Avoiding international transaction fees in Mexico - Tips on cards, ATMs, and banks
-Beach in Mexico- photo by K. Mennem
In 2023 Americans are flooding to Mexico in record numbers. Some are working remotely but many more are taking vacations, which is being called revenge travel. One thing not all travelers plan for is the extra fees they find on their bank and credit card accounts when they get home. But there are a few ways to avoid these.
Credit cards are very useful in Mexico, but some places only take cash. On top of that, some places are just outright not safe to use a card. So it is good to have both cash and a travel credit card with you at all times (plus emergency cards).
For most Americans every ATM trip will tag at least $9–11 USD in fees on top of the withdrawal. This is an ATM fee, a conversion fee (more on this later), and your home bank fee. At the time of writing only a few U.S. banks can waive all of these fees. Here are a few.
-CITI — You have to pay a monthly fee or have a decent amount of cash in the account for this benefit
-HSBC — same as Citi
-CHARLES SCHWAB — same as CITI and HSBC
Regardless if you have a debit card that waives fees or not, make sure to always decline the conversion rate suggestion at all ATMs. When you are clicking through the withdrawal process, the ATM will ask you to accept their horrible conversion or decline. By declining you will typically get the current exchange rate and not an inflated one. However I have seen some ATMs that outright bypass this and give a bad conversion.
I won’t rant too much on converting actual cash at an exchange place, because this should be outright avoided unless you are in a crunch. They take high commissions and give junk conversion rates. You would be getting 15 pesos per 1 USD against getting 17.4 with an ATM. I also don’t care if you are in a border town or a resort, it is always going to save you money by using pesos and not USD (they may take USD but they build in an exchange rate into the prices to make it worth it).
As far as where is safe to use your credit card and where is not, that is a tricky question. For the most part it is best just to go with your gut. Mexico actually has stricter credit card laws than most nations. When paying they will bring you a remote terminal where typically you place the card in yourself and do the transaction. However, many people still have their information swiped and sold (just like in the U.S.). I would put the percentage at if you lived in Mexico for a whole year, it would probably only happen once. But with credit cards you can often get the charges reversed. Try to keep your receipts or take photos of them daily as Mexican companies do not respond to US credit card companies and you will need something for proof.
NEVER USE A DEBIT CARD IN MEXICO except for at ATM’s. If you do get card swiped with a debit card, your chances of getting your cash back become much harder. Card swiping is most common in non brand name corner stores (it will not happen in OXXO, 7–11, or brand name grocery stores). Often an employee will sell access to the devices so they can be swiped. Usually you won’t notice a large charge, but instead you will see multiple small charges for around $1.99 USD. The point of this is to charge everyone multiple times for a long period of time with the hopes that you won’t notice. If your parents are like mine, they get a paper statement once a month and would not catch the 50 small charges until it is too late. A few people have reported a scam where the transaction is being flipped from pesos to dollars, which makes the charge much larger (receipts!).
With the Chase Sapphire credit card you will pay an annual fee, but the perks pay for it if you travel often. If you are booking lots of rentals or hotels on it, you can take the cash back from the points you earn and discount your monthly expenses. So you could save around 8% monthly on living costs with this card (avoid the 3% international transaction fee other cards have and apply the 5% cash back you could earn from points).
If you are a United Airlines junkie, a United Chase credit card is the way to go to rack up miles and no foreign currency fees.
I often meet people who book all-inclusive vacations with the plans to not leave the resort or need access to funds. However these are the people who often get bored and wander out to town without preparation and end up with all the extra fees mentioned above.
Regardless of your plans, it is best to have multiple money plans in place to have a safe and enjoyable trip.
A few useful terms while in Mexico and dealing with money
Dónde hay cajero? (cajero automatico is the full term but everyone says CAJERO) - Where is the ATM?
efectivo o tarjeta? - cash or card
tiene cambio? - Do you have change?
Terminal por favor - this is asking for the mobile credit card terminal machine to be brought to you
When using a card at a restaurant or bar they will often ask or signal if you want to close the bill as you are actually paying. This may seem confusing but they are politely asking if you will tip (propina). In non tourist areas 10-15 percent is normal. In tourist areas they will likely expect 20 percent (veinte por ciento)
Three hand signals that are universal and used daily in Mexico
Raising your hand to the waiter when ready to order. While this makes Americans uncomfortable, many waiters are being polite by not rushing you. People complain they are being ignored but that is not the case.
Making a gesture at your mouth with your hand as if you are drinking a beer. Put your pinky out and thumb up. Almost like a surfer gesture. This means you want another drink from a distance to a bartender.
The sign check in the air signal. This indicates you are ready for your check.