USD lump sum in cash - how to convert

BiggaThanBen

Hello

We have some USD cash left from a failed foreign property purchase attempt, what is the best way to convert it to GBP?

I don't mind leaving them as USD in case we decide to buy another property abroad, but interest rates are pretty much 0% so I am thinking we would be better off making it GBP.

I can see 2 options:
1. Exchanging it at Queensway in London in several instalments, but to be honest I would avoid that experience.
2. Depositing the cash to a USD account and then using a currency broker to move it to GBP.

Has anyone tried the latter, any recommendations ?

I know Barclays and Citibank offer USD accounts, but I am not sure if there are any pitfalls, if I will be able to use a broker and not pay any extra fees on the exchange.

I had problems trying to get this information from Barlcays, as no one there seems to know anything about USD account and Citibank has only one office in East London, which would be tricky for me to visit.

Archi_Bald

How much money are you talking about?

How much interest would you expect to get in which GBP accounts?

How does the interest compare with the inevitable exchange loss?

How likely are you to pay for property etc in USD?

Currency brokers are usually more economical than banks but as you say, you need current accounts both ends, and they certainly won't answer the above questions. For approximate rates, try a comparison service such as fxcompared.com.

BiggaThanBen

I am more concerned about keeping it as cash rather than about GBP interest rate that I would get. Basically I need a USD saving account that would allow transfers to a currency broker with reasonable or no fees.

bowlhead99

Generally if you want to be able to move money from your account to a broker account and back to your own account you are not going to be able to do it without fees. Why would they give you a free saving account and then move your money around for free so you can use cheap brokers instead of their own internal service that makes them money?

Generally a 'savings' account is not for sweeping money back and forth to other banks, customers and suppliers. A 'current' account is what you traditionally use for ease of access, and when dealing with non GBP currencies, such accounts will come with transaction charges if not ongoing account maintenance charges too.

I use Citi, though I do live in London. I don't really need to visit the branch to use the services though, everything is online/phone these days. They have USD, GBP and EUR accounts in current account (with linked debit card) and deposit account versions (though interest rates are paltry).

Moving both pounds and dollars is straightforward. If I'm converting a few hundred from one currency to the other it's not worth using a broker but if it's thousands, then it is.

BiggaThanBen wrote: »

I don't mind leaving them as USD in case we decide to buy another property abroad, but interest rates are pretty much 0% so I am thinking we would be better off making it GBP.

If you genuinely don't know whether you'll need it as GBP or USD in the future then probably GBP makes sense as that's presumably the currency you live your life in.

But if you don't mind leaving it in USD because you might realistically be buying a USD property, then moving back to GBP to snag a slightly better interest rate seems like it could be counterproductive, if you pay a couple of percent to move the money back then forth and in the meantime the pound depreciates 10% against the USD.

I've never really understood people who are looking to shop around to open a nre bank account to find the absolute lowest fee to ping money to a broker to do a currency deal. If you have thousands of dollars which will fluctuate in GBP by £10, £50, £100, £1000 on any given day, and your goal is to get them to GBP ASAP to avoid fluctuations and start earning interest, it is madness to get hung up on "oh but they'd charge me £20 wire fee to send my money to the broker".

Just find a broker with a low spread and work out the quickest way to get it to them. You already have the money in USD in some bank account right now, right? So why do you even need a new USD account - can't you (or whoever has it) just send it from where it is to the broker and have him send it back to a GBP account.

Or are you just hoping to hold it as USD for the medium term and then drip it over to brokers in due course on the days when you happen to like the exchange rate? Either way I don't have a better recommendation than Citi as I've only used them and Lloyds International for dollar accounts outside the US, and Citi were more convenient.

BiggaThanBen

bowlhead99 wrote: »

You already have the money in USD in some bank account right now, right? So why do you even need a new USD account - can't you (or whoever has it) just send it from where it is to the broker and have him send it back to a GBP account.

No, it is in cash, as in the thread's title, since the question.
If Citi charge £20 and do not put any restrictions on fx transfers then I would be fine with it, although to deposit cash I will need to visit their branch in E14 I suppose ?

bowlhead99

I misinterpreted the question, thinking your talk of having USD cash was the distinction between "USD cash" and "USD investments or other assets". I'd assumed the "cash" was in electronic form somewhere rather than literally having a whole load of physical dollar bills with which you had been planning to buy a house.

You are right you would need to physically visit a Citi branch to be able to deposit it. They closed some of their branches but I think they still have more than just the one branch in Canary Wharf. I can't remember what services they offer at what branch but I'm sure they'll tell you if you give them a call and say you have a pile of dollars with which you'd like to open an account. Presuming they take cash deposits, you shouldn't face any restrictions where you can send it electronically once it's in a current account. You can flip it into dollars at their rate, or - at what is likely a better rate - wire it to a broker who wants the dollars and will send you the GBP proceeds to a Citi GBP account or some other GBP account elsewhere.

As for the exact fees for moving money you can probably get the details off their website or call them.

Be prepared to answer questions about source of funds if you're walking in off the street with pocketfulls of cash. You'd certainly get that problem going to a reputable high street bureau de change, Queensway or elsewhere, as any legit money changer has to satisfy themselves that they're not participating in money laundering, whether you approach them with $40k cash or a series of 4 x $10k or 8 x $5k.

BiggaThanBen

If fact I accidentally found a Citi branch near Oxford Street.
Had a chat with the advisor and it appeared that in order to open a USD account you need to have a GBP account with them.
That's £300 per year for the privilege of having a USD account with 0.01% interest rate.
So Citi is not an option then.

When I was changing GBP to USD at Queensway some time ago, there were no questions asked when I exchanged 10K at a time. Either way I had bank withdrawal receipts with me, it is just that I don't feel comfortable walking with loads of cash.
But the good thing is that you can haggle the rate down quite a bit there.

I will try to get some information from Barclays then, as I already have a current account with them.

bowlhead99

Definitely worth chasing up any / all existing banking relationships e.g. Barclays to see what they can offer even if you can't do it through your local branch.

I don't have the £25pm citi gold account, just the £8pm citi plus account which has the features I need, some travel insurance I don't use, and has a fee waiver if I could be bothered to cycle cash through the accounts and set up direct debits. That's the one I'd recommend as the cheap and cheerful solution but I guess they may not be offering it to new customers as a current product, in favour of their higher priced gold account.

If you're only doing a one off transaction or two then even the gold account is not going to cost you £300 as you wouldn't keep the account for a whole year...

If you just keep the cash in USD under your mattress it costs you money to insure against loss. If you exchange it at a high street broker in chunks, you might think you getting a great deal because you can haggle, but the reality is that if he makes you haggle from a tourist rate instead of just giving you a no nonsense low spread rate for an electronic transaction, you are going to be paying more than you need.

If you change it to sterling before you really need it because you don't want to store it under the mattress or open an "expensive" dollar bank account, and then you do want the dollars after all, you may be out of pocket by 10%+ due to adverse rate movements which is presumably much more than £300.

So, those factors may or may not be considerations. Good luck finding the best solution, come back and tell us what you ended up doing.