If you have a foreign currency account with a Canadian bank, watch out for double conversion fees.
Double conversion fees occur when you withdraw money from your foreign currency account in that foreign currency. The bank will first convert your money to Canadian dollars and charge you a conversion fee for that transaction. Then they will convert those Canadian dollars back to the foreign currency that you want the money in, and charge you a conversion fee for that.
Let’s say you open an account in British pound sterling, for example, and you deposit British pounds into that account. Then sometime in the future you want to withdraw some money from that account because you are planning a trip to the UK, and you want to have British pounds on hand. If you try to withdraw £100.00 of that same £100.00 that you deposited, you won’t receive £100.00. This is because the bank will deduct the two conversions fees described above from the £100.00 that you deposited, with the result that you won’t get your full money back.
There is an exception for US dollar accounts. You can withdraw US dollars from your US dollar account without conversion fees IF you make the withdrawal in your bank’s branch in Canada.
Double conversion fees are something that the banks don’t tell you about when you open up a foreign currency account. You’ll usually only find out about it when you try to withdraw your money from that account. So before you open up a foreign currency account, ask your bank for full disclosure of all their charges that come with that account. And if they engage in double conversion fees, then you should shop around for another bank or look for other options.