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In a recent article, National Geographic estimated that 75 percent of Canadians live within 161 kilometers, or 100 miles, of the U.S. border. This high percentage has plenty of implications for cross-border trade and economic health! Depending on the relative strengths of the Canadian and US dollars, shoppers will often make the trip across the border to stock up on deals. This is especially true in the run up to the Christmas holidays. If you are one of the 75% of border-adjacent Canadians, you may be considering loading up the car and going for a shopping trip of your own right about now. But the big question is: is it really worth it?

Debunking the Dollar

The first factor that many cross-border shoppers will consider is the exchange rate, which sits at $0.75CAD to the US Dollar as of this writing. About a year ago, the Canadian dollar was valued near USD$0.80 – indicating that shoppers heading south will be slightly worse off this year. However, your buying power is going to be reduced if you’re going to the States no matter how you cut it. Americans heading north, however, will find that their money goes further. Many retailers near the border attempt to sway Canadian shoppers with special offers, some of which may offer discounts that offset the exchange rate or that take the Canadian dollar at par.

Plan Around Your Allowances

Cross-border shopping pros will be sure to know the rules and regulations surrounding duties and taxes on the goods that they can and cannot bring back into Canada from the United States. Some of these limits apply depending on how long you’ve spent time in the States, and others are dependent on the kinds of goods, like alcohol or tobacco.

If you’re planning an American shopping visit, be sure to read up on the list of regulations. The Canadian Border Services Agency has a ​comprehensive guide​, but if you’re not sure about something it’s better to be on the safe side and declare it at customs lest you incur a significant penalty.

Mind the Citizenship of your Credit Cards

It’s a bit funny to think of, but your Canadian issued credit card still retains its identity when you take it into the United States. Shoppers using credit across the border might be surprised to find extra fees on top of their spending: this is because many credit card issuers charge for the privilege of using your card outside of Canada. This charge can be 2.5% or even greater for some issuers, in addition to foreign exchange spread fees – all told you could be adding up to 5 or 6 percent to your costs. If you’re a super keen or regular cross-border shopper, you may be able to make the trip more worth your while by applying for an American-issued card only to be used on those specific purchases.

Consider Fuel Costs

Most cross-border shoppers will drive from Canada into the United States – where fuel is often cheaper to purchase. For example, using today’s data from Abbotsford, BC and Blaine, Washington, the cost per unit of volume is 6% less on the American side of the border. This difference fluctuates day to day, so it’s not always a perfect indicator, but the pattern is likely to hold due to differences in fuel tax legislation between Canada and the United States.

Consider how long it takes you to get from where you live to the US border, and how much gas you may use on the way. Is the expenditure of keeping your tank full – even with the decreased fill-up cost across the border – justifiable compared against the money you expect to save on the goods you want to purchase? Or are you effectively spending money in order to save it?

Don’t Forget About Home

Personally, your humble author is somewhat disincentivized from crossing the Canadian border for various reasons, some of which wear a sprayed-on tan and oversized tie. If, like me, you are keen to keep your dollars in the Canadian economy, but still want to make them go as far as they can, you have plenty of options as well, some of which we covered in our recent blog on “Controlling Holiday Spending.” It’s easy enough to apply plenty of the strategies you would use to find deals in the United States right in your own backyard. Planning well, limiting your use of credit, and avoiding “spending in order to save” work just as well here in Canada!

Tags : financial literacyholiday shoppingpersonal financesaving moneysmart spendingspending