You’re a Wanderer, in Mexico, and need money. What’s the best way to get it?
In the States, like most people, I use a high rewards credit card for just about every purchase. It seems you can easily go a week or more without spending any cash—and at the end of the month, you pay the tab all at once in exchange for some travel benefits. But in Mexico, I become almost exclusively a cash payer. It’s not that you can’t use a credit card anywhere, it’s just not generally as convenient. And in small towns or for small purchases it’s still pretty uncommon. Not to mention, the corner taco stand guy isn’t going to be standing around with an iPad and a Square card reader to ring up your 10 peso tacos—though those days probably aren’t far off.
So, with the need for efectivo (cash) comes the question of how to obtain it.
There are just a couple of realistic ways that people go about getting cash—ATM, or money exchange. Money exchanges are possibly the worst scam ever. The rates they offer are horrendous, and if they are yelling out to you that there is no fee for changing money, that’s only because they’ve built it into the exchange rate that they are offering you. That exchange rate is often 10% poorer than the actual exchange rate—or worse. Imagine someone hands you a one hundred dollar bill, and you give them back four twenties—at a money exchanger you’re the person with the hundred to start, and the eighty to finish. So, let’s just agree that money exchangers are the worst way to get Pesos.
ATMs are really the only way to go in Mexico. They’re called cajero automaticos and are found all over the place. Choosing the right one is the trick. A couple of years ago, they all worked the same. They gave a good exchange rate in return for a bank fee of maybe $1 or $2. If you were pulling a few thousand pesos out, your charge between the bank fee and the exchange rate maybe came to 1%. Note: most banks, and especially online banks, refund you any ATM fees. We use CapitalOne and aren’t charged bank fees, so we tend to ignore them when getting money from ATMs.
Then some of the banks discovered the ultimate scam. They realized that most people using a bank card from a non-Mexican bank had no idea what the proper exchange rate should be. So why should they offer the current market rate? Suddenly, we’d start seeing a little line on the ATM screen, right before we hit “Complete Transaction” that stated what exchange rate they were going to make the transaction at, and it was nowhere near the market rate. Suddenly, some ATMs were hitting people with 5-10% worse exchange rates. For those of you who aren’t great with figuring out percentages, that could add up to $25-$50 on a $500 withdrawal. On top of that, they’d still throw in their $2 bank charge.
These days, the best advice I can give is to know what the current exchange rate is. Check it online every few days.
If you know the current rate is 19.2 pesos to $1.00 USD, you’ll be a lot less inclined to click “Complete Transaction” when they tell you that they will exchange your money at 17.7:1.
Fortunately, not every bank has caved to this easy money robbery. Note, it seems that when the ATM doesn’t explicitly tell you what rate they are giving, you are getting the market rate. When they do tell you the rate, it’s because they want your permission to steal from you.
Here are a few of my most recent transactions. We were on our boat in Isla Mujeres but rented a car and spent a few days driving around the Yucatan, so we got a good cross section of ATMs in the area. The below rates were not told to me on the ATMs themselves, but were calculated later when checking online against my bank account.
On February 9th I used a Banorte ATM and was given a rate of 18.90. The rate that day on the open market was about 19.05. So I paid about .8% to get my money transferred from USD to Pesos and have it spit out of a machine at a grocery store on an island in Mexico. Not bad at all.
On February 13th I used a citiBanamex ATM and was given a rate of 19.06. The open market rate was about 19.25. That’s just a 1% difference and is very competitive. Even I concede that the banks deserve a little wiggle room on the exchange rate.
On February 16th I used a BBVA Bancomer ATM and received a rate of 18.95. The open market rate that day was still about 19.25. So for this one, I paid 1.6% to get my money. That’s getting to be on the outside edge of acceptable to me.
Point is, getting Pesos in Mexico isn’t difficult. Use an ATM for the best rates, and don’t finalize the transaction if it tells you it will give you a worse rate than the market. My father-in-law still cracks me up, despite my explaining to him that he can use an ATM, he still insists on visiting his local bank branch in Minnesota to exchange money so that when he arrives in Mexico he has pesos on hand. I can’t imagine what sort of rate they are giving him, or even how they end up having Pesos to give him in the first place.