Copyright John T. Reed 2014
Here is another reader experience opening Canadian bank accounts. I publish these because I learned that there is considerable reluctance among Americans who do not live on the Canadian border, or who do not travel abroad on business a lot, to do this. I experienced it myself. My comments are in red.
Dear Mr Reed,
My wife and I just returned from our trip to Vancouver to open our CAD and USD accounts with the Bank of Montreal. This trip was the culmination of weeks of study and preparation prior to the actual trip. Perhaps it could or should have been completed more quickly -- I'm glad the 'flation' had not hit the fan -- but I could only process and act on the information you provided in the best way possible for me. [My foreign currency advice urges the vast majority of Americans to move outside their comfort zone as far as foreign countries, bank accounts, and so forth are concerned. I laugh at the memory of my own initial reluctance. I had nobody like me blazing the trail or urging me to do it. I just started thinking about what all my research meant and the need for foreign currency was inescapable. So I forced myself to do it.] I'm sure many of your readers have similar stories. But the deeds are done and I feel much better for having completed them. [That was how I felt after I opened the foreign accounts and put some money into them and after I bought about an 18-month supply of long-shelf-life food. My approach to this is not gambling, which is what those who buy gold are doing. Rater, it is an insurance approach. And what does insurance give us, boys and girls? Peace of mind.]
For the trip itself, I initially contacted James Curran, the BMO banker you have written about and we exchanged several emails on the logistics of the trip, best ways to get there, what to bring, dealing with customs etc. At first we wanted to fly into Seattle or Bellingham and then drive up to Delta where he now works. The flights would have been cheaper but after considering the possibilities of delays with a vehicle crossing versus the convenience of flying into Vancouver directly and then taking the Sky Train downtown, the latter won out. We're very happy we went this route as it was very easy and stress-free. [It’s down to Delta, which is south of Vancouver. Unless you are taking a side trip to Victoria by car/ferry, Delta is just way too inconvenient. If you are taking such a side trip, Delta, a.k.a. Tsawassen, is where the ferry to Victoria and other places leaves from. The way you did it is the way I do it, too, for the same reason. I may take the Amtrak Coast Starlight train for my next trip just for variety.]
Since we chose to go to the Vancouver branch, James put us in contact with a banker there, Amanda Lung (604-665-7348), who was very helpful, kind and courteous to us. We emailed a few times prior to our departure and we ended up with a very pleasant experience speaking with her and opening up our accounts. (It happened to be the day the Canadians beat the US women for the hockey gold so we made sure to impart our congratulations to her for their victory. :-)) Our flight arrived at 1:40pm local time. Customs was a breeze -- they didn't even ask the purpose of our visit -- [Not always the case. 1:40 PM may be a less busy time of the day. It looked like a bad day at Disney World once when I went. Huge, slow-moving line corrals, but that was a Monday morning arrival. Nexus would have made it easier. I have now applied for a Nexus card ($50) and my next trip up there will be for my in-person interview to get it.] and we took the train downtown [SkyTrain is great and there is a station near the BMO downtown branch.] and arrived in time for our 3pm. appointment. We had brought printed copies of our email correspondence and had both James and Amanda's telephone numbers in case we were asked. [Wise move, grasshopper.]
The appointment took about an hour and that included getting set up with a safety [safe] deposit box, in which we proceeded to place some Swiss francs. This brings up a point that all your readers need to consider and deal with well before they travel to Vancouver. In our case, we had previously never had to wire money from our bank to any financial institution. We are living in AZ for the winter and needed to have our bank in Kansas City do the wire to BMO. Unfortunately for us, we had no idea that our bank needed special paperwork filled out prior to them being able to wire anything. [That may be overstating it. They need the SWIFT Code number of the bank, your BMO bank account number which you could not give because you didn’t have an account until you physically went to Canada. In Canada, they also need a transit number, and your name and address and the name and address of the distant bank.] As a result, our only option was to get a cashier's check overnighted to us in AZ the day before our flight to Vancouver! [You did not need to do that. When I first opened my BMO account, I simply flew up there with my check book from here and wrote a check and handed it to James while I was there. The only reason to use a cashiers check would be to make immediate withdrawals. I never made any withdrawals other than testing my BMO ATM card in the U.S. Don’t do that. They charge a 4%!! fee for currency conversion via their ATM card. Get a Charles Schwab bank account and use their card—0% fee for withdrawing another currency from an ATM.] In the meantime, we began taking out the maximum allowed per day from our ATM so we would have SOME money to convert to Swiss Francs and to place in our safe deposit box. [Again, a simple personal check sent to James or Amanda would have been fine if you sent it early enough to become good funds before the CHF purchase. Also, you need to specify the denominations you want in Swiss francs. The more advance notice you give the foreign currency guys—which are NOT BMO—the better than can give you what you want. If you just go there and walk in and buy CHF, you can only get what they happen to have on hand. Ideally, you want crisp, never-touched-by-human-hands, 100-franc notes. I got 20s and 50s because I envisioned spending them in Switzerland. I have since become educated. The pristine 100-franc note is preferred when you convert or spend it and you get a worse deal if you have smaller denominations or if the bills are used. Don’t ask me why but that is the worldwide situation whenever there is hyperinflation on one side of the deal and you are not going through banks or other regulated places that only give you the super lousy official government exchange rate. The only negative to 100-franc notes or $100 USD bills is if you plan to spend them where you expect CHF or USD change. That is why I got the 20s and 50s. A 100-CHF note costs about $113 nowadays.] The result is that we were not able to put as much money as we had planned in the box and our money is on hold for 30 days while the check clears the US bank. Obviously not what we had planned.
The good news for us is that our wire paperwork will be completed within a few days and we'll be able to wire additional funds if desired. [At about $45 a pop. I generally just snail mail a personal check. If you put at least $750,000 into Schwab, they give you unlimited free SWIFT wires.] But the adding to the box will require another trip. [Ouch!] So again, make sure you can wire funds from your bank before you leave for Canada! [Just send a personal check well in advance.]
All else went well for us. Vancouver is a beautiful city [Tsawassen/Delta is not.] and our hotel, the Executive Hotel Le Soleil, is just a block away from the bank. Very nice hotel and not the most expensive in the area. Our room was $150 for the night. [I stayed in the Vancouver Club which is extremely well-located and venerable and nice for $105. But I had to be a member of a club which has a reciprocal arrangement with the Vancouver Club. In my case, I am a member of the Marine Memorial Club in San Francisco which does have such an arrangement. To join Marine Memorial, which you can do no matter where you you live if you have an honorable discharge from the U.S. military or are on active duty still, you pay just $125 a year. Here is a list of their reciprocal clubs. I could have stayed in several such places in Calgary when I was there last summer but forgot to check. I have also stayed in the Victory Services Club in London, the Circle National des Armees in Paris, the Royal Automobile Club of Australia in Sydney, the Buckingham Athletic Club in Chicago, and the Harvard Club of Boston via being in the Marine Club. As a Harvard grad, I am eligible to join the Harvard Club of Boston, but that ain’t no $125-a-year deal.] The Blackbird Public House and Oyster Bar next door was an excellent choice for a delicious steak and varied oyster selection. It was a bit loud as the Olympics were on all the available TVs and the Canadians do love their athletes but it was a nice atmosphere. The people were very friendly, perhaps more so because we kept a low profile about our allegiances during the events! :-)
Please allow me a final few words about the entire process of going from virtually ignorant about the potential for hyper-inflation to having to plan for such unheard of ideas like taking money out of my IRA's and opening foreign bank accounts. I'm 56 and three years away from being able to take funds from my IRAs without penalty. It was a tough decision to take out this money! I have 50% invested in real estate (within my IRA) so that will be staying for the time being. But taking that 10% hit on top of the higher tax rates for taking out more money than I would have planned in any one year, really hurt. [Tell me about it. I did not pay the 10% penalty but I did pay the taxes—albeit at 2012 pre-Fiscal Cliff tax increase rates.] But I had to balance that against what Mr. Reed preaches, namely, that we don't know when (or if) the 'flation' will hit the fan. [Exactly.] I guess for me it became a case of being more afraid of not doing it than doing it. I hate the idea of seeing those extra thousands going to Uncle Sam but I feel it had to be done for the greater peace of mind I now possess.
To all of you still thinking about this but not doing it, remember, this is like taking out insurance. In our case, it was more costly than I would have liked but when weighed against the potential cost of hyperinflation, it was worth it for us. Good luck! [The potential cost of USD hyperinflation is wipe out of the purchasing power of your USD-denominated assets. People have trouble comprehending such a thing. Comprehend it. Go visit Argentina if you need to see it with your own eyes. But do not deny the possibility of it or the financial devastation of it. See my article on the Dolar Blue market there.]
John T. Reed