How to avoid currency conversion fees on Questrade?

If you are a Canadian investor who trades in U.S. stocks, you might be wondering how to avoid currency conversion fees on Questrade. Questrade is one of the most popular online brokers in Canada, offering low commissions, no account fees, and access to a variety of investment products. However, one of the drawbacks of Questrade is that it does not offer a true U.S. dollar account, meaning that every time you buy or sell U.S. securities, you have to pay a currency conversion fee of 1.5% to 2%. This can add up quickly and eat into your returns, especially if you trade frequently or in large amounts.

Read : How to access Questrade IPO Centre and invest in the next big thing

Fortunately, there are some ways to reduce or eliminate these fees and save money on your U.S. trades. In this article, we will show you three methods that you can use to avoid currency conversion fees on Questrade. These methods are:

• Using Norbert’s Gambit
• Holding U.S. Dollars in your account
• Using a U.S. Dollar credit card

Read : How to Use Questrade Edge for Advanced Trading

Using Norbert’s Gambit – Questrade

Norbert’s Gambit is a technique that allows you to convert Canadian dollars to U.S. dollars (or vice versa) at the spot exchange rate, without paying any conversion fees. The idea is to buy a security that trades on both the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE) in Canadian dollars, and then sell it in U.S. dollars. This way, you effectively exchange your currency through the market, rather than through Questrade.

The most common security used for this technique is the Horizons US Dollar Currency ETF (DLR), which tracks the value of the U.S. dollar against the Canadian dollar. Here are the steps to perform Norbert’s Gambit on Questrade:

1. Log in to your Questrade account and go to the Trade tab.
2. In the Order Entry window, enter the symbol DLR.TO, which is the Canadian dollar version of the ETF.
3. Enter the amount of Canadian dollars that you want to convert to U.S. dollars, and place a buy order at the market price.
4. Once your order is filled, go to the Requests tab and click on Exchange Funds.
5. In the Exchange Funds window, select the account that you want to exchange funds from and to, and enter the amount of Canadian dollars that you bought DLR.TO for.
6. Click on Submit Request, and wait for Questrade to process your request. This may take up to five business days.
7. Once your request is processed, you will see that you have U.S. dollars in your account, equal to the amount of Canadian dollars that you exchanged, minus the commission fees for buying and selling DLR.TO.
8. You can now use your U.S. dollars to buy or sell U.S. securities, without paying any currency conversion fees.

The table below shows an example of how much you can save by using Norbert’s Gambit, compared to paying the conversion fees on Questrade.

Amount	Conversion Fee	Norbert’s Gambit Cost	Savings
$10,000	$150 – $200	$9.95 x 2 = $19.90	$130.10 – $180.10
$50,000	$750 – $1,000	$9.95 x 2 = $19.90	$730.10 – $980.10
$100,000	$1,500 – $2,000	$9.95 x 2 = $19.90	$1,480.10 – $1,980.10

As you can see, the savings are significant, especially for larger amounts. However, there are some drawbacks of using Norbert’s Gambit, such as:

• It takes time and effort to execute the technique, and you have to wait for Questrade to process your request.
• You are exposed to market risk, as the price of DLR.TO may fluctuate while you are waiting for your request to be processed.
• You have to pay commission fees for buying and selling DLR.TO, which may offset some of the savings.

Therefore, Norbert’s Gambit is best suited for investors who trade infrequently or in large amounts, and who are willing to accept some risk and inconvenience.

Read : How to Transfer Your Margin Account to an FHSA at Questrade

Holding U.S. Dollars in your account

Another way to avoid currency conversion fees on Questrade is to hold U.S. dollars in your account. This way, you can buy or sell U.S. securities without having to convert your currency every time. However, to do this, you need to have a margin account, and you need to enable U.S. dollar settlement for your account.

A margin account is a type of account that allows you to borrow money from Questrade to buy securities, using your existing securities as collateral. This gives you more buying power and flexibility, but also involves more risk and interest charges. To open a margin account, you need to have at least $1,000 in your account, and you need to meet certain eligibility criteria.

U.S. dollar settlement is a feature that allows you to settle your U.S. trades in U.S. dollars, rather than Canadian dollars. This means that you can keep your U.S. dollars in your account, and use them for future U.S. trades, without paying any conversion fees. To enable U.S. dollar settlement, you need to log in to your Questrade account, go to the Account Management tab, click on Account Settings, and select U.S. Dollar Settlement under the Trading Preferences section.

Once you have a margin account and U.S. dollar settlement enabled, you can hold U.S. dollars in your account by either:

• Depositing U.S. dollars directly to your account, using a U.S. dollar bank account or a U.S. dollar wire transfer.
• Converting your Canadian dollars to U.S. dollars using Norbert’s Gambit, as explained above.

The table below shows an example of how much you can save by holding U.S. dollars in your account, compared to paying the conversion fees on Questrade.

Amount	Conversion Fee	Holding U.S. Dollars Cost	Savings
$10,000	$150 – $200	$0	$150 – $200
$50,000	$750 – $1,000	$0	$750 – $1,000
$100,000	$1,500 – $2,000	$0	$1,500 – $2,000

As you can see, the savings are substantial, regardless of the amount. However, there are some drawbacks of holding U.S. dollars in your account, such as:

• You need to have a margin account, which involves more risk and interest charges.
• You need to enable U.S. dollar settlement, which may not be available for all account types or securities.
• You are exposed to currency risk, as the value of your U.S. dollars may fluctuate against the Canadian dollar.

Therefore, holding U.S. dollars in your account is best suited for investors who trade frequently or in small amounts, and who are comfortable with using margin and managing currency risk.

Using a U.S. Dollar credit card

A third way to avoid currency conversion fees on Questrade is to use a U.S. dollar credit card to fund your account. This way, you can pay for your U.S. trades with your U.S. dollar credit card, without having to convert your currency through Questrade. However, to do this, you need to have a U.S. dollar credit card, and you need to use the Pre-Authorized Deposit (PAD) method to fund your account.

A U.S. dollar credit card is a type of credit card that allows you to make purchases in U.S. dollars, without paying any foreign transaction fees. This can save you money when you travel or shop online in the U.S., as well as when you fund your Questrade account. However, to get a U.S. dollar credit card, you need to have a U.S. dollar bank account, and you need to meet certain eligibility criteria.

The Pre-Authorized Deposit (PAD) method is a way to fund your Questrade account by linking your bank account or credit card to your Questrade account, and setting up a recurring or one-time deposit. This is a convenient and secure way to fund your account, as you do not have to log in to your bank account or credit card account every time. However, to use the PAD method, you need to fill out a PAD agreement form, and wait for Questrade to verify your bank account or credit card information.

Once you have a U.S. dollar credit card and the PAD method set up, you can use your U.S. dollar credit card to fund your account by either:

• Setting up a recurring deposit, which will automatically transfer a fixed amount of U.S. dollars from your credit card to your Questrade account on a regular basis.
• Making a one-time deposit, which will allow you to transfer a specific amount of U.S. dollars from your credit card to your Questrade account whenever you want.

The table below shows an example of how much you can save by using a U.S. dollar credit card to fund your account, compared to paying the conversion fees on Questrade.

Amount	Conversion Fee	U.S. Dollar Credit Card Cost	Savings
$10,000	$150 – $200	$0	$150 – $200
$50,000	$750 – $1,000	$0	$750 – $1,000
$100,000	$1,500 – $2,000	$0	$1,500 – $2,000

As you can see, the savings are substantial, regardless of the amount. However, there are some drawbacks of using a U.S. dollar credit card to fund your account, such as:

• You need to have a U.S. dollar credit card, which may not be easy to obtain or maintain.
• You need to use the PAD method, which may take some time and paperwork to set up and verify.
• You are subject to the interest charges and fees of your credit card, which may vary depending on your credit card provider and your credit score.

Therefore, using a U.S. dollar credit card to fund your account is best suited for investors who have access to a U.S. dollar credit card, and who are comfortable with paying the interest and fees of their credit card.

Conclusion

In conclusion, there are three ways to avoid currency conversion fees on Questrade:

• Using Norbert’s Gambit, which allows you to exchange your currency at the spot rate, without paying any conversion fees.
• Holding U.S. Dollars in your account, which allows you to buy or sell U.S. securities without having to convert your currency every time.
• Using a U.S. Dollar credit card, which allows you to fund your account with your credit card, without paying any conversion fees.

Each method has its own advantages and disadvantages, depending on your trading frequency, amount, risk tolerance, and convenience. You should choose the method that best suits your needs and preferences, and that maximizes your savings and returns.

We hope that this article has helped you understand how to avoid currency conversion fees on Questrade, and that you will use this knowledge to improve your investing experience. If you have any questions or feedback, please feel free to contact us at HustleHub. We are always happy to hear from our Hustlers and help them achieve their financial goals. 💰