[throwaway_32948]

If you are converting large amounts and you are comfortable with purchasing and selling stocks online then a viable option is to use Norbert's gambit. This involves buying stock in companies traded on both Canadian and US exchanges, such as TD. You buy on one exchange (in your case on a US exchange), journal over to the other exchange, and then sell on other exchange. With the right online broker, journaling is automatic, and the entire process takes a few minutes to complete.

The final costs for the exchange are the trading fees (typically $10 per transaction for an online broker), the bid-ask spread, and any fluctuation in price between the buy and sell price (this can be in either direction---gains are taxable). Fluctuations over periods of a few minutes should be small for a highly liquid and stable stock. Always use limit orders to protect against any unusual events such as a flash crash.

There are lots of links found through a web search that describe the process and which Canadian online brokers make this easy to do. Also see http://www.northernraven.ca/financial/NGcalculator.php for a calculator that helps you select which stock to use. You want to select a stock with high liquidity (typically translates in a low bid-ask spread) and also a high unit price (to minimize the relative bid-ask spread cost).

The calculator at the link above shows that using today's prices to convert $10k can save about $80 versus a 1% currency conversion cost by using one of a number of stocks.

[ashray]

Why not just use a forex broker instead? Better rates, lower spreads, and higher liquidity. I would personally recommend Interactive Brokers.

[throwaway_32948]

For large transactions, I don't think it's true that rates are lower using a forex broker. In the limit of large transactions, Norbert's Gambit fees approach the bid-ask spread cost, which should be lower than any forex fee.

For example, according to the calculator, converting $100k saves about $350 versus a 0.3% conversion fee. Even converting $10k is cheaper than 0.3%. What are Interactive Brokers fees?

Another reason is that you don't have to transfer your money out of your accounts to a third party. Everything happens within your brokerage accounts.

[ashray]

Interactive Brokers is your own brokerage account, they are a regulated broker that offers Forex in addition to the other stuff (stocks, options, etc.).

I'm not 100% sure on the fees but they are not even close to 0.3% for forex. It's pretty much around $2 for most trades (their example covers: USD 50,000 daily volume for EUR = USD 2.00). Here are the details of the fees: https://www.interactivebrokers.com/en/index.php?f=commission...

I think the reason IB charges are so low is because they deal with very large customers (banks, trading houses, etc.).

[throwaway_32948]

I looked into Interactive Brokers in more detail and you are correct that their fees are extremely low. They do not seem to charge a hidden "spread" fee, which is they usual method that forex traders hide their fees.

Based on some googling, there are secondary fees to consider such as minimum monthly fees and wire transfer fees, which might make it more or less attractive than alternatives depending on conversion amounts and regularity of transactions.

You mentioned that you use Interactive Brokers. Are you a Canadian citizen living in Canada that transfers money into and out of an Interactive Brokers account, exchanging USD and CAD?

[ashray]

No, I'm not Canadian living in Canada but I'm sure they have deposit options (local banks) in Canada. I have used it to convert small amounts of money before.

My email address is in my profile if you want to get in touch with more questions :)

[throwaway_32948]

I asked if you are a Canadian living in Canada because the devil is in the details when dealing with cross border transactions as a Canadian.

After some further research, it does seem like Interactive Brokers is a good option for the OP. For posterity, here are two blog posts by a Canadian describing how he uses Interactive Brokers: http://blog.plsoucy.com/2012/11/best-way-to-convert-usd-to-c... and http://blog.plsoucy.com/2013/03/converting-usd-cad-interacti...