As a US resident, cashing or depositing a Canadian check can be complicated, given the catches and requirements.
To minimize the risk of fraudulent activity, numerous American banks opt to place a temporary hold on funds from Canadian checks. Therefore, what are the steps to cash or deposit Canadian checks in US banks?
Without any delay, explore a systematic process for depositing or cashing a foreign check at a US bank. So, without further ado, let’s get started!
Cashing a Canadian Check – Everything You Need to Know
We can simplify the cashing and depositing process by dividing it into a few distinct steps. However, before we proceed further, let’s start with the basics.
Directly Cashing the Check
The current policies render you unable to cash out or deposit a Canadian simply. To use a foreign check, you will need to deposit the check into your checking account. You can only withdraw the money from your check after depositing it in your checking account.
Considering the need to deposit the check, you can process a Canadian check only at a bank where you are a customer.
While cashing out the check usually requires you to bring a government-issued ID and a check, the requirement may vary, depending on your bank. Hence, confirming the required documents before going to the bank would be wise.
When you clear a Canadian Check, the bank will take some time to process the check before transferring the amount to your account. The bank takes this time to verify the authenticity and perform all formalities, and it is called “hold times.”
There are two ways of clearing Canadian checks: Check collection and Negotiation. Both these processes have different hold times.
Check Negotiation is the ideal process to clear a Canadian Check. Following this process, the bank takes approximately 3-5 business days to process the funds.
Check collection, on the other hand, can be a lengthy process. The bank may require 3-6 weeks to process your funds, depending on the formalities it needs to fulfill.
During a check collection, the US bank will send the check to the originating back for verification. However, check collection is often triggered when you deposit a check for a larger amount than normal.
Processing a Canadian check causes the US banks to require running some processes, resulting in incurring costs. In turn, the bank makes itself whole by taking the fee money from your pockets and calling it the “processing fee.”
The processing fees for clearing a Canadian check may vary from bank to bank. Therefore, before you clear a check with your bank in the US, it is necessary to inquire about the processing fee. Knowing about the processing fee will help you understand your check’s total amount reduction.
Inquiring about the processing fee beforehand can also help you compare the fees being charged by the other banks. Although it will require you to open a new account, going with a bank with a relatively lesser fee will allow you to save some money.
When you deposit a Canadian check in a US account, they will pay you the amount in American currency. Since American Banks have no interest in Canadian Dollars, they convert the amount into US Dollars before paying you the amount.
According to the Federal Reserve, the current exchange rate between the US and Canada is 0.7355. However, your chosen bank is not legally obliged to use this conversion rate. Therefore, when inquiring about the processing fees, it is also necessary to inquire about the exchange rates the bank will offer you.
Conclusively, you will want a bank offering the best exchange rates and lower processing fees.
Using Canadian Banks in America
The best option is to use the same bank to cancel out some fees and make the procedure go faster. If the Canadian Bank through which the check has originated is present in the US, you should choose them.
Processing your checks through them can make the process much less complicated and mitigate a few processing fees.
Below are a few American banks with branches located in Canada:
- Bank of America
Having its branches located in Canada, the Bank of America allows you to cash or deposit Canadian checks at no fees! They use their conversion rates when processing Canadian checks. However, the hold time will differ, based on multiple factors, such as the amount.
The Bank of America, however, restricts you from depositing Canadian checks via ATM or through your smartphone. You must visit any bank branch and deposit your check with a teller.
- Chase Bank
While Chase Bank provides the service of cashing and depositing the Canadian check, it comes with a catch. Their service for cashing checks is only available at a few branches. The rates also vary depending on the customer and transaction.
Chase Bank also has a limitation to processing the check only if the USD amount of the check is equal to or less than your account’s courtesy limit. Generally, the courtesy limit of a Chase Bank account is $5000. They also may charge you a commission fee or any other costs incurred during the process.
The estimated hold time for clearing checks through Chase Bank can be up to Six Weeks. So, call them to inquire about the branches allowing you to cash the Canadian Checks and choose the one closest to you!
The HSBC bank is another option for Cash or Depositing a Canadian Check. They charge you for any cost incurred by the bank while adjustment of the check. As for the conversion rate, HSBC converts the money depending on the deposit rate.
HSBC states that you will be solely responsible for all exchange risks. However, requesting HSBC to process the check on a collection basis can help nullify this risk. While you will have to pay any applicable fee, it can help you attain peace of mind.
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