August 8, 2010 letter to Citizens Bank

August 8, 2010

Branch Manager
Citizens Bank
One Financial Center
Boston, MA 02111

To whom it may concern:

I recently executed several large currency exchanges for Israeli sheqels through your branch.

Since I am somewhat naive about how currency exchange rates are determined, I made a substantial effort when planning our trip to determine the most cost-effective method of obtaining Israeli currency.

I was therefore quite pleased when I was told by Citizens Bank customer service over the phone that because I was a Citizens Gold customer, the bank would exchange currency for me with no fee, and I would pay only whatever exchange rate was in effect on the day I ordered the currency.

I was given similar information when I called your branch to order Israeli currency. When I specifically asked, “Do you mean that you will sell currency to me at whatever the money market rate is on the day I order it?” the answer I was given was, “Yes, that’s correct.”

However, looking back now on the three currency exchanges I executed with your branch, it seems to me that I was provided with rather incorrect information. In fact, it appears to me that rather than exchanging currency for no fee, Citizens Bank has charged me a 10% fee totalling around $320 for the approximately $3200 I exchanged! Please allow me to explain.

I ordered $700 worth of sheqels on July 13. When I picked them up on July 16, the rate I was charged was 0.286713. According to Google, the USD to NIS money market rate on July 13 was 0.259457 / 3.8542 and the NIS to USD rate was 0.2595 / 3.853565. Note how the rate I was charged by Citizens Bank was over 10% higher than the other two.

I ordered $500 worth of sheqels again on July 19. The rate Citizens Bank charged me was 0.28837. Again, the market rates were significantly lower: 0.259329 / 3.8561 and 0.2593 / 3.856537.

I ordered $2000 worth of sheqels on August 2. The rate Citizens Bank charged me was 0.296180. Again, significantly lower market rates: 0.266064 / 3.7585 and 0.2661 / 3.757986.

When I picked up the last order of sheqels on August 6, I was starting to suspect that something was not as I had been told, so I asked the exchange rate question again, this time more forcefully, and this time, I got a different answer. “Oh, our rate is usually about a dime higher than the market rate. So for example if the market rate was 1.29 Euros per dollar, our rate would be about 1.39.”

In fact, it should be clear from the numbers quoted above that the rate Citizens Bank uses in these exchanges is not ten cents higher (an answer which made no sense, given that the rate in question is foreign currency per dollars, not dollars per foreign currency), but rather is ten percent higher.

To be blunt, a 10% markup on foreign exchange is exhorbitant. I might expect to pay that markup in the kiosks at the airport or at a hotel front desk. I most certainly did not expect to pay that level of markup from my bank, especially since what I was told by the bank was that I would pay “no fee” and that I would be exchanging currency “at the market rate.”

Before deciding to exchange large amounts of dollars for sheqels at your bank branch, I also asked your centralized customer service line what the fee would be for withdrawing sheqels from my bank account at an Israeli ATM, and I was informed that the fee would be 2%. I asked her to confirm that this meant it would cost 2% more to withdraw money from an ATM than to exchange money in Boston (since she had already told me no fee would be charged for exchanging in Boston), and she said yes. I want to be clear here: in response to my questions, the woman in the Citizens Bank customer service department with whom I spoke told me clearly and explicitly that it would be more cost-effective for me to exchange money in Boston than to withdraw money via ATM from Israel.

As it happens, my wife withdrew 1,500 sheqels from an ATM in Israel on August 3. Here is how the cost of that transaction compares to the money market rates on that day [NOTE: The information in this letter about the cost of withdrawing sheqels from an ATM turned out to be incorrect; because the fees associated with these withdrawals didn’t show up on my account until weeks after the withdrawals were made. However, the point remains that the ATM withdrawals were significantly less expensive than the exchanges done in Boston.]:

Rate USD / NIS NIS / USD Sheqels Dollars %age $>min
ATM 0.265607 3.764966 1500 398.41 1 0
Market USD to NIS 0.265745 3.763 1500 398.62 1 0.21
Market NIS to USD 0.2657 3.763 1500 398.55 1 0.14


Here is something else I want to be perfectly clear about: The only reason why I exchanged large amounts of dollars for sheqels in Boston, taking the risk of sending my wife to Israel carrying large amounts of cash and doing the same thing myself when I leave in three days, is because Citizens Bank representatives told me in would be cheaper to do so. In fact, it was not cheaper. In fact, it was much, much more expensive, to the tune of $320 in fees that there was absolutely no need for me to pay and a risk of carrying cash there was absolutely need for my wife and me to take.

I paid those $320 in fees because I was given explicitly, directly incorrect information by your customer service department. I paid those $320 in fees because I was given vague, incorrect information by the tellers at your branch, and not a single one of them (I dealt with several) thought to ask, “Why are you exchanging so much money here? It’ll be cheaper if you take money out of ATMs in Israel,” even though that it clearly something your tellers should be trained to know and advise customers on.

To have paid these fees out of ignorance would have been my fault. To have done so because you misinformed me is your fault. Citizens Bank has cheated me out of $320, and I would like to know what you are going to do about it.


Jonathan Kamens

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