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Updated 2mo ago.
Updated 2mo ago.
Currency conversion fees are the costs charged by your brokerage to convert Canadian dollars to U.S. dollars (or other currencies). They typically range from 1% to 2.5% of the converted amount.
If you buy a U.S. ETF like VOO on Questrade and your account is in CAD, the broker automatically converts your dollars at the exchange rate plus about 1.5%. On a $10,000 purchase, that's $150 in hidden fees. Wealthsimple Trade charges 1.5% too (unless you have the Premium plan). These fees aren't always visible — they're built into the displayed exchange rate.
Conversion fees can significantly eat into your returns if you frequently buy and sell USD-denominated securities. To avoid them, you can: use Norbert's Gambit, buy the Canadian version of the ETF (e.g., VFV.TO instead of VOO), or open a USD account at your brokerage. It's one of the most underestimated fees for beginner investors.