Gordon Powers

The Canadian dollar has been on a real roll recently. It passed $1.04 against the greenback this week, hitting a new three-and-a-half-year high and prompting several strategists to reaffirm that the loonie will likely move higher still.

Analysts credit the currency's upward climb to a softer U.S. dollar, solid commodity prices and the likelihood of the Bank of Canada boosting interest rates before the U.S. Federal Reserve does.

How high can the loonie go? Well, Scotia Capital currency strategist Camilla Sutton feels it could end the year at around $1.05, pushing as high as $1.09 by the end of 2012.

Most Canadians regard this upward climb as a spring bonus since it means a better chance of a cheaper vacation in the U.S. or a more rewarding visit to cross-border outlet malls. And snowbirds that spend a few months of the year down south couldn't be happier.

But there's a dark side to a sharply climbing dollar: Some people might not actually be able to afford that vacation or shopping trip to Buffalo or Bellingham because they'll have been priced out of the market — and maybe even out of a job.

On a day-to-day level, you can't blame shoppers for trying to stretch their purchasing power by putting their money to use across the border. And that means somehow converting loonies into greenbacks - which is often a frustrating exercise.

Banks make big profits on foreign exchange conversion, collecting service charges on retail customers buying U.S. dollars, or vice versa. So does everybody else, of course, although not always to the same degree.

First off, despite the headlines, don't expect to get the Bank of Canada's posted value. At current rates, you'll get a bit more than $1.02 U.S. from the bank branch on the corner. And the gap will be slightly larger if you try to sell them back.

You'll likely do a bit better at boutique operations like Ottawa's Accu-Rate or Bendix in Toronto, which offer competitive rates and tend to have more U.S. twenties on hand since currency is their main business.

And online providers like Travelex or XE are often even more competitive still on smaller amounts.

Big or small, all these institutions provide daily quotes on their sites so that you can quickly compare rates and determine how much you're willing to pay for convenience.

But, particularly if you're looking at more than a day trip, you can only carry so much cash around with you. And the costs of replenishing your stash at an ATM every day can really add up.