Breaking Pura Vita! The Banking System Explained

I woke up this am thinking about writing about foibles and follies of the media. An industry that I was part of for ten years that has turned deeply toxic. But I realized after seeing the blog posts of a few people I know, and many I don’t about moving here thinking it’s going to be a piece of cake, and slamming up against their own ignorance I figured it was time to explain things. It’s not that cake and eating it too, for some it turns out to be a urinal cake, an old sodden urinal cake.

Look, I don’t want to discourage anyone from pursuing their dreams. I just ask you do some basic research about the place, what to expect, how things happen here before you show up with stars in your eyes imagining it to be just like your luxurious tropical vacation. Moving here is not for the faint of heart, and knowing what you are up against can make for a much better experience. We were lucky, our research paid off, we did many things right, but we also flubbed up a few times along the way.. So this is my new series here Breaking Pura Vida.

Why this name? Couple of reasons. While I adored AMC’s big hit “Breaking Bad” it is at best a cautionary tale. For many of us it was a world we knew nothing about. Moving to Costa Rica after experiencing a few vacations here is much the same, a world you know little about, filled with possible missteps that can really mess you up if you are unprepared! Pura Vida is a saying here that means pure life, or good life pretty interchangeably. Let’s make sure it’s true for you too because there are big benefits to making the move.

First, I’ll repeat the saying I have about the place. It’s a second world nation struggling to become a first world nation that sometimes slips into third world nation. If you come here armed with knowledge, foresight, planning and knowing that you are coming into someone elses culture it will go one very long way towards defusing the fact that the majority of Americans moving here scuttle right back to the good old USA around the two year mark. I’ve seen oodles of these “Two Yearers” in my almost eight years here.

Being an American, or a Canadian, or someone from the British Isles moving here it can be tricky navigating the banking system. Here’s what you must know about banking here.

Only two banks in Costa Rica are protected by a program similar to the FDIC. What this means is if the bank goes under you are protected to a certain amount. Why this matters is because there are a huge multitude of banks here, and only Banco de Costa Rica and Banco Nacional are those two banks that are government backed with this in place. If you’re Canadian this might not matter as Scocia Bank here is affiliated with your bank by that name in Canada. BAC is a bank here that is huge! But it’s not government-owned and protected in the same way the two I mention at the top of the list are. I have heard many tales of people directing their Social Security or life savings to one of the uninsured banks, the bank going belly up and you cannot reclaim colones one.
These two banks have a variety of accounts and you have to be careful to open up the right kind of account. If you expect to be able to transfer money into Costa Rica it is vital you have someone who is a member in good standing at that bank write a letter of recommendation to the bank vouching for you.
Opening an account that allows you to transfer in is going to require you provide documentation. Unless it’s changed greatly we were required to give the bank two or three years of bank statements and copies of our income tax statements along with your passports.
Always bring your passport to the bank. Most will not even process simple dollars to colones conversions without the passport.
The bank will determine based on your paperwork submitted when you join the bank just how much in funding you’re allowed to transfer in monthly. I’ve seen this number vary greatly. We are allowed five thousand a months, but I know others limited to fifteen hundred tops.
Once the time comes for you to move a large sum down to buy a house, or property there’s another procedure that has to be followed. Most of the time you must start with this bank for your transfer. You have to be able to prove the providence of the funding from the time the money came to you with more, you guessed it, paperwork. Income tax statements, copies of wills or contracts, bank accounts in your home country. Why they do this is that in years past drug cartels used Costa Rica as well as other Central American countries to launder their money. Once the bank has determined you’re not Walter White, you’re not trying to wash your ill-gotten money earned cooking meth you’re golden. You will not have to prove your funding source again.
It can take longer from the States to here for your wire transfer to arrive. It’s a process that usually takes about a week. When the money leaves the States it goes through a Swift wire transfer procedure before being sent out of the country. International tranfer take time.
The banks here are not set up to US customer service standards. The culture here, how local people handle business is very different. Behaving in a nasty manner, cursing, and angry shouting gets you nowhere rapidly. It’s not unusual sitting and waiting for the “multi platforma” for a couple of hours when you need special services such as buying a CD or setting up an account. Bring a book because your anger will not work here.
There will be times when there is a big language gap. Most of the employees at the bank do not speak English. There are usually one or two who will, but there are times when they may not understand what you are talking about. I’ve rarely intervene at the bank with angry expats, there are always exceptions to that like the time when a couple from NYC were carrying on something fierce at the bank because they were trying to pick up ATM cards for their account. Instead of calming asking for the cards they did this entire over the top thing that I could tell was this couple reaching their breaking point. They kept confusingly rehashing their entire banking experience with the confused customer service rep. I stepped in to translate. It was a language quirk, they weren’t effectively communicating what they needed..
Sometimes during these customer service situations you will discover that Ticos hate to tell people unpleasant facts. I remember when Price Smart (our Costco!) opened in Liberia and they were promoting a BAC owned credit card that gives additional percentage back on every purchase. We applied, the bank kept dicking us around, every time we called or stopped by the BAC we were given a different excuse. Finally after two months we were told that the reason was that we were both over 60 years of age, and it was the policy of most banks to not allow anyone greater than 59 year old to have credit because here in Costa Rica, the government pension is a mere pittance. Loaning to old timers is an unsustainable practice. Here there are no age discrimination practices in place at the banks, whereas the States it’s all about that joly credit score. Hey, it’s their culture, not ours no matter how inconvenient it might personally be.
Checks are useless here. Cannot deposit them, cannot cash them, cannot write them. Your choices are cash, ATM/Debit cards, or wire transfers. The good news is that all banks here have secure online portals that allow you to pay your monthly bills.
Banks here routinely offer a much, much higher percentage rate on CDs. The plus side is investing money in a Costa Rican bank with an investment instrument gives you another reason to cite when you apply for residency. That can make a large difference for you. I’m always amazed by folks that are incurious or never check out the opportunities here.
Banks have the daily exchange rate posted in multiple places in the bank building so there are no surprises when going to convert dollars to colones. Any bank can do that money exchange right at the counter. You just need your passport. Please bypass those money exchange places in the airport that charge an eye-watering gouging when you change money!
A secret they may not tell you is that some branches have private bankers. If you have a large account, many investments and other things you might find yourself hooked up with Costa Rica’s version of Mr. Drysdale of “The Beverly Hillbillies” Lucky you! You will not have to wait at the multi platforma because your banker will handle whatever you need. It’s kind of nice.
Mortgages and banks – unlike conventional banks in the States it’s quite hard to get a mortgage with a bank here, and it’s a lengthy process. Most real estate contracts drop out well before the point of obtaining a mortgage. Many expats either buy for cash, or they get a private investor to hold the mortgage.
High interest rates on services are not uncommon! We discovered several years ago when we bought our new car that rates on auto loans or lines of credit ran about 18% at that time. It’s the flip side to the high CD rate.
Banks here are usually set up with a teller area for teller transactions, credit area for loans and credit, and the multi platforma for everything else. Some banks have a separate desk for opening a new account.