How to Convert CAD to USD Cheaply: Norbert's Gambit and Other Options

If you buy U.S. stocks, send money to the U.S. or spend winters in Arizona, currency conversion is probably costing you more than any trading commission. A typical 2% spread on $20,000 is $400 — each way.

What conversion really costs

The "rate" your bank or broker shows includes a markup over the mid-market rate. Compare it with the day's Bank of Canada rate (see our converter) and you'll see the gap. Common ranges:

• Big-bank branch or online transfer: often 2–2.5% or more.
• Brokerage automatic conversion when you buy a U.S. stock in a CAD account: often 1.5–2%.
• Credit card purchases in USD: typically a 2.5% foreign transaction fee on top of the network rate.

Norbert's Gambit, step by step

The idea: buy something in Canadian dollars that also trades in U.S. dollars, move it to the U.S.-dollar side of your account, and sell it for USD. The most commonly used security is the Horizons/Global X U.S. Dollar Currency ETF, which trades as DLR (in CAD) and DLR.U (in USD) on the TSX. Interlisted stocks can also work but carry more price risk while you wait.

1. Make sure you have a USD account (or USD side of your account) at your brokerage.
2. Buy DLR in your CAD account with the amount you want to convert. Use a limit order near the ask.
3. Ask your broker to journal DLR to DLR.U. Some do this online; others need a chat message or call. Some let you do the journal immediately; others require settlement first (T+1).
4. Sell DLR.U in your USD account once the journal shows up. Use a limit order near the bid.
5. Done. Your cost is two commissions (often $0 now) plus the bid/ask spreads — commonly a small fraction of a percent.

To convert USD back to CAD, reverse the steps: buy DLR.U, journal to DLR, sell DLR.

Risks and gotchas: the U.S. dollar can move while you wait for the journal (DLR tracks USD/CAD, so the risk is small but real); some brokers charge journal fees; and selling before the journal completes can create a short position. Ask your broker how they handle it.

Interactive Brokers

IBKR lets you convert currency as a spot FX trade at near-interbank prices for a commission of 0.2 basis points (0.002%) with a US$2 minimum. For large amounts, it's typically the cheapest mainstream option in Canada — and there's no waiting. See our Interactive Brokers Canada review.

Keep USD as USD

Once you've converted, hold U.S. securities in a USD account — including USD TFSAs and RRSPs where offered — so dividends and sale proceeds stay in USD. Many Canadian brokerages now offer USD accounts; some app-first platforms reserve them for paid tiers.

For travel and online shopping

A no-foreign-transaction-fee credit card removes the typical 2.5% markup on purchases in foreign currencies. Several Canadian issuers offer them; compare annual fees against what you spend abroad. For large one-off transfers (a U.S. property purchase, tuition), compare specialist currency brokers and your broker's options rather than defaulting to your bank.