The majority of my expat friends have not opened a Mexican bank account for one reason or another. Those reasons range from not being able to do so (see requirements later in the blog) to believing that there is no advantage to doing it. I can tell you from experience that opening a Mexican bank account has made it easier to live here and it has provided us with more financial security.
In order to explain why, I am going to go touch on some of the benefits of having a local bank account.
BENEFITS OF OPENING AN ACCOUNT
1. Larger Purchases
Whether you are buying a new car here or having custom blinds put in your house, you will find it much easier to make the transaction with a local bank account. It is common in Mexico to pay for larger items through a bank transfer. If you have a local account, you can quickly make the transfer via your computer or phone app. I have paid for a few items like this and I was never charged a fee by the bank.
Trying to wire money from your home account to a Mexican account to make a purchase can be a huge pain. I did it once, and I spent the day making phone calls and faxing forms. The bank representative in the United States asked me to come into a branch to prove my identity first. Although I do appreciate the effort to protect my finances, it is not easy to comply with that request when you are in Mexico.
Going through the hassle of wiring money from your home bank can also be costly. Banks charge an average of $30-$60 for a foreign wire transfer. On top of that, the exchange rate is usually lower than that offered by companies dedicated strictly to sending money, like Xoom.com.
Nerdwallet.com has an informative article about wire transfer fees: Wire Transfers: A Guide to What Banks Charge.
Some of you are thinking, “Why not just use your credit card?” Actually, I am a big fan of using credit cards in Mexico that offer cash back or rewards. The problem is that many businesses charge you more to pay with a credit card, so that is not always the best option with a larger purchase. You could always carry a big wad of cash to the store, but that probably would not be the safest thing to do.
2. Paying bills
The major banks in Mexico allow you to pay several bills through their online portal (e.g. electric, cable, Internet). You can also set up automatic bill pay, so you do not have to worry about forgetting.
The use of skimming devices to steal credit and debit card information is rampant all over Quintana Roo. If you are using your cards regularly, there is a high probability that you will be a victim.
If your credit card number is stolen, it is not as damaging as your debit card number being stolen because the money is not coming directly from your bank account. This makes it easy for you to dispute a charge before any harm is done. The key here is to review your statement carefully before paying the monthly bill.
In the case of a debit card, you are giving the thieves direct access to your bank account. They can withdraw the maximum daily allowance every day until they are either detected or you run out of money. Many people are unaware that they have been victimized until their card is rejected at a business or they check their balance at an ATM.
Most banks will reimburse you after you fill out a bunch of affidavits saying that the charges are fraudulent. The problem is that this process takes awhile and you may be without funds in the meantime. For this reason, it is not advisable to use your foreign debit card here.
Having a Mexican account will give you a little more protection because you can elect to keep a small amount of money in it. If the card is compromised, the thief will not have access to the bulk of your assets back home.
If your cell phone or laptop with the bank app are ever stolen, you will be glad that you have a Mexican account. The online security provided by Mexican banks is superior to that of their counterparts in the United States.
When you open a basic checking account here, you will be given a small coding device called a token. You have to use the token whenever you want to transfer money online. The token generates a temporary code that you have to type into the screen in order to finish the transaction. This means that even if someone has your username and password, without the token they cannot touch your money.
4. Convenience If Something Goes Wrong
If you are the victim of a theft, you can just go to your local bank branch to order a replacement bank card or token.
In the past few months, two of my friends have had their credit and/or debit card information stolen. The financial institutions in the United States detected the unusual activity and deactivated the cards before any serious damage was done. That was the good news, the bad news is that they could no longer get any money out. The financial institutions said that they would only send the replacement cards to the U.S. addresses for security reasons.
In one case, the person had a friend who was coming to Mexico bring it down. In the other case, the card sat in the United States until they returned for other business.
5. You Can Play Exchange Rates Like Stocks to Come Out Ahead
This one was explained in Tip #4 of Tips to Make Your Money Go Further in Mexico.
REQUIREMENTS TO OPEN A BANK ACCOUNT
The banks generally require the following in order to open an account:
- Valid official identification
- Proof of Address (not less than 3 months old)
- For foreigners, a valid passport and a valid immigration document showing legal status in the country
That last one can cause you some trouble. I have been to several banks and all of them have told me that they will not accept a valid tourist visa (FMM) to open a bank account. They require either a temporary or permanent resident card as proof of legal status. You may want to consider this if you are debating whether or not apply for a resident visa.
CONSIDERATIONS WHEN CHOOSING A BANK
Do not choose a bank solely on its proximity to your residence. Once you set up the account, you will not be going back there very often anyway. It is more important to choose a bank that best suits your needs. The following are some things you might want to consider:
1. Online Access
You want to choose a bank that will allow you to check your balance and move money easily online. This information is usually available on their website.
2. ATMs Nearby
It is important to make sure that you will be able to get cash when you need it. Many of the banks will list branch and ATM locations on their site.
3. Money Transfer Limits and Fees
This is a huge one for an expat. In the beginning of the blog I mentioned above that wire transfers from your home bank can be expensive and the exchange rates are usually not optimal. That is why I recommend using a money transfer service to send your money directly to your new Mexican bank account. The fee for these services is a fraction what the banks charge and the exchange rate is better. Once you have an account, you just set up a transfer online from your home bank and you will get a text message when it is deposited in your Mexican account.
After opening an account, I discovered that my first bank had strict limits on such transfers and I was not able to move much money a month. I started to research the options and moved to a new bank.
Xoom.com is a money transfer company owned by Paypal. Their site has up-to-date information related to the transfer maximums: Xoom list.
I will undoubtedly end up doing a future blog comparing the various money transfer services. I have several blogs in the works, but I only work on them when the weather is bad. After all, I moved to Mexico to enjoy the beautiful beaches and cenotes.
Author: Qroo Paul