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Q. Why are there high fees for buying American cash?
A. The values of the Canadian and US dollar are set by the global marketplace. And, the difference in value between the Canadian and US dollar is called the ‘exchange rate’. Many people confuse money exchange rates with fees. Again, exchange rates are set by external markets, not by Synergy Credit Union.
That said, there is a difference in the buy and sell rates set by financial institutions, Synergy Credit Union included. This difference or spread is used to offset the risks and costs the financial institution takes on for the foreign currency inventories they hold. It is expected that the values of foreign currencies will fluctuate up and down. The convenience of having foreign currency onsite can be costly. Should the values drop, the institution takes a loss. Other costs associated with holding foreign currency inventories include storage, insurance, shipping, etc.
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