The European Central Bank has imposed negative interest rates on commercial banks since 2014. Six years later, this continued policy is now forcing those banks to impose negative rates on their customers.
As a result, BullionVault's bank has since 1 August 2020 begun charging a negative rate on the Client Euro Account. With tens of millions of euros in that account, we regretfully have to pass these charges on. The 0.75% annual fee simply reflects this.
We do not wish to make this charge, but we have no choice. To give fair warning, we alerted all users to the possibility of a currency holding fee in October 2019, and we updated our Terms & Conditions to allow for it in November. This July we then emailed all users to say that a currency holding fee would apply to Euros from 1st August. Our published Tariff was updated to state this charge, and it was also highlighted at the top of the BullionVault homepage.
What should you do now?
To minimise future charges from the Euro holding fee, you could use your available funds to buy bullion, or withdraw your available Euros back to your own bank. For more active traders there are other options too.
What are your choices?
#1. Leave your EUR funds as they are, and bear the cost. For every €100 you leave in the Client Account, you will lose €0.07 per month (seven cents). On a holding of €50,000 the Currency Holding Fee would cost you €375 per year (€31.25 per month, equal to €7.22 per week).
#2. Alternatively you could look to replace your Euro cash balance with another of BullionVault's trading currencies: US Dollars, British Pounds, or – for Zurich gold only – Japanese Yen.
BullionVault doesn't offer FX services, so we cannot convert your Euros for you. But you could, if you wished, effectively change the EUR in your account into USD or GBP by buying bullion with your Euros and then selling it for one of the other currencies.
NB: Depending on your current dealing commission rate, the cost of this strategy would likely be higher than the annual currency holding fee charged on Euros. That's because instead of 0.75% per year, you would immediately pay up to 1.0% in total (maximum 0.5% to buy, another 0.5% to sell). Plus there will likely be a small gap (perhaps 0.3% during UK business hours) between the best price to sell and the best to buy in that other currency.
#3. Withdraw all your EUR funds back to your own bank account, and then transfer them to your BullionVault account when you are next ready to buy gold, silver, or platinum. Withdrawals to Eurozone bank accounts cost €10 (again, that fee is needed to cover the banking fees we incur). Withdrawals to EUR accounts outside the Eurozone may be higher.
#4. Buy bullion with your currency holding and leave just a little cash on deposit to cover forthcoming storage charges. Our vaulting fees, with insurance included, run below the EUR holding fee (0.12% per year with $4 per month minimum for gold; 0.48% per year with $8 per month minimum for silver or platinum).
Please note that if you own bullion but hold no cash in your account, you will over time accrue unpaid storage charges. To cover these fees, BullionVault has the right to sell a little of your bullion so it can recoup these unsettled expenses. Such sales are made at the Daily Price, using the London benchmark price. They are charged at the standard Daily Price dealing commission of 0.5%.