Navigating Your U.S. Travel Budget with a Weak Loonie
It’s no secret that times are tough right now for the Canadian dollar. Between persistent inflation, global economic uncertainty, and – most recently – the threat of a trade war with the United States, the Canadian dollar is trading at some of the lowest levels in years.
For Canadian snowbirds, a weak Canadian dollar can translate into hundreds or thousands of extra dollars spent on their annual winter getaway. The expenses have become so high that some snowbirds have even decided to sell their U.S. properties and migrate back to the Great White North.
For most snowbirds, however, there’s no need to take such a drastic step. With the right strategies, you can stretch your Canadian dollars further and keep costs down to a manageable level. Follow these money-saving tips to minimize costs and maximize value while spending time in the U.S. this winter.
1. Minimize Currency Exchange Costs
In an environment where one Canadian dollar buys just $0.70 USD or less, anything you can do to gain a couple of extra pennies on the exchange rate can make a huge difference over time. Here are some hacks to help you get as favourable an exchange rate as possible.
- Use a No-Foreign-Transaction-Fee Credit Card: Most Canadian credit cards charge a 2.5% foreign transaction fee on U.S. purchases. These fees can easily add up to hundreds of dollars over time – which, when you’re already dealing with an unfavourable exchange rate, feels like an extra punch in the gut. Depending on how often you’ll be swiping your card south of the border, it may be worth switching to a no-foreign-exchange fee credit card like the Scotiabank Passport Visa Infinite or the Home Trust Preferred Visa. While the Scotiabank Passport Visa Infinite card comes with an annual fee of $150, the amount saved on foreign transaction fees in combination with earned travel rewards can make it well worth it. The Home Trust Preferred Visa, on the other hand, is annual-fee free!
- Exchange Money at Competitive Rates: Carrying cash is always a good idea in the United States, since you may still come across merchants who don’t accept credit card. When converting Canadian dollars to U.S. greenbacks, be sure to avoid airport kiosks and foreign banks since they often provide poor exchange rates. Instead, exchange your currency before you go at your local bank or credit union.
- Open a U.S. Dollar Bank Account: If you plan on spending lots of time in the U.S., it can be well worth it to open a U.S. dollar account with a Canadian bank. This approach allows you to exchange money when the rate is favourable and to avoid frequent conversion fees. Buying and holding U.S. dollars in a bank account, especially an interest-bearing account, is a great way to protect yourself from the risk of future weakening of the loonie.
- Monitor Exchange Rate Trends: For snowbirds who know they will be spending a certain amount of time in sun spots like Florida or Arizona each winter, it’s wise to plan ahead and keep an eye on exchange rates throughout the year. Make purchases when the CAD is stronger to get more value for your money.
2. Save on Shopping and Dining
Shopping and dining in the U.S. can be costly, but for those who are willing to be flexible or to spend a bit of extra time hunting for deals, there are lots of savings to be had. Keep your spending in check with these strategies.
- Leverage Coupons: The U.S. is the country of the coupon. You’d be amazed at how much you can save by hunting for coupons prior to going shopping. Keep an eye on your mailbox for physical coupons, download the apps of the stores you do most of your shopping at, and – most importantly – ask the store employees about current deals on offer. If you’ll be shopping online, apps like RetailMeNot, Rakuten, and Honey make finding discount codes a cinch.
- Don’t Be Afraid to Price Match: Many U.S. retailers like Walmart, Target, and Home Depot offer price-matching. It can be worth it to spend the extra time comparing prices with other retailers to get the best price possible. Remember that Walmart and Target sell groceries too, so you can use this strategy to keep your grocery prices down also.
- Choose Home-Cooked Meals Over Restaurants: While grocery prices in the U.S. aren’t exactly cheap, they still tend to be cheaper than restaurant prices. Cutting back on your eating-out budget is one of the best ways to save money.
- Utilize Happy Hours and Daily Specials: For those occasions when you do decide to treat yourself to a meal out, call ahead to ask about deals. Many restaurants and bars in the U.S. offer happy hour discounts on drinks and appetizers. It may be worth eating at 6pm rather than 8pm if you can shave $20 or more off your bill!
- Stock Up Before Leaving Canada: Certain items, like toiletries, over-the-counter medications, and electronics, may be cheaper in Canada due to the poor exchange rate. Buying these before your trip can help you avoid inflated U.S. prices.
3. Save on Travel and Telecommunications
Travel and transportation costs are another significant budgetary item to consider when wintering in the U.S. With some planning and creativity, you can keep these costs way down.
- Use Canadian Loyalty Programs: If you collect points through Aeroplan, RBC Avion, Amex Membership Rewards, or similar loyalty programs, redeem them for flights and other travel expenses to get the most bang for your buck.
Save the Rental Car Expense: U.S. rental car prices have gotten expensive, and it doesn’t help when you’re paying in Canadian dollars. Skip the rental car entirely by hiring a driveaway service like Cross Country Valet to deliver your personal vehicle down to your winter getaway address. You still get to enjoy the convenience of flying down while avoiding costly rental car fees. - Optimize Your Cell Phone Plan: Avoid costly roaming charges from Canadian carriers by choosing a snowbird-friendly cell phone plan that includes cross-border data, talk, and texting. Alternatively, consider using a prepaid U.S. SIM card from providers like Mint Mobile, T-Mobile, or AT&T if you’re happy with your current cell phone plan but don’t want to pay for roaming.
4. Optimize Your Investment Portfolio
For Canadians who frequently deal with U.S. currency, including snowbirds, investing in U.S. stocks or bonds is a great way to hedge against exchange rate fluctuations. After all, if the Canadian dollar is falling against the U.S. dollar, but you’re earning most of your money from U.S. investment income, then you have much less to worry about.
- Balance Your Portfolio with a Healthy Mix of U.S. ETFs and Dividend Stocks: Investing in U.S.-based ETFs or dividend-paying stocks can provide exposure to the U.S. market while earning in U.S. dollars. If you’re going to be spending a lot of time and money in the U.S., it makes sense to earn in that currency.
- Use Norbert’s Gambit to Convert Currency via the Stock Market: A technique called Norbert’s Gambit allows investors to convert CAD to USD at minimal cost by buying, journalling, and then selling shares of a stock that is transacted in both CAD and USD through an online brokerage account. Using this technique, you could change $10,000 Canadian dollars into U.S. dollars for around $15 in commission fees rather than the typical 1.5% conversion fee ($150).
Final Thoughts
While the high exchange rate can make U.S. travel more expensive for Canadian snowbirds, these money-saving strategies can help mitigate costs. By being mindful of where and how you exchange money, taking advantage of deals and discounts, and diversifying your investment portfolio to earn in U.S. dollars, you can make your money go a lot further. During periods of weak Canadian dollar growth such as we are experiencing now, these strategies can make all the difference.
Next time you travel to the U.S., use these tips to save money and make the most of your trip!
Heading down to the U.S. this winter? Learn more about our car transport service for snowbirds.