Citibank FX rate (Citi vs Amex vs 28 Degrees)

[RayEarth2162]

Just thought this may be useful for those who wondered if Citibank's FX rate is worth the trade-off for the additional points.

I made the purchase on the same day (4 June 2013) on Amazon for the same item on 3 cards: Citibank Select, Amex Blue and 28 Degrees. The unit cost per item is EUR 476.23

Citibank Select: $666.30 (conversion rate: 1.399)
Amex Blue: $662.58 (conversion rate: 1.391)
28 Degrees: $656.78 (conversion rate: 1.379)

So it looks like Citi charges 2% more than 28 Degrees but you get 3000 points for the additional $10. Interestingly, the Amex statement says the $662.58 includes an FX commission of $19.30. So I am not 100% sure that 28 Degrees is really no FX conversion fee.

Hope this helps others in selecting the right card to use for FX transactions.

 

[Jack_OC]

Interestingly, the Amex statement says the $662.58 includes an FX commission of $19.30. So I am not 100% sure that 28 Degrees is really no FX conversion fee.

It probably is technically true that they don't charge a conversion fee, they just make money by applying an unfavorable fx rate (unfavourable to the customer, that is!)

The lesson is you have to look at the total you end up paying in your home currency, as that's all that really matters - your post above illustrates that very well, so thanks for that. Very good to know that the Citi "surcharge" isn't very much - I'd certainly pay $10 for 3,000 points any day of the week.

 

[serfty]

XE - Credit Card Charges Calculator

According to xe.com, the mid market rate that day was 645.87 AUD.

The cost charged is very un 28 degree like.

FWIW, on 7th June I had a USD transaction charged with a 1pc margin on the 28 degree.

Note that with the way the exchange rate has been fluctuating recently, such anomalies can be common.

 

[RayEarth2162]

I have run through 2 more transactions through Citi and 28 degrees and will report back in 3 days time to verify the FX difference.

 

[Cynicor]

I assure you there is no variation/charge to the 28 degrees card. You either struck a bad night when the rate varied wildly on the markets or have done something wrong (DCC, not waited for the charge to post etc.)

Many years and over $100k in transactions on this card will attest to that.

 

[oz_mark]

It probably is technically true that they don't charge a conversion fee, they just make money by applying an unfavorable fx rate (unfavourable to the customer, that is!)

In the case of 28 degrees and Citibank, the actual currency conversion is done by the card scheme (Mastercard and Visa as the case may be) GE/Citibank do not apply the exchange rate, favourable or otherwise.

 

[Jack_OC]

XE - Credit Card Charges Calculator

According to xe.com, the mid market rate that day was 645.87 AUD.

The cost charged is very un 28 degree like.

FWIW, on 7th June I had a USD transaction charged with a 1pc margin on the 28 degree.

.

$645.87 + 1% = $652.33, which is not far off what the OP was charged in this example. I'd be amazed if any provider passed on anything closer to mid market rates.

Thinking about it further, what's confusing here is that the cost via Amex and Citi was so low, rather than the cost via 28 degrees being high.

 

[markis10]

Given the shift in rates intraday at present I am not sure any comparison could be a benchmark, some may use a spot while others use a spread, making for a 2-3% difference .

 

[paultiffen]

I once tried for a 20 dollar load of my Pokerstars account with both 28 Degrees card and Woolworths Qantas card and both amounts came through identically. FX rate was less volatile at the time. I'm going to try sometime with Platinum Reserve AMEX as getting two points per dollar on FX transactions is pretty sweet.

 

[oz_mark]

Thinking about it further, what's confusing here is that the cost via Amex and Citi was so low, rather than the cost via 28 degrees being high.

The Citi Select card looks spot on for a Visa transaction:

Currencies fluctuate every day. The rate shown is effective for transactions submitted to Visa on June 4, 2013, with a bank foreign transaction fee of 3.3%.
1 Euro = 1.399132 Australian Dollar

See here: Exchange Rates - Visa Corporate


The 28 degrees Mastercard transaction looks correct for a Mastercard transaction settled on the 5th of June.

https://www.mastercard.com/global/currencyconversion/

(Not sure why one would be the 4th and one the 5th though...)

 

[RayEarth2162]

The transactions were effected at about 8pm, so maybe Amazon charged my third order a hour or so later, ticking over to 5 June. Will come back with further data.

 

[markis10]

The transactions were effected at about 8pm, so maybe Amazon charged my third order a hour or so later, ticking over to 5 June. Will come back with further data.

8PM our time is the start of a new day in the USA in many cases, and acutal exchange rates are probably used when the transaction passes the clearing house, not the authorisation time.

 

[Jack_OC]

(Not sure why one would be the 4th and one the 5th though...)

From that MasterCard link: "The exchange rate that is applied to a transaction is the exchange rate as of the day of settlement which is the day that MasterCard determines the settlement amount to be exchanged between the acquirer and the issuer. The settlement date is therefore typically different from the date of the actual transaction."

By the way, the MasterCard rate for 5 June is about 0.4% higher than the mid market rate, which is pretty good in my opinion (better than I expected as posted earlier), but still it shows there is some money being made by someone on the 28 degree fx transactions!

 

[oz_mark]

By the way, the MasterCard rate for 5 June is about 0.4% higher than the mid market rate, which is pretty good in my opinion (better than I expected as posted earlier), but still it shows there is some money being made by someone on the 28 degree fx transactions!

Mastercard will still be charging GE the 1% or so that gets charged. Most banks pass this on, while GE absorbs it on the 28 degrees card. I doubt GE are making the money....

 

[markis10]

From that MasterCard link: "The exchange rate that is applied to a transaction is the exchange rate as of the day of settlement which is the day that MasterCard determines the settlement amount to be exchanged between the acquirer and the issuer. The settlement date is therefore typically different from the date of the actual transaction."!

Thats the point I was making, transactions done on the same day are not the best litmus test for actual likely differences between cards, unless the currency is stable from transaction to all settlements, hardly the case in the last few months for the AUD.

 

[Jack_OC]

Mastercard will still be charging GE the 1% or so that gets charged. Most banks pass this on, while GE absorbs it on the 28 degrees card. I doubt GE are making the money....

I don't think GE are absorbing anything - according to the MasterCard link you posted, MasterCard would have converted €476.23 to AUD$656.42 on 5 June. The OP was charged $656.78. Seems to me GE passed on almost exactly what MasterCard charged.

The other thing I've just noticed is, the Visa rate on both 4 June and 5 June was much better than the MasterCard rate (if AUD is your currency):

4 June:
Visa: €1 = AUD$1.35443
MC: €1 = AUD$1.35956

5 June:
Visa: €1 = AUD$1.35951
MC: €1 = AUD$1.37837

In other words, the AUD was worth 0.4% more with Visa on 4 June, and worth 1.4% more with Visa on 5 June. That's the main reason why there is not as big a gap as you'd expect between 28 degrees and Citi Select. Even if both transactions were processed on 5 June, there would have been little difference in cost between Citi Select and 28 Degrees. Not sure if that would always hold true though.

 

[Jack_OC]

Just to add some more data points - the AUD was stronger vs the EUR with Visa compared to MC every day last week. By 0.13% (Mon), 0.38% (Tue), 1.39% (Wed), 1.78% (Thu) and 1.25% (Fri). So this is another variable that could have a significant impact, depending on the respective rates on the day.

 

[oz_mark]

I don't think GE are absorbing anything - according to the MasterCard link you posted, MasterCard would have converted €476.23 to AUD$656.42 on 5 June. The OP was charged $656.78. Seems to me GE passed on almost exactly what MasterCard charged.

28 degrees card does not pass on the cross border assessment fee, or the currency conversion fee.

 

[Jack_OC]

28 degrees card does not pass on the cross border assessment fee, or the currency conversion fee.

To the best of my knowledge, when those fees are charged, they are charged by the card issuer, not MasterCard. That's why they vary so much between cards. So I believe this is simply a case of GE not charging those fees on the 28 degrees card, rather than absorbing fees imposed by MasterCard.

Anyway, bottom line is that customer doesn't pay them, which is probably all that matters.

 

[greenfrog86]

To the best of my knowledge, when those fees are charged, they are charged by the card issuer, not MasterCard. That's why they vary so much between cards. So I believe this is simply a case of GE not charging those fees on the 28 degrees card, rather than absorbing fees imposed by MasterCard.

Anyway, bottom line is that customer doesn't pay them, which is probably all that matters.

Not exactly true... The fee that most consumers get charged (which is usually around 3%) is most often a combination of the Visa/MC charge that the bank incurs, plus a charge the bank adds. Most companies break down the total percentage and you can see the make up of the two components.