Canada and the United States share a lot: a border, the same language and countless cultural practices, to name a few. But despite how close the two countries are in geographic and cultural terms, they don't share a currency. If you finish up a trip to Canada with Canadian cash left over, you'll have to exchange it for U.S. dollars in order to use it in the United States.

Scoring a Decent Exchange Rate

They may both be called "dollars," but U.S. and Canadian dollars have different values, so you'll have to deal with that when going through a foreign exchange for your money transfer. The exact exchange rate varies from day to day, but generally speaking, one USD is worth about 1.25 Canadian dollars. Knowing this and using a currency converter before any trip will be helpful for deciding how much money to convert into foreign currency for your trip.

Still, most currency exchange kiosks set their own (usually unfavorable) exchange rates and often charge a commission on top of that. The ideal goal when exchanging Canadian cash for American cash is to do so at a rate that's as close as possible to the actual exchange rate. Asking your financial institution for advice on how to do this could be a good idea as well.

Your best bet is to exchange your cash at a bank, since most major banks offer decent exchange rates, especially if you're exchanging only a modest amount of cash (not thousands of dollars). If your bank has a location near you in Canada, or if you have an account with a Canadian bank, you could also deposit your Canadian cash there and withdraw U.S. dollars from an ATM in the United States, since ATMs usually give even better exchange rates than banks do. However, in those cases, you'll have to watch out for ATM fees.

Using Canadian Dollars in the U.S.

In Canada, it's common in border towns to accept U.S. dollars, though the vendors are permitted to set their own exchange rates and often do so in a way that's unfavorable to their customers. However, the same practice isn't as common with Canadian cash in the United States. Canadian curerency is generally not accepted in the U.S., even in cities near the border, leaving travelers with no choice but to exchange their Canadian dollars for U.S. dollars when moving from Canada into the U.S.

Some Canadian banks, such as TD Canada Trust and Royal Bank, actually offer U.S. dollar accounts, so Canadians who have to travel to the U.S. on a frequent basis often open up U.S. currency bank accounts and credit cards. This eliminates the complication of exchanging currency for these travelers, but these accounts usually require a monthly fee, so it's important to do your homework before signing up for a U.S. dollar bank account with a Canadian bank.

Overall Tips

Of course, when you are searching for various currency exchange rates you want to find the best exchange rate with a low exchange fee. Unfortunately, it’s pretty rare to avoid transaction fees for any foreign transaction or when you go to exchange money, so just be smart and explore all of your options!