Using Norbert's Gambit is worthwhile given some conditions - when you do not have to convert your currency immediately and/ or when you need to convert a large sum of money.
The Canadians are highly interlinked with American markets. Canadian residents travel to the United States for business, leisure travel etc. For this purpose, residents require US dollars during their stay in the US. One could convert the currency into a bank or an exchange kiosk at the border.
An alternative cheap way is Norbert’s Gambit, which converts Canadian dollars to US dollars and the other way around. This is done through a discount brokerage account.
Norbert’s gambit process takes around 5 business days to get completed. It is worth it when you can wait for 5 working days, to get your money converted.
Let’s imagine you have a trading and bank account with RBC Bank, which is one of the big 5 banks in Canada. If you are converting $10,000 CAD, then you will receive $7,116.93 USD in your bank account as of 11th October 2022.If you are converting using Norbert’s Gambit, then you will receive $7,260.55 USD. You need to pay $10 twice – once when you buy and once when you sell the shares. So, you will have $7,240.55 USD. You can save $123.62 USD using Norbert’s gambit. The savings will keep increasing as your volume of funds increases, as the $10 CAD transfer fee is a fixed cost. Hence, Norbert’s Gambit is worth it when you need to convert a large volume of money.
If you require your money urgently, then it is better to use a bank or exchange kiosk.
If you do not even have an online brokerage account, then it is better to use the traditional ways of conversion.
Imagine, if you need to convert $100 CAD with RBC. You will receive $71.03 USD. When you go for Norbert’s Gambit, you will receive $72.55 CAD. However, a $20 CAD transfer fee is applicable, and you will have only $52.55 USD in your account.
In addition to the above, you should also consider market risk, currency conversion risk. In addition, you should beware of articles that lure you to earn money through currency conversion. You must explore if it is a scam or not before plunging into it.