For American Retirees Living in Mexico, This Could Be an Ideal Time to Make a Major Purchase

No one can dispute the fact that the Coronavirus has had a rapid and profound impact on the economies of countries across the globe.

Stock prices have fallen and the value of the U.S. dollar has risen sharply relative to the value of other currencies, especially against the Mexican peso.

On March 24th, the Mexican peso dropped to a historic low against the dollar: $25.17 MXN. For comparison purposes, the exchange rate on February 18th of this year was $18.55 MXN.

That probably doesn’t mean much to our readers outside of Mexico who are focused more these days on trying to find toilet paper — but it should mean a lot to American retirees living in Mexico on a fixed income originating from the U.S. (e.g. social security) because they suddenly have a lot more buying power.

Example Time!

When it comes to explaining exchange rates, I’ve found that the most effective way to do it –especially when speaking with someone unfamiliar with the topic — is through examples.

For the purposes of this section, I’ll be using  the exchange rates and corresponding dates that I referenced in the previous section. The actual rates that you would receive in the “real world” will vary depending on the method you use to transfer the funds and/or make purchases. I’ll talk more about that in the next section.

A New Car

Let’s say you want to buy a brand new, fully-loaded Nissan Kicks in Mexico. The list price from Nissan Mexico is shown below.

On a side note, the prices of goods and services in Mexico are the total amount to be paid and already include all taxes, commissions and fees. I really like this about Mexico.

The price of that car in pesos did not change from February to March but the number of dollars it took to buy those pesos did.

February 18th ($18.55 MXN) $400,400 MXN = $21,584 USD

March 24th ($25.17 MXN) $400,400 MXN = $15,907 USD

That’s a pretty significant price difference. Now do you understand why exchange rates are important?

Real Estate

In areas of Mexico that cater to foreign real estate investors, it’s not uncommon to see prices listed in U.S. dollars. That won’t help you much when it comes to exchange rates, so let’s look at a property that’s listed in pesos.

This is an actual listing from the Riviera Maya. I redacted the contact details:

February 18th ($18.55 MXN) $2,990,000 MXN = $161,185 USD

March 24th ($25.17 MXN) $2,990,000 MXN = $118,792 USD

I could keep listing items ranging from flat screen televisions to bedroom sets, but I think you get the point. The more expensive the item, the more significant the savings.

Changing Your Dollars Into Pesos

The method that you choose to transfer your dollars into pesos can substantially impact the exchange rate you actually receive. That’s because financial institutions — especially banks — make money off of exchanging currency. Even if they claim there are no fees, the profit comes from giving the customer a lower exchange rate and pocketing the difference.

You didn’t really think your bank was exchanging your dollars for pesos out of the kindness of their heart, did you? Rest assured, they’re taking a cut of your money.

In fact, transferring money through a bank wire service often results in the fewest amount of pesos at the end when compared to third-party money transfer companies like Transferwise. Unfortunately when it comes to big ticket items like real estate, sometimes the bank transfer service is the only option.

I use Transferwise to move money from my U.S. bank account to my Mexican bank account via their app in response to changes in the exchange rate. It takes less than a minute to set up a transfer.

If you don’t have a foreign bank account to transfer funds into, you can set up an multi-currency account with Transferwise and store your money with them until you need it to buy, say — a new car in Mexico.

U.S. Credit Cards

Another great way to take advantage of good exchange rates is to make purchases using a U.S. credit cards that do not charge a foreign transaction fee. The exchange rates given by most cards are fairly close to the posted rates at the time.

Some new and used car dealerships will allow you to put the entire car on a credit card. Not only can you get a great deal on the exchange rate, you can earn cash back or points to use toward things like plane tickets.

One word of advice. If you are asked by a salesperson if you want to charge your card in pesos (the price shown) or in dollars, always choose pesos. If you say dollars, you’re agreeing to let the business handle the conversion for you instead of your credit card company and that convenience comes with a charge.

That practice is known as dynamic currency conversion (DCC) and I addressed it in an earlier article about foreign ATMs. You can read that one HERE.

Let’s Wrap This Up

As you can see, timing both bank transfers and major purchases to take advantage of fluctuations in the exchange rate can dramatically increase your buying power when living in Mexico. It’s all about learning how to live better on less.

On a related note, the value of the dollar against the peso dropped a bit since March 24th. My Transferwise app indicates that I can lock in a rate of $24.1080 MXN. That’s still an excellent rate.

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About the Author

Qroo Paul
Paul Kurtzweil (Q-Roo Paul) was a deputy sheriff in Florida for 25 years before retiring at the rank of lieutenant in 2015. He and his wife moved to Mexico looking to maximize their retirement income. They later started a blog called Two Expats Mexico ( to share their experiences as well as information about the logistical and legal aspects of retiring south of the border.

56 Comments on "For American Retirees Living in Mexico, This Could Be an Ideal Time to Make a Major Purchase"

  1. Amen! Buy what you need now. I almost feel guilty. I’ve been buying off Amazon daily. Everytime I think of something, I buy it. Food,Respirators and filters, gloves, goggles and everything else I need . Ior want, I have boxes stacked up. I’m running out of things to buy.

    Also, I’m paying my monthly rent in advance and for next month I’m giving the property owner a huge tip for being so nice to me during my stay over the last year. They accept AMEX so no transaction fees. I’m saving at least $250 per month on rent with these low exchange rates.

  2. “If you don’t have a foreign bank account to transfer funds into, you can set up an multi-currency account with Transferwise and store your money with them until you need it to buy, say — a new car in Mexico.”

    Is the Transferwise FDIC insured? I use Transferwise and have kept money with them. Currently trying to get a hold of them over the phone to find this out. Critical info these days.

    As for transferring large sums of money to a Mexican bank, just be aware that SAT/Hacienda (Mexico’s IRS) monitors transactions with the assistance of banks, and a huge transfer can trigger SAT contacting you.

    • Here’s the answer about how safe your money is being stored by Transferwise:

      Yes, the IRS and SAT do monitor bank transfers. Contact is normally made more for suspected money laundering than anything else. Most Americans and Canadians we know send thousands of dollars at a time without any issue. Even a transfer of $25,000 USD by our neighbor which was later used to buy a car didn’t get any attention whatsoever.

      • I found that link after posting too. Here is some key info from it:

        What would happen if TransferWise became insolvent?

        Because your money is always kept separately from the accounts we use to run TransferWise, it wouldn’t be affected if we were to become insolvent. We’d return all of your money to you.

        If something were to happen to one of the banks we store your money in (like Barclays or JP Morgan Chase), then your money wouldn’t be protected. We wouldn’t be able to give your money back in that situation.

      • Yes, I think that most expats avoid dealing with SAT or being contacted by them, and the vast majority of expats don’t think twice about it. The reason that SAT set up the stringent monitoring a few years ago was for money laundering and typically its cash deposits that get more attention.

        That being said, whether or not you are contacted by SAT is playing the odds. It’s like being audited for taxes anywhere. Probability-wise, chances are that you won’t. But it happens.

  3. Recently I cancelled a transfer with Transferwise that hadn’t yet been completed by me. I cancelled it when I found the method I wanted to use to transfer funds wasn’t available for the amount I wanted to send. When hitting the cancel button, I received a stern warning that cancelling could affect my ability to transfer funds quickly or at a guaranteed rate in the future. Your post makes it sound like cancelling is really not a big deal. Thoughts?

    • I’ve been cancelling and rescheduling pretty much constantly for about a week or more without an issue. Many of my neighbors tell me they’ve been doing the same.

      I’ll go ahead and omit that section just to keep folks out of trouble. 🙂

    • I spoke with Transferwise about this in the past. I was told that since they are charged for cancellations, if you do several of them (wasn’t told how many) in any given month, they won’t let you try to do any additional transfers that month.

  4. Valerie Swisher | March 25, 2020 at 2:10 pm |

    Thank you so much for ALL your helpful information

  5. Hope you are doing well with COVID-19. Folks in Baja California seem really worried now, with lots of long-term gringo visitors heading back to the U.S. quickly last week, lest they be unable to return later.

  6. Thanks for all your great information!
    We will be coming to your area next year (April) up to now we’ve only visited the Baja – actually I think you may have been there the same time as we were in February? We are staying in a beautiful home on the ocean on Isla Mujeres with a great group of friends. We can’t wait!!! Have you been? Do you have any tips or suggestions?
    Again, we love reading your blog!!!
    Thanks again

    • Yes, we were in Baja in February as part of our one-month tour around Mexico to celebrate our 20th wedding anniversary.

      I think you’ll love Isla Mujeres. I know we do! We go there once or twice a year and stay for a week each time. I don’t have any tips though. It’s a small island and you’ll learn it all within the first day…lol.

      Have fun! 🙂

  7. I just cancelled a transaction with TransferWise last week. There was an internet problem and it was stuck in the sending mode. Good old TelMex fiber optic dropped the connection in the middle of the deal. Cancelled and did it again. No problems, no messages.

  8. Glenn Sekse | March 25, 2020 at 3:53 pm |

    I cancelled a few transactions in the beginning due to transfer issues. Now that I have successfully transferred to myself and my girlfriend the transfers go quickly and without issue. Possibly Transferwise monitors what you are doing and only complains when the transfer is cancelled while it actually is in progress and not if it failed on the initial start. For example, it can’t get payment from your payment source. Just a thought.

  9. Cheryl Lovberg | March 25, 2020 at 4:08 pm |

    Hi Paul,
    What is your take on the banking system in Mexico? If the Peso keeps going down is it possible that a few banks could go under like what happened in the US in 2008/2009? My concern is transferring funds into a Mexican account with things spiraling out of control.


    • Mexico has an entity very similar to the FDIC that protects your funds, it’s called el Instituto para la Protección al Ahorro Bancario, or IPAB for short. The amount insured is 400,000 UDIs or around $2,584,000 pesos. I don’t see a total collapse of the banking system here occurring anytime soon — of course I didn’t see a U.S. without toilet paper and restaurants with inside dining 6 months ago either, so who knows for sure. 🙂

      For us folks that live there, we will be spending the pesos anyway, so we might as well get as many of them for our buck as we can. 🙂

  10. It’s great to hear that many are saving transfer costs by using TransferWise.

    I just checked it, to compare what I currently pay going direct US Bank to Mexico Bank and the costs are nearly double, so not sure how many are saving. Maybe for small transfers it helps.

    In my case, I transfer $5k from BofA to Santander and the fee is $25 which is reasonable. TransferWise wants $49 for the same transfer.

    I hope it does work for some. I hate high bank fees and always on the lookout to reduce them.

    • Don’t compare fees, compare how many pesos you get on the final end and even subtracting the fee amounts, you should come out on top. They gives a true midmarket rate, most banks do not and make their money on that. Our neighbor had a well known bank with zero transfer fees. Used them for years convinced he was doing better, he wasn’t. He still has that bank in the U.S. but he doesn’t use them for transfers.

  11. Valerie Link | March 25, 2020 at 4:17 pm |

    So do you store your money with Transferwise with the better at that time? Or does it fall back to what it is at the time of transfer? I don’t have a Mexican bank account yet. I hope you and Linda are staying well. Valerie

    • When you set the transfer, it locks in that rate and that’s what you get. Transferwise just holds the money in accounts of different currency types.

  12. Do you know of certain new car dealerships that will allow to use a credit card for purchase? Do they generally charge any additional fee?

  13. I can’t believe some new car dealerships will take a credit card. Do they charge an additional fee for this? Are there certain brand dealerships that do this?

    • I just checked with a neighbor that put her new Honda on a credit card. She said there was an additional 3% fee to do that but that getting all of the air miles more than made up for that.

  14. We purchased our car last Wednesday

  15. We purchased our car last Wednesday via wire. The exchange was 24 to 1. When we 1st started looking last month it was 18 to 1.

  16. Great article, Paul. Another thing to add about real estate transactions is that you can open a peso escrow account to lock in the exchange rate that you want and you can have that account open as long as you want. It costs $750 to set up. If someone is planning to buy at some point in the future now would be the time to send some money. Many developers are also freezing the exchange rate right now due to such volatility. So you can always negotiate to pay in pesos. If anyone needs help with this I’ll be happy to help.

    • Thanks for sharing that, Dave.

    • Hi Dave and Paul, Do you know what the ramification of paying off my mortgage with TAO would be with the peso being so high? Without digging out all my paperwork (which I may not understand) I’m not sure if I am locked in at a certain rate or if my payments are based on current exchange rate.. I DO plan on paying off my loan with TAO as soon as possible.. Thank you in advance.

    • That is excellent advice. Our offer was just accepted by a home seller and we made using an escrow company as part of that offer. We are just waiting for them to sign the sales agreement. I will look into locking the exchange rate, since the peso is creeping back up in value.

  17. Arlene Richardson | March 25, 2020 at 7:43 pm |

    I’m bad at math! Please give me a simple example. What is 100 US dollars now worth compared to before

  18. I have cancelled transactions many times as the peso was going up and never have had a problem. Even if the money was taken out of my account, it was returned promptly. Never an issue, just the first transfer took a little longer getting set up with the banks and I have been using them about 3 years

  19. Has anyone used Transferwise to send money to an Intercam bank account

  20. Shelley Otoupalik | March 25, 2020 at 10:16 pm |

    Hi Paul
    Thank you for the information. I don’t have a Mexican bank account yet, but I want to take advantage of the great exchange rates. If I transfer money to Mexico via Transferwise now, how do I access/receive the money when I get to Mexico in the fall?

    • You would have to have a place to send it to. In the meantime, you could set up a multi-currency account at Transferwise or another financial institution offering a similar service.

  21. We can expect inflated peso prices as soon as the Mexican businesses realize what is happening. Just saying.

  22. While it is true that Transferwise is simple and hard to beat for rates, I am limited by my bank to transfer money to them as Direct debit and with a maximum of a few thousand dollars. Besides, to do so, I have to give Transferwise my banking password and my PIN, which to me is a no.

    So I use XE which has pretty much the same final rate and to which I can send money as a bill payment, with no $ limit.

  23. Dwain Morgan | March 26, 2020 at 11:15 am |

    I would love to buy a car. I was moving to Chelem on April 14th but looks like I will not be able to get there due to the virus. Great idea if you are already in Mexico.

  24. Set up an account, sent $1000 and they deactivated my account without giving a reason. May not want to recommend them anymore.

    • They never gave you a reason? We’ve used them for transfers for a few years without any issues at all.

  25. I have used Transferwise to send money to Intercam bank.

    The only issue I had was: It took about three (3) days longer because they had to verify me, including selfies with my passport, etc. The exchange rate was what they said it would be when I started the transaction, but it still takes several days.

    I just recently moved some money using Transferwise again, and again it took about three (3) business days. I sent it to another bank, and I also took advantage of the change in exchange rates to get more Pesos–but it still takes about three (3) business days, even without the verification.

    I have looked into Xoom (as I also have PayPal; but I’m reading they have the same approximate 3-day delay). Other than banks making money on the float of my money, as long as I get the exchange rate quoted when I booked the transfer it all seems good to me.

    And, using Transferwise you can set alerts/triggers when the exchange rate hits your “target.” (Haven’t done that yet, but might try it today or tomorrow.)

  26. I was a little early on my purchase. My wife and I transferred funds using Transferwise to buy a car. We received just over 19 pesos to the dollar in late February. Missed out on the current 25 peso rate. Turns out hindsight is much better than foresight. Still, the potential loss on the car purchase is dwarfed by the financial market drop in March. Thanks for your timely articles.

  27. Would you please write about your opinion on the government’s response to the coronavirus. Thank you

  28. Julie M LeBlanc | March 29, 2020 at 12:04 pm |

    Most real estate sold is in $USD. Any specific leads on properties sold in MEX pesos?

  29. Marc Mittelstead | April 2, 2020 at 8:35 pm |

    Paul I also wanted to point out that requirements for residency permanante used to be $130,000 in a bank account.
    With a new conversion rate is it about $103,000??

    • The consulate locations do not respond in real time to fluctuations in the exchange rate when they set the financial requirements. Most use an average, or something close to it, of exchange rates from the previous year.

  30. Chris Poulter | April 8, 2020 at 2:07 pm |

    Hi Paul. We are moving to Mexico in September and don’t have a Mexican bank account. If we transfer money using a multiple-currency account, how would we be able to transfer that money once a Mexican account is open in September?

    • Just as you would with any bank account. In this case, you wouldn’t have to worry about the exchange rate at the time because you wouldn’t be converting any currency. It would be pesos to pesos.

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