BANKING ON BETTER SERVICE

Heading south for the winter? Cross-border banking is making your stateside finance management easier

Snowbirds are enjoying a new ease of banking with the advent of cross-border banking – a host of services specifically catering to Canadians visiting the U.S. to help manage their finances more seamlessly.

It’s good news for snowbirds who’ve had little joy banking abroad.

Back in 2001 when Toronto business owner Gordon King purchased his first home in a golf course community in Fort Myers, Florida, there was no online banking, no easy way to get funds from a Canadian bank to a U.S. bank and it was difficult to get utilities paid on time or square up store credit bills.

“At that time, the exchange rate wasn’t favourable to the Canadian dollar, so I decided to take out an open mortgage until things improved,” says King. “I opened a bank account at a U.S. bank to, among other things, obtain the mortgage, pay my utilities and get a VISA card.”

King had no credit history in the U.S., so his new American bank worked with his Canadian bank to approve the mortgage; initially, he could get only $1,000 credit on his VISA. He had to keep a close eye on his bank balance to ensure his account had enough money to cover expenses at all times. “Often, during the months we were in Canada, by the time I got utility bills in the mail and sent a cheque, it was already too late and our utilities had been cut off.”

His experience is not unique. Many snowbirds complain about the difficulties of getting credit, being hit with foreign exchange plus transaction fees to get cash and pay bills, writing cheques in U.S. funds only to have them rejected because U.S. retailers, utilities and trades are worried, among other things, about the risk associated with cheques coming from another country.

Cross-border banking aims to reverse this fortune. TIDIER TRANSACTIONS

Cross-border banking provides convenient and more cost-efficient banking, foreign exchange and finance solutions for those who spend significant time and money in the U.S. Some of the big Canadian banks with a presence in the U.S. are providing this service so Canadians can set up U.S. banking from their Canadian branch. “This isn’t just a U.S. account or VISA card at a Canadian bank,” explains Stephen Fine, president of snowbirdadvisor.ca. “In this case, you’re actually opening accounts and getting a debit and credit card through the U.S. arm of the Canadian bank.”

As with any banking service, the benefits and fees that go along with each product will vary. You need to carefully read the credit card contract to understand the terms of this legally binding document.

Cross-border banking easily transfers to and from your Canadian accounts and makes it simpler to get U.S. cash, cutting down on costs for foreign exchange in a number of ways.

“For starters, you’ll get a debit card for your U.S. account which will allow you to withdraw cash from American ATM’s that are affiliated with your bank for low or no fees, as well as make purchases from U.S. retailers in U.S. dollars,” says Fine. Conversely, if you were to use your Canadian debit card to get cash from an ATM or make a purchase in the U.S., you could be subject to hefty foreign exchange and banking fees.

You can also save on transaction fees by using a U.S. dollar credit card from a Canadian bank or their U.S. arm. “One thing travellers should know is that if you use your Canadian credit card in the U.S., you’re usually charged an additional 2.5 per cent foreign transaction fee in addition to any foreign exchange fees,” says Fine.

“A U.S. dollar credit card can help you save the 2.5 percent foreign transaction fee.”

Another benefit to cross-border banking is the ability to pay bills and transfer money online, which can now be done exclusively using U.S. dollars. This is a great advantage when paying utilities, rent or condo fees. And, in most instances, you can bank online relatively easily between your Canadian and U.S. accounts.

SATISFIED SNOWBIRDS

King is happy with his relationship with his American bank and many other snowbirds continue to set up accounts and credit with U.S. banks. But more and more, Canadians are opting to take advantage of cross-border banking through Canadian banks.

Dianne Low of Tillsonburg, Ont., purchased a vacation home in 2010. “We opened an account at the U.S. branch of our Canadian bank, which is linked to the Canadian account. We initially received a debit card, then later a credit card with our American address, which made purchasing retail items easier,” says Low. “I pay my accounts with telephone banking. It’s all very simple.”

While there are still “a few kinks to work out” according to Fine, much of the frustration, nuisance and additional fees of banking between countries is being eliminated. “The crossborder banking services are evolving rapidly. It’s becoming easier to bank across the border all the time. It’s important to check with your bank to see what new services are becoming available and to make sure you are dealing with the most current information.”

To find out what options are best for you and the procedures for setting up cross-border banking, talk to a representative at your bank or banks offering crossborder banking services.