Canada and the United States both call their unit of currency the dollar. Despite the name, these are two different currencies and have different values. Both are “floating currencies,” meaning there is no fixed rate of exchange. Instead, the relative worth of the Canadian and U.S. dollars fluctuates in response to supply and demand on currency exchange markets.
At any given time, U.S. and Canadian dollar are worth what the currency exchange market says they are worth. You can readily find current quotes on many financial websites. You’ll see something like this: USD/CAD 1.2400. The first currency, which in this case is the U.S. dollar, always equals one unit. The trailing number tells you how many Canadian dollars one U.S. dollar will buy. In this example, you can exchange $1 USD for $1.24 CAD.
Converting U.S. to Canadian Dollars
Suppose you are traveling to Montreal and want to exchange 500 U.S. dollars for Canadian money. You check the current exchange rate and get a quote of USD/CAD 1.2400. To convert U.S to Canadian dollars, multiply the exchange rate by the amount in U.S. dollars. You have $500 multiplied by 1.24. Your 500 U.S. dollars are worth 620 Canadian dollars.
Converting Canadian to U.S. Dollars
Calculating the worth of Canadian dollars in U.S. currency is just the reverse of converting U.S. dollars to Canadian dollars. Suppose you have $750 CAD and you want to swap for U.S. currency when the exchange rate is USD/CAD 1.2400. Divide the amount of Canadian dollars by the exchange rate. In this example you have $750 divided by 1.24, which gives you $604.84 in United States money.
Ways to Exchange Dollars
There are several ways to swap U.S. and Canadian dollars – for a price. Do some shopping around to find the lowest fees. NBC News says you’ll usually save money by using a credit card or ATM card to buy foreign currency. Travelers checks tend to be more expensive, but you don’t need to saddle yourself with a lot of cash. Plus, travelers checks can be replaced if something happens to them. Other options include banks, online currency vendors, and exchange services in airports and hotels. However, these latter options typically cost more.