Cross Border Gift Buying - Online & Destination Shopping for Canadians heading to the US
October 15, 2022
Cross-border gift buying is common amongst many Canadians. In some cases, some Canadians who live close to the Canada/US border will drive to the US to shop as a regular part of their weekly purchases. Other times, Canadians will fly to the US, but travel is only one version of cross-border gift buying. Online shopping is also a beloved form of cross-border gift buying.
There are many reasons people love cross-border gift buying, and whether frequently done or done only on occasion, using two currencies to shop can be a new skill to learn to benefit from the experience. Understanding the USD/CAD exchange at the point of purchase or through their credit card can be a problem if their bank or provider doesn’t have a great exchange rate.
VBCE customers are savvy cross-border shoppers, whether for personal or business purposes. We regularly share options with customers to maximize their experience and help them manage post-purchase payments efficiently and conveniently. This comes in handy when using their USD credit cards or transferring between US/CAD bank accounts because they realize their bank doesn’t give the best exchange rate in that transfer. We bridge the transfer between currencies and exchange funds so they can get the best rate and pay less for their overall purchases; this can be done over the phone, in person, or as part of our VBCE Online platform.
Why People Shop Across The Border
Two of the most common reasons for cross-border shopping are a) cheaper costs of certain items and b) the availability of certain items in different places. With the holiday season just around the corner, we’ll see Canadians looking to the US for Black Friday savings.
It’s good to think strategically to save money through a good bargain, which sometimes means going to the US.
“products like hiking gear, medicine, cheese and even new cars are often cheaper on the Canadian side. [...] Over in the States, shoppers can grab the best prices on items like jeans, towels, luxury brands and toys, as well as small-scale electronics like video games and wearable tech.” - Narcity
Saving money isn’t the only reason you should know how cross-border shopping works. If you are in the US on vacation or business and are buying anything, be it food, hotel rooms, souvenirs, gifts, etc., you will be managing the currency exchange rate daily.
Gifts have their own set of rules:
“While you are outside Canada, you can send gifts free of duty and taxes to friends at home in Canada under certain conditions. To qualify, each gift must not be worth more than CAN$60 [...] If the gift is worth more than CAN$60, the recipient will have to pay regular duty and taxes on the excess amount. It is always a good idea to include a gift card to avoid any misunderstanding.” - Border Buddy
You just have to ensure that the gift you’re sending doesn’t include any sort of tobacco product, alcohol, or advertising material.
Common Destinations For Destination Shopping
When you live a short drive from the border to the US, it’s relatively common for you or people you know to go into the US to do some shopping. People in Vancouver will often go to Blaine, Washington for groceries or gas, Bellis Fair Mall in Bellingham, Washington for clothing or electronics or further south to Seattle and head down the I-5 in search of luxury outlet malls. People from Toronto will stop in Buffalo, Niagara Falls (the US side), and even New York.
Common places people travel to in the US either by car or plane to shop are Las Vegas, Los Angeles, New Your City, Palm Springs, and Detroit. If you’re shopping somewhere you have to fly to, keep in mind the cross-border restrictions and the flight restrictions for what you can bring back.
Cross-Border Shopping Online
Buying things online from a US shop rather than a Canadian one can sometimes be cheaper, depending on what you’re looking for, but you need to keep shipping costs and customs fees in mind.
When shopping online, it’s good to make sure you notice whether the item’s listed price is in CAD or USD. When both countries use the same dollar sign, you might not notice that whatever you’re buying is in the wrong currency until what you thought was $20 comes out of your Canadian bank account as $35.
Dealing With The Exchange Rate
Often, banks charge extremely high fees for exchanging currency, such as CAD to USD. This is normally a full 3% which can add up quickly when cross-border shopping. If you’re using a Canadian credit card to purchase items in the US, keep this in mind.
There are solutions out there that can help you save that money; we are one of them. Look into what bank you’re using and their offered exchange rate, then look into the cash rates at VBCE as a good guide on what a strong rate looks like. Our services allow you to get the best exchange rate out there, and we have been in business for over 30 years. We are the most trusted currency exchange company in Western Canada.
Paying for purchases at Point of Sale (POS)
You’ve found the perfect item, you line up, and when it’s your turn to pay, you hand over your Canadian currency credit card or ATM card at the point of sale (POS), and you see a choice on the payment terminal. Would you like to pay for your purchase in USD or CAD currency? This usually stops people in their tracks…what is the difference? In most cases, shoppers don’t know the daily exchange rate, so they wonder if this is a good rate being offered to them. Or not? We can make this decision easy for you: You should always opt to pay in local currency and not accept the exchange rate at the card machine. You do not get the best exchange rate at the point of sale.
This option is called a dynamic currency conversion (DCC) fee and may be offered by the merchant at the point of sale but is optional to the consumer. If you aren’t prepared to act quickly, you may select a choice that isn’t as beneficial to you, and you will not get the best rate.In the case of shopping in the US, opt for the USD amount.
If you are using a USD credit card from a Canadian bank at the POS, see our advice for getting the most out of this option below.
Getting Cash from a ATM when in the US
If you are already in the US and need US dollars quickly, you can go to an ATM, but these often charge high exchange rates fees and an extra transaction charge. ATMs are one of your least economical options. Planning before you leave Canada gets you much more in exchanged funds putting more in your pocket to spend while travelling.
Investopedia does a good job of sharing the nuances between the foreign transaction fee and currency conversion fee if you’d like to read more about the complexity of credit card and ATM use when shopping abroad.
Paying for your US Credit Card once the shopping and travel are done
Many Canadians have a USD Credit Card issued by their Canadian bank. Most commercial banks, such as CIBC US Dollar Aventura card or the RBC US Dollar Visa Gold, are good examples of what is offered. You’ll notice language around saving on foreign exchange fees, but this isn’t tied to giving you the best exchange rate.
If you are paying your USD credit card in Canada with existing US dollars, then this is a straight transfer between accounts at your bank. However, if you need to transfer funds from your Canadian dollar account to your USD credit card for payment, you are not getting the best exchange rate from your bank.
You can choose to bypass the exchange rate offered to you by your bank and work with a currency exchange firm, such as VBCE, to withdraw the Canadian funds, exchange them for you at a much better rate, and then have the firm transfer the USD into your USD bank account or send a bill payment to your USD credit card on your behalf. At VBCE, we offer customers with recurring needs an online platform that lets you take these steps yourself, including booking the best exchange rate on the FX market. For occasional needs, we offer a full-service customer support team to manage this on your behalf.
The bottom line is that to save money, the bank won’t give you the best rate, working with a currency exchange firm will and it’s easy and convenient to set up.
What To Keep In Mind Crossing Back In To Canada
It’s important to note that to shop across the border in the US duty-free, Canadian residents must be there for 24 hours. That means you need to find a place to stay and take note of if that’s going to cost you money, such as a hotel or Airbnb. The Canadian Government outlines more specific duty-free rules here:
“Residents can bring back tax and duty-free goods valued at CAN$200 after being away for 24 hours, and goods valued at CAN$800 after 48 hours. There are no personal exemptions for same-day cross-border shopping trips, so be prepared to pay tax on those purchases and possibly duty.” The Government of Canada shares info aroud crossing the border, as part of their information to Canadians.
These rules are similar to the reverse situation–a US citizen shopping in Canada.
Understand that Canadians living in the same household cannot combine their limits. Also, alcohol and tobacco purchases are not included in the $200 limit. They have their rules, such as if a Canadian is in the US for less than 48 hours, alcohol and tobacco purchases will be taxed. Stay up-to-date on the Canadian Border Services rules for cross-border purchases of alcohol and tobacco.
Cross-border shopping is here to stay
Cross-border shopping is super common for Canadians, so make sure you have the right strategy as you plan your visit to the US. Know the rules, the exchange rate, and how best to pay for purchases to get the most from the experience.
Interested in learning more about the cross-border shopping options at VBCE? Connect with us by phone or email (fxonline@vbce.ca) or visit us at one of our four locations in the Vancouver area. Related articles about managing USD to CAD currency exchange needs: