Chapter 09 · Currency & payments
Real cost of bank FX conversion vs spot rate
Why converting $100,000 CAD through your bank costs $1,000–$3,500 more than the Bank of Canada spot rate.
Direct answer · 60-second summary
The 60-second version
Canadian banks charge 1–3% FX markup plus wire fees ($15–50 CAD). On $100,000 CAD, hidden costs can exceed $1,000–$3,500 USD. Bank of Canada publishes the spot rate; your bank charges far above it.
Acronyms used in this guide
- CAD — Canadian Dollar
- USD — United States Dollar
- FX — Foreign exchange
- BOC — Bank of Canada
- RBC — Royal Bank of Canada
- TD — Toronto-Dominion Bank
- BMO — Bank of Montreal
What is the spot rate?
Bank of Canada publishes the daily average CAD/USD exchange rate at 4:30 PM ET. This rate comes from aggregated quotes from financial institutions and includes no markup. It is the reference baseline for all players.
Example: On April 28, 2026, the BOC rate is ~0.7200 USD/CAD. You can convert 100,000 CAD = ~72,000 USD at spot.
Canadian bank fees and markups 2026
RBC Royal Bank: $45 outbound wire + 1.5–2.5% FX markup
TD Bank: $50 outbound wire + 1.5–2.0% FX markup
BMO: $14–16 wire fees (some accounts) + 3.34% FX markup (verified 2026)
Net result: Converting 100,000 CAD via BMO, the 3.34% markup = 3,340 USD lost, plus fees.
Real cost: concrete example
You will convert $250,000 CAD to fund a real estate purchase.
- BOC spot rate: 0.7200 = $180,000 USD
- Via RBC (2% markup + $45 wire): 250,000 × (0.7200 − 0.0144) = 175,400 USD after markup, − $45 in wire fees ≈ 175,355 USD. Loss: $4,645.
- Via BMO (3.34% markup + $16 wire): 250,000 × (0.7200 − 0.0240) = 175,000 USD, − $16 ≈ 174,984 USD. Loss: $5,016.
Why do banks charge markups?
Markups cover:
- FX risk (hedging positions)
- Operational and compliance costs
- Profit margin
This is not secret. Banks rarely publish markups explicitly; they are simply embedded in the rate you receive.
Cheaper alternatives
FX brokers: Wise (0.48–1.5%), Knightsbridge FX (1–2%), OFX (0.4–1.5% + fixed fees)
Norbert's Gambit strategy: Via Questrade, dual-listed ETF conversion for ~0.2% total fees
Forward contracts: For real estate, locks rate 90–180 days before closing (investment banks)
Every figure, rate, threshold, and deadline in this guide is drawn from a verifiable primary source listed at the bottom of the page. The article is updated whenever the underlying rules change, with a fresh review date stamped at the top.
Sources and references
Public sources verified as of the last review date (Bank of Canada, FINTRAC, IRS, Wise, Knightsbridge FX, Canadian banks).
Disclaimer
This guide is for educational purpose only. Figures, rates, thresholds, timelines and rules are drawn from public sources at the date shown and may change.
For any concrete decision on currency exchange or cross-border payments, consult a cross-border tax advisor, a tax attorney, or a licensed FX broker.