in those cases (for both the staff and the people behind them in line).
I also think we should be careful to recognize that anyone who asks in advance on TripAdvisor has already demonstrated they're interested in respecting local customs -- I think the frustrations raided here are really aimed those who don't ever ask and simply assume USD will be handled just like it is at home.
That isn't what the article says, Toronto!
In the CBC article you linked to, they mention in passing, by way of background, that: "Merchants pay two to four per cent of the sale price in various transaction fees whenever they accept a credit card for payment." The article says nothing about this being mandated by law or "pegged." It's not even clear how the CBC arrived at this background figure.
At first, when I saw your article, I wondered how my credit could afford to pay me 2 dollars per $100 of spending. Reading some of the comments that follow the CBC article, I note that others say that it's more like 2%-5%. I'm pretty confident that, to give me 2% cash back, my credit card card company must ding its unfortunate merchants significantly more than 4%.
The interchange rate paid to the company that owns the card is 1.75%. Anything above that goes to the company that has the merchant as a customer and this can vary greatly depending on industry and associations. Many associations (ie food and beverage) have special rates some as low as 3% and that would include the 1.75%.
As for the original question on whether to change money or us US$. The average person generally gets their best rate at the ATM or credit card. Simply because the bank will "batch up" their foreign exchange and usually passes at least some of these savings onto their clients in lower rates. Simply put, a bank buying $100Million US$ will get a much better rate than someone buying $100.
Most banks advise using credit cards rather than ATM's as if for some reason the ATM eats your card you have to go to your home branch to get a new one. The bank won't return it. If you lose your credit card you can usually get a new one in a day or two. Further, if you are deal with a small bank in the US it might not work in a Cdn ATM.Edited: 24 August 2011, 18:31
Regarding the "cash back" or bonus cards. The fee paid out on cards is significantly less than the huge amounts of revenue generated from interest. Additionally, many people who have insentive cards have to trigger a redemption (ie airline points). Many simply don't or don't met the min amount needed. Hense there is only a deferred cost for the CC company, not an actual cost.