TD cross-border banking is regarded as one of the top U.S. bank accounts, yet many Canadians opt for a TD U.S. Bank account. While this choice is perfectly valid, TD cross-border banking offers significant advantages for individuals earning U.S. dollars or spending time in the U.S. Here, we will explore the distinctions between TD cross-border banking and a TD U.S. Bank account.
What is TD cross-border banking?
TD cross-border banking refers to a TD Bank account that is based in the United States. This option is particularly useful for those who earn in U.S. dollars or frequently visit the U.S. By having a U.S.-based account, you can easily provide employers in the U.S. with your direct deposit details. The account comes with a debit card and the option for a credit card, enabling you to access U.S. TD ATMs without incurring fees. Although there is a monthly fee of U.S. $4.95, this can be waived if you maintain a minimum balance of U.S. $3,000.
While it’s feasible to receive payments from U.S. employers directly into Canadian accounts, both you and your employer may face wire transfer fees that diminish your earnings over time. By opting for TD cross-border banking, you can sidestep these costs. Additionally, obtaining a credit card through this account may help you establish a credit score in the U.S.
What is a TD U.S. bank account?
A TD U.S. bank account is a Canadian bank account designed for holding U.S. dollars. Its primary benefit lies in providing a secure location for your U.S. funds. If you possess a TD U.S. credit card, you can conveniently pay your bills using your TD U.S. bank account.
Even if you do not earn U.S. dollars consistently, you can purchase them and deposit those amounts into your U.S. bank account, which can be advantageous for those who prefer to buy when the exchange rate is favorable.
This type of account suits individuals who sporadically deal with U.S. dollars but do not receive them on a regular basis.
Why consider TD cross-border banking?
Individuals choose TD cross-border banking to eliminate fees associated with payments from U.S.-based clients. For instance, I had a monthly client in the U.S. whom I billed U.S. $200. Each time I received payment, a wire transfer fee of $17.50 deducted 9% of my earnings, which was excessive. Transitioning to this account ensured I received the full payment.
Another scenario in which TD cross-border banking proves beneficial is when receiving U.S. dollar payments via PayPal. Surprisingly, PayPal does not permit the transfer of U.S. dollars to a Canadian-based U.S. bank account, requiring you instead to send funds to a regular bank account where they are converted to Canadian dollars at a less favorable rate. With TD cross-border banking, you can transfer U.S. dollars directly to your TD U.S. bank account without incurring fees (details will follow).
Additionally, those residing in the U.S. with U.S.-based expenses can find TD cross-border banking useful. You can pay bills directly from your account without worrying about currency conversion issues. Alternatively, using your U.S.-based TD debit card allows for withdrawals from ATMs without incurring extra fees that would come with a Canadian debit card.
How to establish TD cross-border banking
Establishing TD cross-border banking is straightforward, as it doesn’t require a U.S. address or an in-person visit to the U.S. Simply visit any TD branch in Canada and express your wish to open a TD cross-border banking account. You must be an existing TD customer in Canada.
You will complete some initial paperwork, and if you don’t already have a TD U.S. dollar account, now is a good time to open one. Following this, TD will arrange a conference call with a representative in the U.S. Once connected, they will assist you in setting up your TD cross-border banking. Interestingly, you will have the opportunity to choose a home branch location; however, this choice does not affect access to TD’s ATMs.
Once your setup is complete, you’ll receive your account login for TD’s U.S. platform and a debit card will be sent to you. Expect delivery within a few days, but don’t hesitate to follow up if your card doesn’t arrive within two weeks.
How to move U.S. dollars between accounts
Having both TD cross-border banking and a TD U.S. bank account allows for easy transfers of U.S. dollars across the border with minimal fees.
In Canada, you can transfer up to U.S. $2,500 daily from your Canadian account to your U.S. account. While a transfer fee exists, it will be refunded within five business days. For amounts exceeding this limit, reach out to the TD cross-border support line at 1.877.700.2913 and have your U.S. access card on hand for verification. You can expect to see the transferred funds in your account within 48 hours.
Once the money is deposited, you have full control over it.
How to change U.S. dollars to Canadian dollars
If you need to convert U.S. dollars into Canadian currency, I have a comprehensive guide detailing the best currency exchange methods available, which covers everything from the simplest to the most cost-effective options. Here are a few methods I prefer.
If you’re looking to convert a substantial sum, Norbert’s Gambit is a cost-effective strategy, though it requires some effort. It involves transferring U.S. dollars to a U.S. trading account, buying a stock or ETF listed on both the NYSE and TSX, and then journaling the shares over to Canada before selling them. This method primarily incurs trading fees. For a detailed walkthrough, refer to my Norbert’s Gambit guide.
An alternative for converting U.S. dollars to Canadian dollars is an online currency exchange service like OFX. This platform not only allows conversions to Canadian currency but also provides the ability to exchange for over 50 currencies, which is beneficial for international transactions. Typically, the greater the sum you are exchanging, the more you stand to save.
The simplest method is to convert directly through TD, although the exchange rates may not be the most favorable. For regular smaller conversions, consider using Wise (formerly TransferWise).
Conclusion
While some might find the process of setting up TD cross-border banking tedious, its immediate advantages are clear. Additionally, consider the long-term implications: establishing a bank account is essential for building credit history in the U.S. A cross-border account is the most straightforward approach, especially since you do not need a physical address in the U.S. Furthermore, if you ever aspire to acquire U.S. credit cards as a Canadian resident, having a cross-border account will be beneficial.