Canadian banks allow you to hold deposits in foreign currencies, primarily US dollars but also euros, British pounds, and other major currencies. For newcomers receiving income from abroad, investors holding foreign assets, or frequent travellers, a foreign currency account can save significant money in exchange rate costs.
A foreign currency account (also called a multi-currency account or USD account) lets you hold, receive, and spend money in a currency other than Canadian dollars without automatic conversion. You avoid conversion fees when dealing in that currency.
If you freelance for US clients, receive dividends from US stocks, or are paid by a foreign employer, depositing directly into a USD account avoids forced conversion at bad rates. Convert to CAD only when the rate is favourable or when you need the Canadian dollars.
A USD chequing account with a linked USD Visa makes US purchases at the USD price with no conversion fee. The RBC USD Visa (tied to a USD account) is popular for this use case.
Snowbirds and US property owners often maintain USD accounts to receive US rental income, pay US property expenses, and manage US mortgages without converting every transaction.
Investors who buy US stocks in their RRSP, TFSA, or non-registered account benefit enormously from holding a USD side account. Norbert's Gambit — buying a Canadian ETF that trades on both TSX (CAD) and NYSE (USD) — lets you convert large amounts at near-mid-market rates, then hold in USD for future purchases.
When you transfer between your CAD and USD accounts at a bank, the bank uses its own retail foreign exchange rate. This is typically 1.5–3% worse than the mid-market rate. On $100 CAD, that can be $150–$300 in exchange costs.
Alternatives to reduce conversion costs:
The Canada Deposit Insurance Corporation (CDIC) insures eligible deposits at member institutions up to $100,000 per depositor per category. Since 2020, CDIC coverage extends to eligible deposits in foreign currencies — previously, only CAD deposits were covered. This means USD and other foreign currency deposits at CDIC member banks are now insured up to $100,000 CAD equivalent.
Interest earned in a foreign currency account is still taxable in Canada, converted to CAD at the exchange rate when received. If your foreign currency account is outside Canada (e.g., a US bank account), it falls under T1135 reporting requirements if the total cost basis exceeds $100,000 CAD.
Capital gains or losses arise if you hold foreign currency and the exchange rate changes between acquisition and disposal. The CRA treats foreign currency as a foreign property for tax purposes. Practical note: tracking the cost basis of USD held in an account is complex — many taxpayers simplify by converting regularly to avoid large unrealized FX positions.
For newcomers who need to manage multiple currencies (e.g., maintaining savings in home country currency while also using CAD), Wise Personal Account and Revolut (available in Canada) offer multi-currency wallets with competitive rates and the ability to hold balances in 30–40 currencies simultaneously.
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