US dollar accounts in Canada: who they help, CDIC coverage and the real conversion cost
If you get paid in US dollars, travel south often, shop on US sites or send money to family in the US, every conversion quietly costs you. A USD account is one way people avoid paying that cost twice. Here is how they work, what CDIC does and does not cover, how the tax side works, and a calculator to see whether the conversions you make today add up to real money.
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Conversion cost calculator
What do your USD conversions cost in a year?
The 1.40 rate is illustrative, not a current rate; enter today's rate. The 2.5% default matches the conversion charge in FCAC's credit card example. Banks also convert at their own exchange rate, which can differ from the Bank of Canada's published rate; check your own agreement. A round trip applies the charge twice (for example, US income converted to CAD, then back to USD to pay a US bill).
What a USD account is
A US dollar account is a deposit account at a Canadian financial institution that holds US dollars instead of Canadian dollars. Money in it stays in USD until you choose to convert. People use them as a chequing account (to pay and receive in USD) or as a savings account (to hold USD and, at some institutions, earn interest).
The point is not the account itself. The point is the conversions you avoid. Every time money changes currency, the institution applies an exchange rate and, often, a conversion charge or spread. A USD account lets USD that comes in stay USD until USD needs to go out.
Who it helps, and who it does not
| Situation | Does a USD account help? | Why |
|---|---|---|
| You earn in USD (freelance clients, US employer, rental income) | Often | You can hold the USD and spend it in USD later, instead of converting on arrival |
| You travel to the US often | Sometimes | Helps if you load it when you choose and spend from it, rather than converting at every purchase |
| You pay US bills (tuition, a US mortgage, family support) | Often | Paying USD from USD avoids converting on every payment |
| You shop on US sites a few times a year | Rarely | The yearly conversion cost is small; an extra account may cost more in fees than it saves |
| You never touch USD | No | Nothing to save |
Before opening one, check the account's monthly fee and transaction fees against the yearly conversion cost from the calculator. A fee that wipes out the saving is a hidden fee like any other.
Is a USD account CDIC insured?
Yes, if it is an eligible deposit at a CDIC member institution. CDIC lists "deposits in Canadian or foreign currency" among eligible deposits. Coverage for foreign currency deposits started on April 30, 2020, when CDIC extended insurance to eligible deposits held in foreign currencies (and to terms longer than five years).
- Each insurance category (deposits in one name, joint deposits, TFSA, RRSP, FHSA and so on) is insured separately up to $100,000, including principal and interest.
- CDIC's limit is in Canadian dollars, so a USD balance counts toward the same category limit as your CAD deposits at that institution, at its Canadian dollar value.
- Mutual funds, stocks, bonds, ETFs and cryptocurrencies, including stablecoins, are not covered, whatever currency they are in.
Our CDIC guide shows how the categories add up, and credit unions are covered by provincial insurers instead; see our credit union guide.
Where the conversion cost hides
FCAC explains how card conversions work: the institution applies an exchange rate, then a foreign currency conversion charge. Its example: a €1,000 purchase at a rate of 1.45 is $1,450, and a 2.5% conversion charge adds $36.25, for a total of $1,486.25. FCAC also notes that some transactions are converted to US dollars first and then to Canadian dollars, and that refunds can come back at a different rate because exchange rates change daily.
On a bank account conversion there is often no separate "charge" line at all: the cost is built into the exchange rate the bank gives you, compared with the mid-market or Bank of Canada rate. That is why it is easy to miss. Our foreign transaction fee guide covers the card side in more detail.
Worked example: the US-paid freelancer
Daniel invoices a US client US$2,000 a month (US$24,000 a year) and pays about US$5,000 a year of US software and travel costs. Assume an illustrative rate of 1.40 and a 2.5% cost each time money is converted.
- No USD account: the US$5,000 he later spends in USD is converted twice: in as CAD, then back out as USD. That US$5,000 is C$7,000 at 1.40. Cost: C$7,000 × 2.5% × 2 = C$350 a year.
- With a USD account: he keeps US$5,000 in USD and spends it directly. Those conversions cost C$0. He still converts the other US$19,000 to CAD once, as before.
- Saving: about C$350 a year, or C$1,750 over five years, before any account fee.
If the USD account charged a monthly fee, he would compare it to that C$350. A $4 monthly fee, for example, is $48 a year: the saving would still win. A $30 monthly fee ($360 a year) would not.
Tax on USD interest
Interest earned in a USD account held in a regular, non-registered account is taxable income, like interest in CAD. The CRA asks you to report foreign currency amounts in Canadian dollars, generally using the Bank of Canada exchange rate on the day the income arose; an average rate for the period can be accepted in some situations. Interest goes on line 12100 of your return. Our guide to HISA interest tax covers how interest is taxed in general.
Options people compare
| Option | What it changes | Watch for |
|---|---|---|
| USD chequing account | Receive and pay in USD without converting | Monthly and transaction fees |
| USD savings account | Hold USD, sometimes with interest | Interest is taxable and reported in CAD |
| Card with no foreign transaction fee | Removes the conversion charge on card purchases | The exchange rate itself still applies; annual fee |
| Convert in larger, planned amounts | Fewer conversions at a time you choose | The spread still applies each time |
| Stay all-CAD | Simplest, one account | Conversion cost on every USD transaction |
These are options to understand, not recommendations. FCAC's Account Comparison Tool lists account fees, and more of our calculators are on the tools page.
How to decide whether a US dollar account is worth it
- Add up how much USD you receive and spend in a year from your statements.
- Find the conversion charge on your card agreement and compare the rate your bank gives you to the Bank of Canada rate.
- Run the numbers in the conversion cost calculator, using two conversions for money that goes in and back out.
- Check the monthly and transaction fees of the USD account you are considering.
- Confirm the institution is a CDIC member, or a provincially insured credit union, before you deposit.
- Keep a record of USD interest so you can report it in Canadian dollars at tax time.
Questions people ask
Is a US dollar account in Canada CDIC insured?
Yes, if it is an eligible deposit at a CDIC member institution. CDIC has covered eligible foreign currency deposits since April 30, 2020, up to $100,000 in Canadian dollars per insurance category.
Does my USD balance count toward the same $100,000 CDIC limit?
Yes. The limit is per category at each member institution, in Canadian dollars. A USD deposit in your name counts toward the same "one name" category as your CAD deposits there.
Do I pay tax on interest in a USD account?
Yes, in a non-registered account. The CRA asks you to report it in Canadian dollars, generally using the Bank of Canada exchange rate on the day the income arose, or an average rate where that is accepted.
Is it cheaper to pay with a USD account or a Canadian credit card in the US?
It depends on the conversion charge on your card and the fees on the account. FCAC's example uses a 2.5% charge on top of the exchange rate. A USD account avoids the conversion when you already hold USD.
Who should consider a US dollar account?
People who regularly receive USD, pay bills in USD or travel to the US often. If you only buy something in USD a few times a year, the account fees may cost more than the conversions.
Can I get a refund in a different amount if I return something bought in USD?
Yes. FCAC notes that refunds on foreign currency purchases can post at a different exchange rate than the original purchase, so the Canadian dollar amount can differ.
Looni reads your statements and adds up every foreign transaction and conversion charge, line by line, so you can see if a USD setup would pay for itself. Read-only, no advice.
Sources
Canada Deposit Insurance Corporation, What's covered (deposits in Canadian or foreign currency are eligible, $100,000 per category including principal and interest, products not covered) and the Deposit Insurance Information By-law bulletin, April 2020 (foreign currency deposits eligible as of April 30, 2020); Financial Consumer Agency of Canada, How credit cards work (exchange rate plus conversion charge, €1,000 at 1.45 with 2.5% example, conversion through US dollars, refunds at a different rate); Canada Revenue Agency, Conversion of foreign currency and Line 12100. The 1.40 exchange rate and the example are illustrative; the arithmetic is ours.
Sending money overseas instead? See international money transfer fees and how to measure the exchange rate markup.