The currency in Mexico is the Mexican peso. It is posted or written with a dollar sign in front of the amount the same as in the U.S. or Canada. This can be confusing initially to newcomers as they struggle to make mental conversions, but within a few days everyone is usually into the swing of things.
Mexico is a cash society. Credit cards may be accepted at high end shops and restaurants and in tourist zones, but don’t expect it. Credit and debit cards are not widely used by Mexicans, so merchants hate to pay the high administration charges unless they have a lot of business from foreigners. In addition, you will be able to negotiate much better prices for your purchases if you have cash. Some Mexican retailers will accept U.S. dollars, albeit at a reduced rate of exchange, but the local currency is favored by most. Travellers’ cheques need to be cashed at a bank or money exchange shop (you will have to show your passport for these transactions). Very seldom will a merchant cash a traveller’s cheque.
Fortunately, cash is easily obtained. Most Canadian or American bank cards or credit cards work in the Mexican ATM’s. Check the logos on the back of your card and compare them to the logos on the ATM to find the ATM’s that are compatible. This is usually the most cost effective way to obtain cash – the service charges may be higher than back home, but not as much as buying and cashing travellers’ cheques. Also, ATM’s tend to give very competitive exchange rates. Your bank can advise if you need a new personal identification number (PIN) for international access to your account.
The banking system in Mexico is relatively advanced - a combination of high-tech infrastructure and low-tech delivery systems (not necessarily the fault of the banks). Since the financial crisis of 1994-95, most of the banks in Mexico have been taken over by European or American banks, and are very stable. ATM services are available throughout the country, not only at banks, but also at supermarkets, malls and other high traffic areas. Be sure to use these machines during daylight hours in secure areas.
How to transfer money from U.S. bank account to Mexican bank account
If you decide to open a bank account in Mexico and will want to transfer money regularly either one way or both ways, the following may be helpful to you. (For example, if one of your children decides to do a year of study at a university in Mexico). When deciding on a bank, select one that has a partner bank in the U.S. (this may necessitate changing your bank in the U.S. or Canada, too). Citibank is a partner with Banamex. Bank of America is a partner with Santander Serfin. Scotiabank in Canada is a partner with Scotiabank Inverlat. When you go to the bank, tell them you want to set up an account so you or a family member can withdraw from the account in either country. They will set it up so you can have an ATM card and can send another ATM card to your family member. Then, you can deposit money in the account and the other person can withdraw it in Mexico. Conversely, if you decide to retire early to sunny Mexico, and still have a couple of offspring in college back home, they can access cash from your account in Mexico in the same way. You just both need an ATM card and use the same username and password. Be cautious when you send ATM cards - do not use the regular mail. Use a courier to ensure its safety.
The costs and procedures for bank transfers of large amounts vary depending on the institutions, the urgency and the amount. Your realtor (if you’re buying a home) or banker can advise you on the most cost-effective method for such transfers. Be precise with the amount you will be transferring when asking for costs, exchange rates, etc. and ask for a written estimate. Some charges, for example, are fixed amounts while others are percentages. If you have the option of making, say, 3 payments over 6 months or 1 payment in 3 months, but the fixed charges per transfer are high, it might be a big factor in your decision.
Currency values rise and fall in relation to each other. Some people like to study the trends and make purchases of pesos when it is most advantageous for them. Others may have little choice but to convert their dollars whenever they become available. For people making large conversions, possibly a year or two in the future, there are foreign exchange specialists who will guarantee an exchange rate at dates in the future. We can put you in contact with these specialists. For those who are making small, but regular exchanges some local casas de cambio offer better rates than others. It is prudent to shop around.
There are also a group of financial institutions that are similar to banks, but that do not offer the full range of banking services. These instititutions take deposits and offer a series of plans for investing your deposit. Interest rates are substantially higher than at a bank, but the money is less accessible and no chequing privileges are available. It is also more cumbersome to transfer large amounts into and out of these institutions, as it has to go through a Mexican bank for transfer to or from your bank back home. However, they are very popular among expatriates who only require bi-weekly or monthly cash withdrawals for personal spending, but who want a cash reserve available in the country to pay for emergencies.