Users considering opening a savings account in Canada expect that they will be making purchases, and depositing and withdrawing in Canadian dollars, the local currency. However, if you regularly travel south to the U.S. or would want to add some diversification to your currency holdings, you could work with a Canadian bank that offers you the option of opening a savings account with U.S. currency.
What is a U.S. savings account?
The U.S. savings account allows users to save funds in American dollars instead of Canadian currency. Like any savings account, you can open them in Canadian and American banks. Of course, these accounts are not designed for daily transactions. You cannot manage your funds through ATMs or make funds transfers by email.
Why open a U.S. savings account?
By opening a U.S. savings account, you can avail of two main advantages.
- As a frequent traveler to the U.S., having a savings account with U.S. currency ensures that you have instant access to American dollars whenever you need them on your travels. In the process, you can save on the currency conversion fee and fluctuating exchange rates.
- You can diversify your funds into American and Canadian currency. This facility allows you to get full value for your money even if the value of the American currency rises against the Canadian dollar.
What are the advantages of U.S. savings accounts?
In addition to the advantages listed above, you can make use of several other benefits by opening a U.S. savings account:
- Similar to US chequing accounts and several Canadian savings accounts, you need not pay a fee each month on your U.S. savings account. As with most other accounts that banks offer, they typically allow you to make transactions over the internet and phone or at a physical bank branch.
- Although not a large sum, but you’ll receive interest on the U.S. savings account you maintain. For instance, you can earn an interest of 0.15% on the U.S. savings account with RBC. Should you open a U.S. savings account with any other financial institution, you’ll receive a tiered interest rate.
- Banks offer you competitive exchange rates as against any other exchange sources you may contact.
What are the disadvantages of U.S. savings accounts?
Along with the positives, there are several downsides to maintaining a U.S. savings account.
- Banks allow you only 1 or 2 free transactions each month. Each additional transaction incurs a fee of between $1 and $3. For this reason, these accounts aren’t suitable for your daily banking needs.
- Similar to U.S. chequing accounts, you cannot make electronic transfers on your U.S. savings accounts since they are not linked to the Interac network.
- Fluctuating rates of the Canadian and American currencies can result in loss of value for you depending on the rates at which you purchased them.
One thing to consider before opening a U.S. savings account
You might find that opening a savings account in the U.S. with a U.S. based bank or lender is more advantageous under certain circumstances. Like, for instance, if you’re the owner of property in the U.S. and/or regularly visit and conduct business in the country. You’ll earn higher interest rates on U.S. deposits and pay a more economical monthly charge. However, opening the account may require you to visit a physical branch and present your passport along with one other identification document such as a driver’s license.
As a businessman looking to conduct business or buy property in the U.S., opening and keeping a savings account in the U.S. can help you develop a robust credit score and history without the need for a social security number.
Given these reasons, you might want to make inquiries and explore the advantages of your options before opening a U.S. savings account.