Credit cards, bank, and investment accounts in the United States are an important tool for expats who either relocate or live part time in Costa Rica. Without them you will have trouble making purchases online, paying expenses or sending money to family in the United States.
U.S. accounts also provide the benefit of FDIC protection and customer service in English. Above all, many expats are reluctant to put their entire savings into a country where one legal problem could freeze their local assets for years.
However, before relocating it’s a good idea to shop for a bank that does not charge fees for international ATM withdraws. Even long term expats make this mistake, sticking with some credit union or last place they parked their IRA.
The problem is the 1 to 3 percent surcharge on foreign ATM transactions. May U.S. banks simply roll this fee into the currency exchange and DO NOT break it out as a line item. It especially confusing when it’s charged invisibly next to a fixed ATM that is identified on the statement.
For example, a U.S. Citibank account holder who withdraws the colones equivalent of $460 is actually paying a flat $2 fee, plus an additional $13.80 international transaction fee (3 percent).
Often these fees apply even when you use a Costa Rican ATM to withdraw dollars. Exchange rates are often better in person at the bank in Costa Rica, than via the ATM network. So, looking for an ATM that issues dollars is worth the effort.
Although many expats deal with the problem by getting local accounts, there is another option. Accounts with Capital One and Charles Schwab Bank charge absolutely no foreign ATM fees.
Schwab also goes an extra step and refunds any ATM fees that local banks may add onto the transaction. Opening an account has to be done online because Charles Schwab is an online bank and their only branch is in Reno, NV. Account holders also get a linked brokerage account and can transfer their IRA. It’s possible to instantly transfer funds online between the investment and checking account, and there are no fees.
Credit cards transactions are another way you can get soaked for extra fees when you make purchases abroad. Although some banks will allow you to negotiate away this requirement, Capital One is the only bank that waives the fee on all its cards.
Having a credit card is important because some types of transactions, especially hotel reservations and car rentals will pre-authorize an amount that would disappear from your available balance on a debit card. U.S. accounts tend to clear up in a few days or weeks, but banks in Costa Rica like to hold the money for up to 6 months.
Also, getting a credit card in Costa Rica is a big hassle because banks require some security in the form of a deposit. Interest rates are also often high enough to border on usury.