Paying your USD bills out of BMO in Canada

Copyright 2013 John T. Reed

I have urged readers to put not only their rainy-day savings cash in Canadian savings accounts, but also their current bill-paying cash there.

Your rainy-day savings goes into a normal Canadian savings account denominated in Canadian dollar (CAD). In the event of U.S. hyperinflation, this money would not lose purchasing power because of U.S. dollar (USD) hyperinflation. I use Bank of Montreal for that purpose. 

I also now use BMO to hold USD in a checking account out of which I pay many of my U.S. bills.

Since it is USD, it is not currently protected from USD hyperinflation. But it is protected from US capital controls. If and when the U.S. gets hyperinflation, we will almost certainly and immediately get capital controls. Those prohibit possession of foreign currency and removal of US currency from the U.S. So the reason to pay as many of your current bills out of a USD checking account in Canada would be get that money outside of the jurisdiction of future U.S. capital controls.

On The Day the Dollar Dies, I and my readers who follow this advice will simply immediately go to our BMO USD checking accounts on line and transfer that money into one of our CAD accounts. That has the effect of converting the USD to CAD which will then protect us from further USD loss of purchasing power, although there will be some loss during the time when we are doing it.

Readers who do not follow this advice, will, on The Day the Dollar Dies, slowly figure out that they need to convert their USD to CAD or other foreign currencies ASAP to prevent further loss of purchasing power. When they try to do that, their bank will tell them they are too late. The U.S. government just issued an executive order prohibiting moving money out of the US without federal government permission, which will NOT be forthcoming.

You will be trapped. Your only hope will be to try to withdraw the money ASAP and convert it to hard assets—that is, buy stuff with it before it loses further purchasing power. But A. that will be easier said than done because everyone in the world with USD will be frantically trying to do the same thing at the same time and B. hard assets are not liquid.

You need a certain amount of liquid assets to pay your bills and buy food, gas, medicine, toilet paper and so on. You cannot buy groceries with hard assets. Foreign currency is liquid.

As you frantically try to withdraw your money—there will probably be restrictions on bank withdrawals, too—your purchasing power will be falling by the minute. You will be pounding on your bank’s windows or on the ATM or on the phone or Internet trying to get through to them and all you will get is busy signals or statements saying, “We are sorry but our hands our tied by the U.S. government. We can neither given you your money nor let you transfer it out of the country.” Checks will cease being accepted and will not clear. All credit cards will be canceled immediately. Only debit cards will work and there may be severe restrictions on how much you can get with them per day.

I have now been using BMO to pay some of my routine U.S. bills for about a month. Here is how it works.

You need a USD checking account in a Canadian bank that offers this service. You also need a CAD account there for your rainy-day savings and—when the ’flation hits the fan in the U.S.—an account into which to transfer your USD quickly. To open a Canadian bank account, you must go there in person. Many readers have insisted there must be a way to do it by mail.

Nope. But you can waste a bunch of time and energy trying to prove me wrong if you want.

You need a Premium Plan checking account at BMO. That must always have a balance of at least $5,000. It can be in CAD and mine is. You then call 877-730-0265 and set up “US billers.” That is a list of U.S. companies who whom you pay bills. You give them the name of the vendor and the account number. They can set it up for many U.S. billers, but not all. For example, I can pay USAA insurance/bank and the San Francisco Chronicle newspaper, but not Wells Fargo or State Farm. You can request that your billers who are not registered with BMO become registered. I was originally told they call the same 877-number to do that. Later, they said the vendors must contact BMO world headquarters. When I was asked for a phone umber, they refused to give me one

Say what!? Finally, after asking demanding to speak to a supervisor, they told me vendors who want to be registered as billers need to contact procurement.strategicsourcing@bmo.com. That is an odd name for such a purpose. I have not referred any vendors to that email address yet. If you do, please let me know if it worked.

You can also give them the name of your U.S. bank and they will set it up so you can do transfers to them, too.

You then deposit enough money into the USD checking in BMO to pay your upcoming bills. On the day when you pay your bills, you call the 877-number and tell them you want to pay some US bills. They are open 20/7 not 24/7. That is, they are closed from midnight to 4AM eastern time.

They will ask for your BMO debit card number. Tell them you want to keyboard that yourself and keyboard your phone password without the BMO operator listening in. That means they connect you to the automated system and get off the line. The automated system will then ask for your BMO debit card number and your phone password. After you give it, it will start saying “If you want to do X, press one. If you want to do Y, press two,” and so on. Press 0 instead.

That will get you a human. Then tell them you want to pay some US bills out of your USD checking account at BMO. At that point, they will be looking at your name and account info on their computer screen. Make sure you tell them it is out of your USD checking account or they may pay the bills out of another account, namely a CAD one and you do not want that because it will incur an unnecessary currency-conversion charge.

BMO will initially ask you to keyboard your phone password in while they listen on the phone. I say that is a security risk. They say, “I can only hear beeps.” I say “That is enough for your to tell what my password is if you practice a little on recognizing which beep is a 1 and which a 2 and so on. Or you could record the beeps then figure out later which numbers they were.” They say they would not do that.

“Comforting, but I still want to be switched to the automated operator and then ask for a human so please switch me to the automated operator, thank you.”

They will ask which vendor you want to pay and the amount to pay on this day. Tell them. When you are done, they will give you a confirmation number for each bill.” Write it down. I wrote it on the bill in question along with the date.

Then go to your check register and enter the amounts of the payments you just made.

They will send the money electronically to the vendor. For US billers, it arrives in 3 to 5 business days. If you tell them to send money to your US bank, it arrives in 1 or 2 days.

There is no charge for this service. These are not SWIFT wires.

This always seems to take 10 minutes or so. They put me on hold. I don’t know why. It should only take about three minutes. My vendors have received the money just fine as far as I can tell.

Other than their wanting me to key in my password while they listen to the beeps, I have had no problems so far.

If you do the same, but pay by check, the check will take forever to be paid and may incur an extra fee to be paid by your vendor because banks treat checks from another country bank as “collection items.” If you pay by SWIFT wire, there is more paperwork and rigmarole plus about a $45 charge per payment and it is often much slower.

I know of no free, electronic way to get money into the BMO account from the US. I have gotten a couple of free SWIFT wires from Charles Schwab as an introductory feature. If you have $500,000 or more with Schwab they give you unlimited free SWIFT wires. And theirs arrive the same day whether I am sending to Australia or Canada!

I also send US checks to BMO in Canada by snail mail. There is no charge other than postage, but it takes a couple of weeks to get there. For income checks that I know are arriving the the future, like my social security, I mail the check early to BMO so it will arrive at US my bank where my social security amount is deposited each month at about the same time as BMO presents the check to my US bank to be paid. That cause the social security amount to essentially arrive at my US bank on one day and get transferred to BMO in Canada the next.

Get all your USD income into Canada ASAP

Basically, what you want to do is to have all your USD income go flying into BMO ASAP. Some of those who pay you money will direct deposit it into BMO if you ask. Social security will do that, but only if your permanent residence address is in Canada. Mine is not. The money you need to pay your US bill would go into your USD checking account in BMO; the rest into your CAD rainy-day savings account. I also have rainy-day savings, but not bill-paying money, in Westpac Australia and three New Zealand banks for foreign currency diversification.

Your capital-controls-avoidance cash-management system should get your income out of the US ASAP whenever you receive USD income from any source. Then you transfer some of that money into your US checking account in the U.S. on a just-in-time basis using BMO Auto Cash to pay your US vendors who are not registered with BMO and you pay your US billers who are registered with BMO out of the BMO USD checking account as described above.

This minimizes the amount of cash you have in USD within US jurisdiction at any given time. Hyperinflation typically hits without warning. If and when you see excess amounts accumulating in your BMO USD checking account, move them over to your rainy-day savings in CAD at BMO or into an outside-the-US savings account in another non-US country’s currency.

If and when we get USD hyperinflation, and you follow this advice, you will thank me. If we get it and you do not, you will curse yourself for the failure and money unnecessarily lost. If you do what I urge, and we somehow don’t get USD hyperinflation, no harm done. What I am urging is a low-cost, low-risk, risk-management technique, like buying fire insurance on your home. You do not curse your insurance agent every year that your house does not burn down.