The recent decline in the Canadian dollar has many Canadians wondering if t’s still worth shopping in the U.S.
In many cases, the answer is a resounding yes. However, to compensate for the lower Loonie, you’ll need to be a little more resourceful if you want to maximize your savings. To help you out, we’ve created a list of our top ten cross border shopping tips for Canadians.
1. Stay Overnight for Larger Duty Free Allowances
If you’re planning a shopping trip to the U.S., staying at a local hotel for one or two nights can really help stretch your savings, as duty free limits for Canadians increase the longer you stay in the U.S.
For example, Canadians who spend less than 24 hours in the United States aren’t entitled to a duty free allowance. If you extend your trip for longer than 24 hours, your duty free allowance increases to $200 per person, and for trips longer than 48 hours, your duty free allowance jumps to $800 per person. You can find more information about duty free allowances here.
If you do your research, you will find that some hotels in popular cross border shopping destinations offer discounted rates and shopping packages for Canadians who book directly with the hotel (as opposed to booking with a third party website or travel agent).
2. Minimize Foreign Exchange Fees
One area where Canadians can lower their cross border shopping costs is by reducing foreign transaction fees. If you make purchases in U.S. dollars, you are going to have to incur a fee at some point to convert your Canadian dollars to U.S. dollars (and vice versa). However, the amount you pay to convert your money can vary greatly, from as low as 1% to as high as 6%.
Banks, financial institutions and other businesses that offer foreign exchange services make money by charging a commission to convert your money from one currency to another. This commission is often referred to as a “spread”, which usually ranges from 1% - 3.5%. Some foreign exchange services, such as credit cards and ATM machines, usually charge an additional foreign transaction fee of 2.5% or more.
You can cut down on your foreign exchange costs by following these tips:
- Use Cash and Convert your Money Before you Travel: Cash can often be one of the most effective ways to make purchases in U.S. dollars. If you plan on exchanging your Canadian currency for U.S. dollars, we suggest converting your money before you travel to avoid finding yourself in a situation where you have to convert your money at an unfavourable rate. If you plan on converting your money in Canada, shop around first, as the rates offered by the banks can differ greatly, and many smaller foreign exchange services have better rates than any of the banks.
- Stick to Credit Cards with No Foreign Transaction Fees: While credit cards are a very convenient way to pay for and track your cross border purchases, be aware that most Canadian credit cards charge a foreign exchange spread ranging from 2% to 3.5% PLUS a foreign transaction fee of about 2.5%, which means your cost of converting money could be as high as 6% depending on your bank!
If you want to use a credit card to make U.S. dollar purchases, you should strongly consider getting one of the only no-foreign transaction fee credit cards available in Canada which offers both the convenience of a credit card and lower foreign exchange fees.
- Avoid ATM Machines in the U.S: While they can be convenient, ATM machines should only be used as a last resort to access foreign currency if you are in a pinch, as they often charge some of the highest currency conversion spreads in addition to other fees that can really add up. You may not even be aware of how much you are paying until you get home and see your next bank statement.
3. Join Retailer Email Lists and Loyalty Programs
Many retailers offer a one-time discount or coupon if you sign up for their email list or loyalty program. Signing up is fast, easy and free, and the discounts can be significant (5, 10 or even 15%). We suggest looking for these offers before you head to the U.S. to shop, as some retailers require you to sign up online, print your coupon and redeem it when you go shopping, while others allow you to sign up in-store.
Once you receive your discount, you can always opt out of these programs if you find you are receiving too many unwanted emails.
4. Fill up on Gas in the U.S.
If you are driving to the U.S. to go shopping, we suggest filling up on gas as often as possible south of the border, as gas is usually 20 – 25% cheaper in the U.S. than Canada. If you want to estimate exactly how much you are saving by filling up in the U.S., you can use our Gas Savings Calculator.
5. Time your Shopping Trips Around Sales
While there are still great every day savings to be had in the U.S., Canadians can really hypercharge their cross border savings by timing their shopping trips around sales at U.S. malls, department stores and retailers, which usually offer significantly steeper discounts and greater selections than Canadian sales.
There are many sales to watch for throughout the year (at least 10 - 15 big ones), including:
- National Holiday Sales (Labor Day, Columbus Day. Fourth of July, etc…)
- Seasonal Sales (Winter, Spring, Summer and Fall)
- Event Sales (Black Friday, Back to School Shopping, Christmas, etc…)
- Annual Retailer Sales (a number of U.S. department stores and retailers have big annual or semi annual sales)
6. Look for Coupons and Discounts
Many businesses periodically offer coupons and discounts that can help you stretch your cross border savings even further. And remember, these offers aren’t limited to clothing and electronics , they can also provide savings on hotels, dining, groceries and activities.
Some places to search for coupons and discounts include CrossBorderShopping.ca, mall and retailer websites and newspapers.
7. Shop in Tax Free States
You can save money by shopping in one of the following U.S. states that has no sales tax or offers a sales tax refund program for visitors from outside the United States:
Close to the border, Minnesota has no sales tax on clothing and shoes and Pennsylvania has no sales tax on clothing and shoes (as well as some baby products and toiletries). Montana, New Hampshire and Oregon have no state sales tax and North Dakota has a sales tax refund program for Canadians.
A little further south, Louisiana and Texas both have programs that offer sales tax refunds to visitors from outside the United States for purchases made at select retailers.
8. Shop Online & Ship to the Border
Canadians can get great deals by cross border shopping online with U.S. retailers, where prices and selection are often much better than in Canada. Unfortunately, the cost of shipping to Canada from the U.S., duties and taxes can sometimes negate any cost savings, so make sure to account for all of your costs before you order.
One way to avoid costly international shipping fees is to have your items shipped to a U.S. shipping address just across the border where you can drive to pick them up. There are many U.S. shipping address locations along the border that provide this service, some for as low as $5 - $10. This allows you take advantage of free shipping within the U.S. offered by many retailers.
You can learn more about shipping to the U.S. border here. You can also use our Amazon.com Canada vs. U.S. Price Comparison Tool to compare prices on Amazon’s Canadian and U.S. websites and see where the best online deals are.
9. Reduce Mobile Phone Roaming Charges
Using your mobile phone in the United States can cost you a fortune. We’ve all know the horror stories of travelling to the U.S. only to return home to a massive cell phone bill in the hundreds or even thousands of dollars. To avoid becoming a victim of outrageous mobile roaming charges from your carrier while shopping in the U.S., you can try some of these options:
- Turn your data plan setting to “off while roaming”: While this should help you avoid data usage charges while you are in the U.S., it also means you won’t be able to receive emails, access the internet or use apps that need updating. You also won’t be able to make or receive phone calls or check your voicemail without incurring massive roaming charges
- Use free WiFi while in the U.S.: If you don’t need to make or receive phone calls, you can search for and connect to open WiFi networks while in the U.S. to receive data. Of course, you’ll be limited to accessing data in places where open WiFi networks are available.
- Use Viber, Skype or a similar service for phone calls: These services allow you to make phone calls to other users for free or at a very low cost, but again, you will need an open WiFi connection to use them and you won’t be able to receive incoming calls on your mobile phone number without incurring big data roaming charges from your carrier.
- Get a U.S. SIM card: There are a number of great services that offer U.S. SIM cards for Canadians. These SIM cards give you a U.S. phone number and offer deep discounts on phone calls and data. However, they don’t allow you to use your Canadian phone number and can sometimes be a little confusing to configure the first time.
- Get a mobile roaming package with your cell phone carrier: As a last resort, you can get always get a roaming package from your mobile carrier, although these packages are usually very expensive, inflexible and don’t include much talk time or data.
10. Do your Research in Advance
Advance planning for your cross border shopping trip can save you time and money. Where possible, decide which malls and retailers you want to visit ahead of time and prepare a wish list of the items you want to buy so you can compare prices for these items in the U.S. and Canada before your shopping trip. This will give you an idea of how much you can save, which items are worth purchasing in the U.S. and which items you are better off buying in Canada.