Update (August 6, 2009) Bad news for Canadian independent travelers—Citizens Bank has just announced it is exiting the retail banking business. Citizens Bank announced today that it will be leaving the personal banking space. Citizen’s CEO Jason Farris, said that the company is converting to a non-deposit taking bank. In a message to members, Mr Farris relayed that Citizens, “in a national, online market, (was) unable to achieve the necessary size and scale to succeed.” For more information, check out our post: “Canadians Bid Goodbye to Truly Global Chequing Account“. Thanks to Neil Carey (of 2wanderers.ca) for bringing this news to our attention.
While there is a lot of healthy competition south of the border, with many US players offering global chequing accounts with attractive fees and features, Citizens Bankis pretty much the only Canadian game in town if you want a truly global no-fee chequing account.
Citizens Bank is an online national bank formed by Vancity, and it is the first Canadian bank to offer a no-fee, easy to use account with no ATM fees worldwide (it’s called the ‘Citizens Bank Global Chequing account’). At other banks, you might be required to pay as much as C$5 per transaction when you use your ATM card outside the country. With a Citizens Bank Global Chequing Account, however, that fee is zero. Well almost.
Is the fee truly zero? Well, yes and no. In order to avoid a bank surcharge in Canada, look for ATMs that are part of the EXCHANGE or ACCULINK networks (check out this page for an online locator). Out of the country, if you use the EXCHANGE ATM locator you’ll find over one million ATMs worldwide that you can access with your Citizens Bank ATM card for free (for an online locator for ATMs in the US, click here; for the rest of the world, click here).
Keep in mind, however, that Citizens Bank is on the Visa/PLUS interbank network (global ATM locator here). In some of the countries that you may visit, ATMs might only accept banks that are part of the MasterCard/Cirrus interbank network (MasterCard Global ATM locator here).
A further caveat—for any given debit card transaction, there are two other possible places where you can get hit for foreign exchange fees. Those are:
- By the merchant/ATM-owner
- By whoever calculates the actual exchange rate underlying everything
So, while Citizens Bank will reduce the hit on your wallet, you are still likely to incur transaction fees and currency exchange fees. Compared with the big banks, Citizens Bank’s exchange rate is likely not as advantageous (ie comparing the Citizens Bank Global Chequing account to the prevailing market rate to determine the exchange fee). This is offset, however, by the fact that they are not ‘double dipping’ into your transaction at the ATM—provided you are using an EXCHANGE ATM.
There were rumours that Citizens Bank was charging a much higher exchange rate to compensate for their ‘free’ global ATM withdrawals. However, these turned out to be only rumours. A representative from Citizens Bank explained it thusly:
Please note that Citizens Bank currently only manage rates on the ATM withdrawals for USD, EUR and GBP. For all other currencies, we are at the mercy of the ATM service provider and the rate they use. We do not aim to make a return on these transactions, merely to cover our costs. We’ve decided to go one step further and not only offer no-fee day-to-day chequing but also not charge ATM withdrawal fees worldwide. It was never our intention to recoup the loss fee income through exchange rates.
From what I’ve experienced, however, you’re likely to still come out ahead with Citizens Bank. This account offers all the benefits of a regular chequing account, but with none of the extra charges.
Some additional features:
- no monthly fees or minimum balances
- no fees for debit card purchases in Canada or US
- no fees for direct deposits, account transfers, balance inquiries, bill
- payments and pre-authorized payments
- no fees for cheque books or cheque images that have cleared your account
Everything for free? While I insist that there is no free lunch in life, it appears that Citizens is offering a fairly costly product for free at large? Does this sound too good to be true? Well, it should. But, with no shareholders and no branch network to support, Citizens Bank has built a model that allows them to provide these services for free.
Great value is a good way for a smaller bank to attract customers. And as Citizens is essentially an online-only bank, in order to win over new customers, the benefit to the customer has to be clear.
The trump card for me, however, is that Citizens Bank also has a clear ethical policy. And to that end, they appeal to me even more. For example, they are carbon neutral. They offer term deposits for micro-credit lending in developing countries. They give back a percentage of their profits to organizations nominated and voted upon by their customers.
To those wondering whether Citizens is safe, they are registered under the CDIC (Canada Deposit Insurance Corporation). Hence, your chequing/savings account is insured in the event of bankruptcy up to $100,000.00.
While there is significant lead time before we leave on our round-the-world trip, I have opened a Citizens Bank Global Chequing Account. Why not? It’s free!
- Canadian EXCHANGE ATM locator
- US EXCHANGE ATM locator
- Global EXCHANGE locator
- Visa/PLUS interbank network locator
- MasterCard interbank network locator