My most recent currency exchange using the Norbert Gambit seemed to go off without a hitch. I bought Royal Bank shares in Canada with Canadian dollars and then sold Royal Bank shares in the U.S. to get U.S. dollars. Two weeks later, all looked fine. But I was eventually hit with an interest charge.
Here is the sequence of events. I made the trades one day, and the trades settled three business days later. But it wasn’t until one business day (3 calendar days) after settling that InvestorLine’s systems wiped out the positive number of shares on the Canadian side of my account and the negative number of shares on the U.S. side. So far, so good.
However, InvestorLine’s system decided that I was short the U.S. shares for the three calendar days it took to flatten the positive and negative numbers of shares. At 21% interest, shorting for three days produced a charge of over US$90. The worst part, though, is that interest charges don’t show up in my account until about the 21st of each month. In this case, the interest charge appeared over 4 weeks after I made the trades.
When I called InvestorLine, the representative immediately said he’d reverse the charge. But this isn’t good enough in my opinion. I noticed the charge mainly because my account showed a negative amount of cash. If I had looked a few days later after receiving some dividends, I might not have noticed at all.
When I asked what went wrong and whether I could expect such interest charges again (this happened once before, but I thought it was an isolated mistake), the representative told me that this was a limitation of their system. If I “ever try this again,” I’ll have to call again to get the interest charge reversed.
I’ve heard from many readers that they do currency exchange with Royal bank stock and other stocks without any problems. I’d suggest that these readers go back and check for interest charges up to a month or so after the trades. If any readers go back to check, please let me know your results.