Moving money to Mexico

[Siestatime]

We go to Mexico every winter and hope to someday retire there. Based on the anticipated strenghtening of the Peso, we want to open a bank account and start depositing money in it now.

When we travel to Mexico in February, I'm told we can bring up to $10,000 US cash without declaring it. Is that the best way to open a bank account? Alternately, can't we open the account and wire the funds?

Are the conversion rates different if we deposit cash vs. wired funds?

Any guidance is appreciated!

 

[Original Wally]

remember that if you do, there is a box on the bottom of schedule b on your 1040 that asks if you have a foreign bank account.

 

[HawkeyeNFO]

the anticipated strenghtening of the Peso

That's some funny shizzle!!!

Actually, the Mexican Peso used to be the world's "standard" currency many many many years ago, similar to how trade worldwide is measured in US dollars today.

 

[grasshopper]

Ms G. was in Puerto Palomas de Villa, Mexico yesterday, with 16 girl friends from our little hamlet here. They shop and eat at the Pink Store, they have a party shopping and eating there, and the margaritas usually flow for free.
Yes there was some money moved, me I got some leftover cheese enchiladas made from Amish (soft ) cheese. I had them for breakfast with a cold cerveza from El Salvador at 10 AM. Retirement is muy bueno.

 

[nun]

remember that if you do, there is a box on the bottom of schedule b on your 1040 that asks if you have a foreign bank account.

If you move $10k to a Mexican bank you'll have to declare that to the US treasury on an FBAR form. Obviously any interest it earns must be included on your Schedule B and 1040, no matter what the size of the account.

Be careful not to invest in anything that could be interpreted by the IRS as a Passive Foreign Investment Corporation (PFIC) ie a Mexican mutual fund as gains will be taxed heavily by the IRS

 

[Original Wally]

siesta, nobody has really addressed your question. after posting last night i pondered your issue. at the risk of being labeled anti mexico or anti mexican (i am neither) here is a deeper response.

just my 2[FONT=Times New Roman, serif]¢. [/FONT]remember as always ymmv and free advice is worth every penny.

1) the mexican federales have a long and storied reputation for corruption. a history of, what, over 50 years. i dont know of any sifnificant reforms.
2) layer on top of that the drug cartels and narco terrorists, who seem to have no problem decpaitating 15 or more folks and rolling their heads into a local bar.

and you propose to waltz in with 10 thousand cash. seriously. if worst comes to worst i hope you only lose money not your life.

if you really want a peso denominated bank account, use a wire transfer. and it is probably cheaper if you can find a bank that has a relationship with a us bank. you wire to the mexican bank in care of the us bank, where the mexican bank maintains a sweep account. then it is simply a us fedwire. probably cost you in the $40 range per transfer. if you must wire directly to mexico a true foreign wire is probably more like $60-80. depending on what fees your bank charges. i used to have to wire money to canada, and it was far simpler with someone like royal bank of canada (rbc) - we wired to some us bank (i forget) where rbc had an account. they converted to $can and swept it on their side of the border and paid the vendor in $can.

i know your premise was to capitalize on a stronger peso. remember, if you are moving south to save money you are already getting most of the bang for your buck. don't try to squeeze every nickel out. you would probably do as well to just use a us account and withdraw from a local atm in pesos. you generally can get the equivalent of $500us per day. fair to good exchange rate. i pay $1.50 per draw when we visit daughter in germany. and i am sure you can avoid that with an account at ally or similar. buy stuff with a credit card, then pay your cc bill online, and boom, done and ready for another margarita. even at a buck and a half per draw, you will probably spend aobut the same as wires. so the only issue is the potential gain on a stronger peso. but that can work both ways as currency does fluctuate. and if you decide to bag it and return home you do not have to untangle a forein account and pay more wire fees and currency conversion costs to get your own money back home.

just one person's opinion. no more no less.

 

[nun]

FYI Capital One card will give you no fee foreign transactions.

 

[Original Wally]

nun - cap one credit? no fee cash advance?

 

[omni550]

PenFed's Platinum Cash Rewards Visa has no foreign transaction fees also....https://www.penfed.org/Platinum-Cash-Rewards/

omni

 

[Siestatime]

siesta, nobody has really addressed your question. after posting last night i pondered your issue. at the risk of being labeled anti mexico or anti mexican (i am neither) here is a deeper response.

just my 2[FONT=Times New Roman, serif]¢. [/FONT]remember as always ymmv and free advice is worth every penny.

1) the mexican federales have a long and storied reputation for corruption. a history of, what, over 50 years. i dont know of any sifnificant reforms.
2) layer on top of that the drug cartels and narco terrorists, who seem to have no problem decpaitating 15 or more folks and rolling their heads into a local bar.

and you propose to waltz in with 10 thousand cash. seriously. if worst comes to worst i hope you only lose money not your life.

if you really want a peso denominated bank account, use a wire transfer. and it is probably cheaper if you can find a bank that has a relationship with a us bank. you wire to the mexican bank in care of the us bank, where the mexican bank maintains a sweep account. then it is simply a us fedwire. probably cost you in the $40 range per transfer. if you must wire directly to mexico a true foreign wire is probably more like $60-80. depending on what fees your bank charges. i used to have to wire money to canada, and it was far simpler with someone like royal bank of canada (rbc) - we wired to some us bank (i forget) where rbc had an account. they converted to $can and swept it on their side of the border and paid the vendor in $can.

i know your premise was to capitalize on a stronger peso. remember, if you are moving south to save money you are already getting most of the bang for your buck. don't try to squeeze every nickel out. you would probably do as well to just use a us account and withdraw from a local atm in pesos. you generally can get the equivalent of $500us per day. fair to good exchange rate. i pay $1.50 per draw when we visit daughter in germany. and i am sure you can avoid that with an account at ally or similar. buy stuff with a credit card, then pay your cc bill online, and boom, done and ready for another margarita. even at a buck and a half per draw, you will probably spend aobut the same as wires. so the only issue is the potential gain on a stronger peso. but that can work both ways as currency does fluctuate. and if you decide to bag it and return home you do not have to untangle a forein account and pay more wire fees and currency conversion costs to get your own money back home.

just one person's opinion. no more no less.

Thank you for your opinion. With all due respect, I think you're overreacting to the violence thing, because hundreds of thousand of expats from US and Canada live in Mexico in peace and harmony. I'm not aware of any large (or small) scale violence against them. Life in Mexico is very much like the life many of us remember in our childhood - wholesome, simpler, not-as-commercialized, cheaper, etc. In a word, better. Not to take anything away from the United States, which I love.

When visiting Mexico, I always use credit cards for transactions. The upcharge against the current exchange rate is great, but you're always getting a good rate against the current exchange rate. I'd like to buy pesos now before I believe they will strengthen against the Dollar.

On a fundamental economic level, it makes sense for some Americans to consider living in Mexico. There are many, Consider the following:

By Jason Lavender, Intercam Financial Services

If you live in Mexico you probably already know the great advantages in Mexico’s economic standing and outlook. The Mexican Government has a budget surplus instead of a deficit. Also, the government has about 200 billion dollars in reserves as opposed to the U.S. which has over 16 trillion in debt. It used to be said that if the U.S. sneezed, Mexico caught a cold. Nowadays the Mexican stock market index (Bolsa) is in record territory while the U.S. is sneezing and coughing with its Fiscal Cliff. Mexican Government Bonds CETES pay close to a 4% interest as opposed to U.S. Treasury Bills which pay less than 0.2%. Not only do you get a better interest rate in Mexican Pesos, but you also can benefit of currency appreciation if you purchase pesos at a good time. Many financial analysts are predicting that the peso will go below 12.50 to the dollar by midsummer. So overall investing in Mexican financial products is known to be a safe and profitable bet at this time. Expats- Intercam

 

[kramer]

There are new money laundering laws in Mexico that can prevent or limit cash deposits. I think they started in 2011. You need to look into this before attempting to bring a lot of cash and deposit it.

The new laws had an effect on money changers and many businesses -- it was very pervasive, this was not some small law change. But I don't remember all the details or how that would affect a foreign tourist's bank account deposits.

 

[kramer]

I would look at the living in Mexico forums to see the best way to bring money over. It is different for every country.

For instance, here in the Philippines where I live, I can deposit a check written on a USA bank into a local dollar account at no fee (3 week wait for money to be available). The most efficient way to get Filipino pesos is then not to convert it at the bank but to take cash (dollars) that you withdraw at the local bank to a local money changer to get Filipino pesos.

The reason money changers have better exchange rates is because dollar accounts in the Philippines are protected from inspection in criminal or civil cases -- not even the Supreme Court can demand details of a dollar account. So anyone cheating on their taxes in the country wants to convert their Filipino pesos to American dollars. I am just explaining to show that the best way to bring money depends on a lot of things