I promised this post a while ago, back when we still had no idea how we would move our money from the US to Canada. To be honest, I was not as involved on the this front. The move had so many moving pieces, and there was so much for us to figure out that we took a divide and conquer approach with some things, and transferring our money mostly fell on my husband. That being the case, I figured it would be best if he wrote this post for you, which he did because he is a pumpkin. I hope you guys find it useful!
One of the most important things when moving to a new country, and yet one that few people think about right away, is how to bring your money with you.
It is not as easy as taking the money out of your bank account, putting it in a bag, and bringing it with you over the border (D’s preferred plan). Firstly, there are limits to how much cash you can bring to Canada without having to disclose it (CAD $10,000, which is about USD $7,700 as of the day of this post); secondly, it is very risky and nerve-racking to be carrying around a large sum of money.
Some online forums we read when we were deciding what to do suggested getting a bank draft (which some places also call foreign drafts). We got a bank draft for a portion of our savings, but this turned out to be a bad decision, as the exchange rate that a big bank will give you when converting to foreign currency is typically well below the market rate.
For example, today, May 27th, 2018, $1 U.S. dollar (USD) is worth $1.298 in Canadian dollars (CAD). But at Wells Fargo, for instance, today their rate is $1 USD = $1.2263 CAD. While this may not seem like a huge difference, this means that if you are converting and transferring $10,000 USD, Wells Fargo would only pay you $12,263 Canadian dollars, while the market rate says your $10,000 USD are really worth $12,988 Canadian dollars. That is a difference of $725 CAD!
Market rate (Google):
Getting a bank draft was also unnecessary – there are many services available online that allow you to transfer money abroad pretty easily and for much cheaper.
So here is what I recommend you do: bring only the cash you think you need to put down a deposit for an apartment, for instance, buy some basic furniture, and pay for miscellaneous expenses. Then, as soon as you can open a bank account, sign up for a service such as TransferWise, OFX, or XE Money Transfer.
In our case, we chose TransferWise because it was very easy to sign up, they have very transparent fees, they are fast, and it was consistently cheaper than the rest. All we needed to open an account and transfer our money was 1) our U.S. bank account number, and 2) our new Canadian bank account number. The money can be transferred via ACH, which cost a bit more than a wire transfer but was much easier to do in our case. Some banks will require that you initiate a wire transfer in person, or they may have a low limit on how much you can wire online per day or per month, etc. So an ACH transfer was much less of a hassle.
If you were to transfer $10K today, this is how much you would get with Transferwise:
This is over $600 more than Wells Fargo. It is also pretty fast, taking only about 3 to 4 business days. While a wire transfer with your bank may be faster, if you need to transfer more than your bank’s daily, weekly or monthly limit, then you need to break up your transfers accordingly, and this could therefore take months. With Transferwise, you can initiate a new transfer as soon as your previous one clears.
This is also where having your money consolidated into only one bank account in the U.S. will make your life much easier. This way you only have to set up one bank account in TransferWise (or whatever service you decide to use). It is also much easier to keep track of all your transfers, if you do need to break them up.
Above all, do your research well in advance. Ask for guidance at your local bank branch, too, as they may be aware of other options you may have. But make sure you use a service that is safe, transparent, and where you get a good exchange rate, as it may save you several hundreds of dollars, as TransferWise did for us.
Note: So far we have only moved our savings. We do plan on moving our 401(k) during this tax year, but have decided to wait until we speak to a tax expert. There are lots of very complicated rules around retirement accounts, so I will leave that post until later.