In a previous article, we mentioned how the adoption of ATM use by visitors and expats in Mexico (and world-wide) has made traveler’s checks obsolescent. As the use of ATMs by foreign visitors and residents has ballooned, banks have been gradually racking up the charges they make for use of ATMs in countries other than the one the card is issued in.
Banks have always made money on international withdrawals from ATMs (it’s called the “spread” and is the difference between the wholesale rate and the rate it applies to your account when you withdraw foreign currency) and of late, banks have been introducing other charges in addition to the money they make on the spread. Banks have to pay Visa, MasterCard, AMEX, et al, a fee for each transaction, and the local bank also charges – so these fees are passed on to customers.
A number of readers contacted us last week to tell us that Bank of America, who previously did not charge a fee for their customers who withdrew Mexican pesos from Santander bank (affiliated to BofA) have introduced, with immediate effect, a 3% “Foreign Transaction Fee”. Pensioners who are withdrawing cash in pesos from their Social Security payments made to U.S. accounts are now being charged this fee that costs them $30 for each US$1,000 withdrawn in pesos.
Most banks already charge at least twice for foreign currency withdrawals (the spread and an additional fee), so the new fee imposed by Bank of America is not a pioneering move that others will follow – the others are already there. The matter has upset some expats who live in Mexico and opened Bank of America accounts precisely because of the absence of foreign exchange fees for withdrawals at Santander. In response, they have begun a petition at Change.org, which you can see here. Customer pressure can cause banks to change policies–if sufficient numbers of customers express their intention to close accounts and go elsewhere.
If you are withdrawing more than $1,250 a month from ATMs with a 3% charge (which is roughly the ‘standard’ these days), you might consider making a wire transfer of foreign currency to a Mexican bank account and withdrawing pesos from your local account, as the ATM fees would equate to roughly the same as what major US banks charge as a minimum for international currency transfers (~$40).
A number of internet-based currency transfer services have emerged in the last few years, offering their customers lower cost international transfers than banks do; so it’s very probable that international currency transfers will become less expensive in due course as these services become established and trusted.
Our article, “A Fair Exchange” discusses the various ways of exchanging foreign currencies in Mexico, including the advantages and disadvantages of each one.
Feel free to share your ideas and alternatives about currency management methods in the comments below.
See Also: Money in Mexico
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I have been using B of A acct to withdrawal pesos at a Mexican Bank with no fees for three years. B of A has begun charging a $5.00 fee for each transaction. Is there a US bank I can use to avoid the fees?? thanks in advance
My mother-in-law used to receive her social security check at Banamex USA (California) and they get it out at an ATM. We just got notified 3/30/15 that her account will be closed as of 6/1/15. We called and got the runaround: “the bank has the right to cancel anytime”. Ok, but why? “the bank has the right…”. I am certain it is because they are losing money on it and the Patriot act makes it even more painful for them. At any rate they screwed us now we have try another route.
AS, you are 100% right.
I am at a loss reading the FX fee discussions that lack any reference to the exchange rates. Isn’t true that the financial institutions that charge less in fees, may actually be exchanging at a worse rate, thus making their money in a different way? So isn’t a discussion of fees not incomplete unless there is also a comparison of exchange rates charged to those published?
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I write checks from my Wells Fargo account here in PV and my local bank, Bancomer calls for the exchange rate for that day. That’s the rate I get. The rate is higher for 5,000 and above. It does take 6 business days for the money to appear in our Bancomer account, but no fees on either end.
I recommend Schwabbank.com, from Charles Schwab Co. They reverse all ATM charges AND never charge a foreign transaction fee! Pretty good deal. I just move trip money in the account before I leave home, then withdraw anywhere with no worries. Works great!
Bank America will reverse charges and give you three months total of free ATM withdrawals if you call customer service and tell them you need the three months to find another bank.
Having a platinum account at Bank of America requires a deposit or total of 100,000 in the bank. I’m going to use a teachers credit union from back home, they only charge 1 percent. If you live near canada you can open an account a scotia bank and then use their internet services to deposit. I think you can take money out, at least her in vallarta, from one of their branches, without cost.
I have a PLATINIUM account with BofA.
Bank of America did try to charge 3% fee.
They debited my account on my November withdrawals done at Santander Serfin ATM.
One phone call and they reversed all charges.
There was a recent discussion of this topic on the Mazatlan board and one of the postings contained a link to this http://money.wikia.com/wiki/Foreign_Exchange_fees_on_bank_cards_and_credit_cards and this: http://travelsort.com/blog/no-atm-fees-bank-checking-accounts-that-refund-atm-fees I found them to be quite informative.
I use a web service called ‘Xoom’ and can transfer up to $2000. USD into my Bancomer account for $4.99. No bank fees.
In Response to Aaron. If you are being charged, by BofA, a monthly maintenance fee on your checking account, this can be avoided by having deposits made into your BofA Savings account. I was told this by a BofA customer service rep. It seems to have worked on my Nov ending statement. At least, you may be able to save on this monthly fee.
At this time, I will never use Banamex. To put it mildly, They Are “Cheap”. At one branch, when I wanted to change USD, they wanted a copy of my passport. (Other MX banks would either make a copy or hand copy my passport information.) They would not make a copy. Fortunately It was a branch near my residence. So I went home and made a copy. I wonder about the tourist who has no idea where to get a copy.
As an alternative to Bank of America/Santender/Scotiabank, we decided to open a Citibank account (done easily online from Mexico) as well as a Banamex account here in Mexico. Since Citibank owns Banamex, we are able to transfer funds to our Banamex account without any transaction fee, then use our Banamex ATM/Debit card to withdraw funds at any Banamex ATM machine.
However, this has not worked as well as we thought. The exchange rate that Citibank/Banamex gives us for the free transfer is the day’s bank exchange rate, not the international exchange rate that we got using the BoA/Santender option. Unfortunately the Citi/Banamex exchange rate is roughly 3% less than the BoA/Santender one. This effectively removes any benefit to the Citi/Banamex option–both cost us about $30 for every $1,000 transfer/withdrawal.
There’s still one other option that we’ve yet to try–using our Citibank ATM card in a Banamex ATM machine to see (a) if there are fees attached, and (b) what the exchange rate is. If there are no fees and the exchange rate is the going international rate of the day, this will seem to be our best option.