How to Move Abroad – Banking
Now that we have permanently moved to Mexico, banking has become a necessity of life. We need money to live on, and up until now, all of the money resides in institutions in the U.S.
I have been chronicling our experiences in this blog and on the Repurpose Your Career podcast. I have been discussing our experiences on the podcast and writing about the business side of the move here on the blog.
You can find all of the blog posts and podcast episodes where I am chronicling our journey and the decision-making process on the How to Move Abroad and Take Your Job With You Series Page.
There are a variety of ways to get access to your money, but there are 3 factors that are consistent across all of the methods of accessing banking:
- Transfer time
- Exchange rate
Your options for accessing money in the U.S. are as follows:
- Use a local ATM to withdraw money from your U.S. bank.
- Open a Mexican bank account and wire transfer money from your US bank to your Mexican bank.
- Withdraw money from the bank via a teller (yes, they still exist).
- Access your money via an ATM.
Access to US Banking via Mexican ATM
Before you leave the US you should tell your credit card providers and the bank that you will be in Mexico. Most will put a comment in your credit file which is only good for 3 months.
When you access an ATM the first time, find one that will let you choose the language. If you are in smaller markets, they will only present the menu options in Spanish. The first time I went to withdraw money it asked in Spanish how much I wanted to withdraw using the symbol “$” which I assumed meant in US dollars. I entered 100 and I receive 100 Mexican pesos or the equivalent of 20 US dollars, not the amount of Mexican pesos that was equivalent of 100 US dollars. DUH!
In Mexico, the symbol “$” represents Mexican pesos. My first lesson in Mexican banking.
If you have to use a machine with Spanish only menus, use Google Translate. Use the camera option to translate the ATM menu.
When you withdraw from an ATM, you have immediate access to your money, but the amount of money you can withdraw is limited by the bank that owns the ATM and your bank in the US.
The transfer time is immediate.
ATM fees vary a lot from bank to bank, and then there are the fees your bank charges. These fees are on a per transaction basis, therefore, the more money you withdraw at a time the less expensive the fees are.
For example, there is one bank that allows me to withdraw a maximum of 7000 Mexican pesos at a time and charges just over 80 pesos in fees. Another bank allows me to withdraw a maximum of 5000 Mexican pesos at a time and charges just over 30 pesos in fees. You would think the 2nd bank would be a better deal but it is not because the exchange rate I get from the 1st bank is so much better. My credit union charges me $1.50 (US) to withdraw from an ATM that is not part of their network.
I may be paying $5-7 (US) every time I use an ATM in Mexico to access banking in the US.
The exception to this is Charles Schwab money market accounts, which allow for unlimited withdraws from international ATM’s and they refund all transaction fees. This is very popular but there is one caveat, you cannot have permanently left the US. Most people get around this by maintaining a US mailing address, which we have done.
Establishing a Bank Account in Mexico
Notice I said usually because we were able to establish a bank account with just a tourist visa. This took some digging through several Facebook groups and then discussions with several well-established expats that know the ropes. My recommendation is you explore your options by speaking with established expats in the area where you plan to move.
Once you have a bank account, you can wire transfer from your US bank to your Mexican bank when exchange rates are favorable. I will give you 3 examples on how you can wire transfer money but the speed, fees, and exchange rates will vary and sometimes a lot.
Online and Mobile Banking
When I established my bank account, I was not automatically given access to online banking, I had to ask for it. I was issued a token device. See image to the right.
When I go to log in on the bank’s Internet banking webpage or on the mobile app, I am presented with an 8 digit code which I enter into the device and it returns an 8 digit code that I must enter into the web page or mobile app. This makes this cumbersome but very secure. I do not carry this device around, so using the mobile app when I am away from home is impossible.
I do not know if all of the Mexican banks operate in this fashion.
The first option is to do a wire transfer from your US bank to your Mexican bank. When I did this, I received instructions from my Mexican banker which I forwarded to my US bank. I was charged a US $30 fee and it took about 24 hours for the money to show up in my Mexican account. The exchange rate was good but not great and was determined by my Mexican bank.
The second option is to use a PayPal owned service, Xoom. They offer transfers of money for a flat fee of US $4.99 and it typically takes 3 days. They cannot transfer money to just any bank and they do not support the bank I am using. In addition, the exchange is much lower and therefore, I have not used this service.
The third option is to use Transferwise. They charge a flat fee of US $4.99 plus an ACH fee that is in proportion to the size of the wire transfer. The exchange rates are superior to the first two options. The downside is it takes about a week to receive the funds. The exchange rate is superior to anything else I have seen and makes up for the higher fees.
Our Banking Plans
We have opened up a bank account at Intercam Banco and now have a Visa debit card. I am limited to withdrawing 5000 Mexican pesos per day from an ATM and the maximum online purchase, I think, is 1500 Mexican pesos. I say ‘I think’ because I have not tried this yet and I do not remember what I was told about the limit. I will be using Transferwise to move money from my US banks to Intercam Banco.
We currently have debit cards with 3 different banking institutions in the US. Why have 3 you may ask? If you lose a debit card and need to replace it, it can take a significant amount of time. You can cancel it quickly but getting a new card is an issue. Since most business establishments where we live do not take credit cards, it is a cash-based society. You must have back-up plans. Fortunately, having a local bank account is a big advantage.
I will be exploring getting a Charles Schwab account as another way to reduce ATM fees.
I pay my rent in cash each month and I was withdrawing the monies from my US banks over multiple days from the ATM machines. What a pain. Now I will be able to go to the bank and receive the funds from a bank teller and then walk over and pay my rent. The bank is only 2 blocks from our casita and the rental office is 4 blocks in the opposite direction.
We have multiple credit cards with US banks that we will continue to use to make purchases in the US. For example, I pay for my storage unit in Austin on one credit card, and my wife pays for nutritional supplements on another that is shipped to a friends house. We will make another run to Austin in October and bring back what has been stored.
In no way have I figured all of this out yet … but I am getting there.
If you have any questions or comments please leave them below.Marc Miller