Here’s a new twist. I went to a Citibank ATM in Rio de Janeiro on Monday 05/22/2006 and made two withdrawals of identical amounts of R$ 50.00 in Brazilian currency. I made the two transactions one after the next on the same ATM. One withdrawal was from an account in Citibank NY, using a MasterCard debit card issued by Citibank, and the other was from Bank of Internet (BOFI), using a VISA debit card issued by that bank. For the Citibank withdrawal the ATM printed out an exchange rate of R$ 2.27 to US$ 1.00 and a dollar equivalent of US$ 21.98. But on my statement the total of US$ 21.98 appeared as $21.76 plus a ‘foreign fee’ of $ 0.22. Thus, the exchange rate printed by the ATM already included a 1% fee and the underlying exchange rate actually used was R$ 2.30 to $US 1.00

For the BOFI withdrawal from the same ATM the exchange rate printed was US$ 2.19, less favorable for a conversion from US dollars to Brazilian reais. On top of that Citibank charged a R$ 6.00 convenience fee for the BOFI withdrawal, amounting to US$ 2.64 by its own exchange rate. The total in dollars for BOFI was printed as US$ 25.55, a difference of US$ 3.57 (16.2%). In principle, BOFI should refund the convenience fee, but even so the cost of the withdrawal from the BOFI account would be US$ 22.91, US$ 0.93 more than the withdrawal from Citibank (4.2%).

According to oanda.com, the interbank rate for 05/22 was R$ 2.20 / US$ 1.00, very close to the rate used for the BOFI withdrawal. As hard to believe as it may be, Citibank actually used a rate more favorable than the interbank rate for a withdrawal from its own account, even taking into account the 1% fee.

Neither Citibank Brasil nor Citibank NY could explain why the ATM used different exchange rates for the two successive transactions involving the same currencies.

The moral of this seems to be: use Citibank ATMs outside of the US if you happen to have a Citibank account. If you have a card from some other bank, it might be best to avoid Citibank.