Citigroup won't use high deposit rates to win digital accounts: exec

NEW YORK (Reuters) - Citigroup Inc does not plan to use high deposit rates to attract customers to its new digital bank accounts when it begins marketing this fall, the chief of its global consumer bank said on Tuesday.

Speaking at an investor conference, Stephen Bird said offering high rates tends to attract "hot money" depositors rather than loyal customers.

Instead, the bank will market the accounts nationally to its credit card customers, such as holders of its Double Cash card and cards it issues for American Airlines Group, and Costco Wholesale Corp and Home Depot Inc.

Bird said, for example, that offering additional American Airlines mileage credits will attract stable deposits to the bank.

Citigroup, the third-biggest U.S. bank by assets, has fewer than 700 branches, located in just six cities. It said in March that it will offer accounts nationally on a new phone app.

Other banks, such as Rhode Island-based regional bank Citizens Financial Group Inc, have also said they will offer accounts nationally on digital apps, raising investor concern about more competition in rates for deposits.

(Reporting by David Henry in New York)