Home Articles How to Get a Credit Card in Mexico

How to Get a Credit Card in Mexico

354
0
Small globe resting on a blue credit card
Credit: Orlando Rosu | Thinkstock

Relocating to a new country comes with financial tasks like moving funds, opening a local bank account and getting a credit card. Like many expats new to Mexico, you may be wondering how to get a credit card in Mexico.

While many expats in Mexico use their foreign credit cards, it is not an option for everyone, especially those who move their financial affairs to Mexico. Even expats with foreign cards may want a local credit card due to reasons like high foreign transaction fees.

To qualify for a credit card issued by a Mexican bank, you will need to build credit in Mexico. If you do not have a credit history yet, getting a local credit card can take time.

Here is a look at how to get a Mexican credit card, as well as alternative options to use while you are waiting.

Pros and cons of Mexican credit cards

First, it is important to know the advantages and disadvantages of credit cards issued by Mexican banks, so you can decide if they are worthwhile.

Pros:

  • Make local purchases without foreign transaction fees.
  • Replace lost and stolen cards easily.
  • Take advantage of interest-free installment options on local purchases.

Cons:

  • Banks may require permanent residency status.
  • High interest and fees. If you do not pay on time, the total annual cost can    reach as much as 50-to-80 percent or even more!
  • May have an upper age limit to qualify, from around mid-60s to mid-70s.

Note: although credit cards are widely used, many small vendors only accept cash. You always will need some cash for day-to-day living.

How to get a credit card in Mexico

Here are some steps to get your first credit card from a Mexican bank:

1.   Review the credit cards offered by banks

Check each bank’s requirements to see how you can meet them. Generally, you will need to open a bank account and transact for a while. If you are a current customer of a large bank, check if you are already eligible.

Your bank may require:

  • An account with them for a certain period.
  • A minimum monthly deposit over several months (or longer).
  • A certain monthly income (and proof of income).
  • Residency status and age.

When shopping around for cards, here are a few items to consider:

  • The total annual cost, which is called CAT (Costo Annual Total). This includes interest and other costs like fees.
  • Reward programs and promotions.
  • Ease of getting a card.
  • Customer service.

By reviewing this information, you can select a card that suits you.

2.   Build credit

If you have no credit history in Mexico, here are some ways to build credit:

  • Get a postpaid phone or cable TV connection.
  • Get a store card from a retail establishment.
    You can use these cards in-store. They usually have promotional offers like discounts. Stores also offer other credit cards but you may not get them right away.
  • Take small loans from non-banks and repay them on time.
    Check if you qualify to borrow small amounts from a Fintech company that offers lending services.
  • Get a secured credit card from a bank (discussed later).
  • Get a credit card from a Fintech company (discussed later).

Before signing up for any of the above, always ask if they report to the credit bureau, so your credit-building efforts will not be in vain. Whichever options you use to build credit, make sure to pay your dues on time. That way, you will skip the exorbitant fees and avoid hurting your credit score.

Review your credit history to see how your credit score is coming along. Checking your credit history routinely is also a good idea to spot any fraudulent activities.

You can get your credit history from Mexico’s official credit bureau, Buró de Crédito. Another option is a private credit bureau called Círculo de Crédito. Both these bureaus allow one free credit report per year. The report will show the bank and non-bank items separately.

3.   Collect your documents

Once you are ready to apply for a bank-issued credit card, you will usually need the following documents:

  • Residency card and passport.
  • Income proof such as recent salary slips and tax returns.
  • Proof of address – utility bill within the past three months. If this is not in your name, ask the bank if you can bring your rental agreement to support the bill, or what options you have.
  • Completed application form and any other bank documents.

Make sure to double-check the list of documents with the bank to avoid going back and forth.

Alternatives to getting a credit card in Mexico

If you must wait a while for a regular credit card, here are some alternatives to consider:

1.   Use a cost-effective overseas credit card

As discussed, foreign cards are a popular option among expats who maintain financial affairs overseas.

Foreign cards are a good option if they have no fees on foreign transactions and ATM withdrawals, and you reject the dynamic currency conversion. That is, the guaranteed exchange rates offered by ATMs and vendors. For more information on reducing ATM fees, read our article, “How to Minimize ATM Fees in Mexico.”

If you choose to use foreign cards, remember to inform your financial institutions that you are using the cards here.

Unfortunately, getting replacement cards from overseas is sometimes inconvenient because the Mexican postal service is not always reliable. If possible, ask your bank to courier the cards to you.

2.   Get a local debit card

An expat with residency can easily get a debit card by opening a local bank account. If you are a permanent resident, you will have more bank accounts to choose from.

Alternatively, there are digital accounts offered by Fintech companies. Make sure to check their transaction limits including daily, monthly and per-transaction limits. With these accounts, you will generally get two cards: virtual and physical.

To learn all about opening a local bank account, read our article: “How to Open a Bank Account in Mexico.”

Debit cards are riskier than credit cards because if there is any fraudulent activity, you will lose money from your account. If you suspect any fraud, notify your financial institution immediately, so they can investigate it and give you a solution. To minimize potential losses, you can use a debit card of a low-balance account.

3.   Apply for a secured credit card with a bank

Some banks offer credit cards if you deposit cash as collateral. This way, you can build your credit history of bank products until you qualify for a regular credit card.

By using this card often and paying your dues on time, you will also build credibility with the bank. And they may offer you other lending products, including regular credit cards in the future.

4.   Get a credit card from a Fintech company

Mexican Fintechs also offer credit cards. There are some Fintech card options for temporary residents as well.

Note: expect low credit limits from the alternative options in Mexico while you are working to build credit.

Here are a few additional financial tips that may make your life in Mexico better:

  • Pay your dues on time because the fees are extremely high. And consider avoiding cash advances. That way, you can avoid your new credit cards becoming a financial burden.
  • Be cautious when using cards, and frequently check your accounts for unusual activity.
  • Get financial and tax advice if your financial matters including credit cards extend to multiple countries.

LEAVE A REPLY

Please enter your comment!
Please enter your name here