Vacationing in Canada means a chance to put the country's own currency to good use, with its famously vibrant colors and amusing nicknames. But if you have some U.S. dollars to burn before moving on to Canada's loonies, toonies and bank notes, you're in luck: Many Canadian retailers accept cash in U.S. currency. However, you're likely to run into a couple of obstacles when using usd in Canada, so make sure to do your homework before handing an American dollar to a Canadian cashier.

Exchange Rates

It’s important to know the foreign currency exchange rates before you go. Though the exchange rate fluctuates, you can expect one Canadian dollar to be worth about 80 cents compared to one U.S. dollar, which means Americans might score some good shopping deals in Canada. However, that's not always the case for Americans hoping to use U.S. currency at Canadian retailers. Though you shouldn't have an issue using American cash at most major retailers and tourist destinations in Canada, keep in mind that Canadian retailers are free to set their own exchange rate between Canadian and U.S. currency, and they'll most likely do so in a way that's unfavorable to the customer.

Canadian banks will likely offer better exchange rates between U.S. dollars and Canadian dollars. Otherwise, you should be able to make the currency exchange at airport kiosks, border crossings and shopping malls. The easiest way to obtain some Canadian cash is with your credit or debit card via an ATM, but exchange rates vary based on ATM cards, and most machines charge an atm fee of about $5. The best exchange rates are usually found at border towns or other Canadian cities, not in big airports or malls.

Where to Use U.S. Dollars

It's common for Canadian retailers to accept American currency, but it's not universal. Your best bet for paying in American cash in Canada is in border areas and tourist destinations, such as parts of Ontario north of the Michigan border; tourist-heavy hotels, restaurants and shopping spots; and areas that receive a lot of foot traffic from Americans, such as the national parks in British Columbia. However, smaller cities and retailers in rural areas are more likely to require cash payments in Canadian dollars. Moreover, most coin-operated machines, such as parking meters and laundromat machines, will accept only Canadian currency.

Keep in mind that major U.S. credit cards are accepted pretty much everywhere in Canada, so if you find yourself in a pinch without Canadian currency on-hand, your Visa, American Express, or Mastercard connected to your American bank account should suffice.

Know Your Canadian Cash

If you opt to withdraw some Canadian currency instead of attempting to use U.S. dollars on your trip to Canada, you'll see a few different kinds of bills and coins. Canadian money is referred to as dollars and cents, and it's available in 1 cent, 5 cent, 10 cent, 25 cent, $1 and $2 coins and bills for $5, $10 and $20. The $1 and $2 coins are known colloquially as "loonies" and "toonies," respectively.