An “LOC Citizens” charge on your statement is a fee from Citizens Bank tied to one of two credit products: a line of credit or a letter of credit. For most personal and small business customers, it’s the annual maintenance fee on a business line of credit. For companies doing international trade or posting a guarantee, it’s a commission on a letter of credit. The two look similar on a statement but come from very different products with very different price tags.
The Most Likely Answer: A Line of Credit Annual Fee
If you hold a business line of credit with Citizens Bank, the charge is almost certainly the yearly maintenance fee. Citizens Bank charges $150 per year for business lines of credit under $100,000 and $250 per year for lines of $100,000 or more.1Citizens Bank. Business Line of Credit The fee covers the cost of keeping the line open and available, and the bank reviews and renews the line each year.
You’ll see the charge whether or not you’ve drawn on the line. That’s the nature of a maintenance fee: you’re paying for access, not for use. If the amount on your statement matches one of those two figures and you have a business line with Citizens, that’s your answer.
The Other Possibility: A Letter of Credit Charge
If the amount is larger, irregular, or tied to a specific transaction rather than a fixed annual date, the charge is more likely a letter of credit fee. Letters of credit are bank-issued guarantees that a seller in a transaction will be paid once specified conditions are met. Citizens Bank issues them through its Trade and Supply Chain Finance division and offers three main product lines: standby letters of credit and bank guarantees, commercial letters of credit for buyers, and export letter of credit advising, confirming, and discounting for sellers.2Citizens Bank. Trade and Supply Chain Finance
Citizens Bank does not publish a standard fee schedule for these products. Pricing is negotiated through a commercial banking relationship manager and depends on the applicant’s credit profile, the transaction size, the countries involved, and whether the credit is a one-time commercial instrument or an ongoing standby guarantee. Fees are typically debited directly from a linked Citizens Bank commercial checking or money market account once the credit is approved, which is why they turn up on the statement of the account holding the transaction, not on a separate loan statement.
What Letter of Credit Fees Cover
While Citizens sets its own rates, letter of credit fees across commercial banks generally break into the same categories. Identifying which one you were charged for makes the line item on your statement readable.
- Issuance commission: the main cost, calculated as a percentage of the credit’s face value. For commercial letters of credit tied to a shipment, most banks charge between 0.75% and 2% of the transaction amount. Standby letters of credit run higher because the bank carries the risk for longer.
- Amendment fee: charged each time the terms of an existing credit change, such as an extended expiration date or a higher dollar amount.
- Advising fee: paid to the beneficiary’s bank for notifying the seller that the credit has been issued and verifying its authenticity. Usually a flat charge.
- Document examination fee: covers the bank’s review of the shipping documents, invoices, and certificates the seller presents to draw on the credit.
- Discrepancy fee: applied when the documents the seller presents don’t match the credit’s requirements exactly. Small errors like a misspelled company name or a missing reference number can trigger it, and banks are strict about compliance.
- SWIFT charges: flat fees for transmitting the credit electronically between banks, usually $25 to $75 per message.
- Confirmation fee: an additional percentage if the seller’s bank adds its own guarantee on top of Citizens Bank’s. This matters most when the issuing bank sits in a country the seller’s bank views as higher risk.
Most banks also apply a minimum fee regardless of the credit’s face value, so a small letter of credit can cost the same in absolute dollars as a mid-sized one. If a charge on your statement seems disproportionate to the transaction it relates to, the minimum is a likely explanation.
Standby vs. Commercial Letters of Credit
The type of letter of credit behind the charge changes how it’s priced and how often it recurs. Commercial letters of credit cover a specific shipment: the seller ships, presents documents, and the bank pays. The bank’s exposure is short and tied to a defined event, so issuance costs are lower as a percentage of face value, and you generally see a single charge tied to the transaction.
Standby letters of credit work more like insurance. They sit in the background as a guarantee and are only drawn on if someone fails to perform, such as a contractor who doesn’t finish a project or a tenant who defaults on rent. Because the bank may carry that contingent liability for months or years, standby credits are priced with an annual commission on the full face amount, often billed quarterly. If your statement shows the same charge every three months against a credit that never gets drawn, that’s the pattern to expect. Citizens Bank’s accessGLOBAL Trade Flow® platform lets applicants manage either product online.2Citizens Bank. Trade and Supply Chain Finance
Matching the Charge to Your Situation
A few quick checks usually resolve which product the fee belongs to:
- The amount is exactly $150 or $250 and appears once a year. That’s the business line of credit annual fee.
- The amount is a round percentage of a known contract or shipment value. That points to a letter of credit issuance commission.
- The amount recurs quarterly and stays constant. That fits a standby letter of credit’s annual commission billed in four installments.
- The amount is small and flat, in the $25 to $75 range. That looks like a SWIFT or advising charge tied to a specific message or notice.
- You recently modified a credit’s terms and then saw a charge. That’s an amendment fee.
- A seller’s documents were rejected or waived before payment. That’s a discrepancy fee.
If You Don’t Recognize the Charge
Citizens Bank routes all letter of credit activity through its commercial banking division rather than its retail branches, so a retail branch teller usually can’t explain a trade finance line item. If the fee is tied to a business line of credit, your small business banker or the number on your line of credit statement is the right first call. If it’s tied to a letter of credit, the commercial relationship manager or trade finance specialist assigned to the account will have the underlying transaction and fee schedule on file.
Before calling, pull the exact date, dollar amount, and any reference number attached to the charge. Letter of credit fees in particular are tied to specific transactions and messages, and the reference number is what lets the bank pull the right file quickly. If the charge turns out to be an issuance commission or a standby annual fee you didn’t expect to recur, ask for the fee schedule and the credit’s renewal terms in writing so the next charge doesn’t come as a surprise.