Citibank UK U.S. Dollar Current Account Now Charging for Depositing Cheque's, How to Make an Extra 1% on Transfers

Personal_Finance / UK Banking Nov 19, 2011 - 11:59 PM GMT

Citibank for a number of years has provided UK customers a U.S. Dollar Checking account without fees if the balance across all Citi accounts is above £2,000. This has proved especially useful in depositing dollar cheque's that normally attract significant fees per cheque in addition to exchange rate spread mark-ups.

However since at least 1st October 2011, Citibank has joined other banks up upping fees on transactions and effectively started to charge a $8 fee per cheque deposited (something that Citibank fails to mention on its U.S. Dollar and Euro Current Accounts sales pitch page. Nor is there any mention of this fee in any of the small print pages - the General^ Terms and Conditions and Rates and Charges Information and also the Account Specific Terms and Conditions for the US Dollar Account. The fee changes are hidden away in a pdf file that lists a £5 fee per cheque, which at the current exchange rate of £/$1.60 converts into a $8 per cheque.

Whilst the £5 fee will have an impact on especially low cheque amounts, the fee is still competitive when compared those charged by other banks such as Santander which charges £10 per cheque. However the big negative with citibank remains in that it takes 3 weeks for cheque's to clear, by which time the exchange rate could have moved significantly, this is set against other Banks such as Santander which fix the rate of exchange within a few days of receipt of cheque's.

An advantage of using the citibank account is that it allows the customer to precisely time transfers between currencies to take advantage of short-term and longer term trends that can make a huge difference to the value of funds i.e. following deposit and subsequent 3 week wait for clearance, customers can then time the actual transfer to coincide with a favourable movement in the £/$ exchange rate.

Another advantage of online transfers selected by customers themselves is that citibank does not apparently use the current spot £/$ exchange rate, this can make a difference of as much as 1%, i.e. typically between 1.5% to 2.5%+Current Spot, therefore customers that are given a worse rate towards spot+2.5% can delay making the online transfer until the rate drops to at least spot+2%. In my experience the lowest spread achieved has been spot+1.17%, the highest offered spot+3%, with the vast majority of achievable rates in the range of spot+1.7% to spot+1.9%. The spread are most susceptible during volatile trading days, i.e. Citibank's rate may become significantly out of step with the market following a sharp move in the £/$ rate in response to economic data releases.

Overall the Citibank U.S. Dollar bank account at present still probably remains as the best account available to UK customers for depositing and clearing U.S. dollar cheque's.

Source and Comments:http://www.marketoracle.co.uk/Article31641.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook's - The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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