There's more than one way to use US money in Canada. (Photo: Macro view on money and credit card image by PaulPaladin from Fotolia.com )
As of 2010, US and Canadian dollars are close in value, with slight fluctuations from time to time. Many Canadian businesses, especially those close to the border, will accept currency from their neighbors to the south. In most cases, though, its best to use US money in Canada via bank or credit card, or by exchanging your greenbacks for Canadian dollars.
Withdraw money from an ATM machine as soon as possible after crossing the border into Canada. This is generally the quickest, most convenient way to use your US dollars in Canada without the potentially inflated exchange rate attached when using or changing US bills. Check with your home bank before you head to Canada about its foreign transaction fees on ATM withdrawals, which tend to range between $1 to $5. Although visitors can use their credit cards to withdraw cash at many ATM machines throughout Canada, this is the most expensive option, as credit card companies charge immediate interest on the withdrawal in addition to a foreign transaction fee.
Use a major American debit or credit card directly to pay at hotels, restaurants or stores. Again, contact your credit card company or bank to verify their charges for out-of-country purchases. Visa, MasterCard and American Express cards are usually accepted at establishments throughout Canada. Credit cards generally get a decent exchange rate when compared to exchanging cash, especially if you use a card to pay for a large purchase such as accommodations or transportation.
Ask if you can pay for items with US dollars at businesses just next to the Canadian border or in major tourist destinations and large cities when necessary. Most places will accept American money with change given in Canadian dollars. However, keep in mind that Canadian businesses are at liberty to set their own exchange rate, so you may end up spending more than you&rsquo;d bargained for.
Shop around at banks and exchange offices in your Canadian destination to see which gives the most favorable exchange rate for US dollars. Many times, exchange offices in Canada offer better rates than commercial banks. Once you&rsquo;ve found the lowest rate, exchange your American bills for Canadian cash, which comes in denominations of $5, $10, $20, $50 and $100.