Have you ever been surprised by high ATM fees? Well, you are not alone. Many expats in Mexico have local bank accounts, which usually allow free ATM withdrawals. But local ATMs are also a convenient way to withdraw funds from banks in your home country, especially during emergencies. Unfortunately, these transactions can sometimes result in excessive fees.
To help you manage your money, we have put together some tips to show you how to minimize ATM fees in Mexico.
First, let us look at some fees you may face at an ATM in Mexico. The exact fees will depend on several factors, including the ATM, your card and the bank you are withdrawing from.
Local ATM Fees in Mexico
Generally, you will not be charged a fee when using your Mexican bank’s ATMs and their partner-ATMs. Any fees, if at all, will be nominal.
ATMs outside that network will charge you a usage fee. The fees can vary, but as a rough guide, expect to pay around 30 pesos, or about US$1.50, depending upon the exchange rate at the time. Non-bank ATMs can have higher fees than banks.
Your bank may also charge an out-of-network fee for withdrawing money through another bank’s ATM network. It is unclear if this happens within Mexico.
Foreign ATM Fee and Foreign Transaction Fees
You may face these fees when withdrawing money from your home country accounts.
Your home country bank may have a flat foreign ATM fee like US$5 when withdrawing from an ATM outside an international partner network. The exact fee will depend on the bank.
You may also face foreign transaction fees, which generally include fees by your home country bank and the payment network (VISA/ Mastercard). The total foreign transaction fees can be around 3 percent.
Dynamic Currency Conversion
This is a potentially high cost that you need to be aware of.
When making a local ATM withdrawal in Mexican pesos from your home country bank account, the local ATM may offer you a guaranteed exchange rate. If you look at the ATM screen carefully, there will be a mark-up percentage, which is their charge incorporated into the exchange rate.
This mark-up can be high, for example, more than 5 percent and possibly even a double-digit percentage, which means you can get an unfavorable exchange rate.
The screen will give you the option to accept the ATM’s conversion offer or reject it. We’ll discuss this further, below.
A Side Note
Using credit cards at ATMs to take cash advances will typically result in a cash advance fee. The amount can be a flat rate per transaction or a percentage of the transaction.
How to Minimize ATM fees in Mexico
Let us look at some ways to avoid or minimize your ATM costs.
1. Check if your home country bank has partnered with banks in Mexico to remove ATM fees. By using a partner ATM of your home country bank, you may avoid some fees like the ATM usage fees of both banks. Check this ahead, so you know which ATMs to use. Remember, you may still be charged some fees like the percentage foreign transaction fees.
2. Understand your bank’s fees. Review your bank’s fee structure because fees can vary. For example, some banks do not have foreign ATM fees, and certain banks reimburse ATM fees. Some expats may consider getting an account with a bank that has partner ATMs in Mexico or one with minimal fees.
3. Consider declining the ATM’s dynamic currency conversion rate. As discussed, when withdrawing money in Mexican pesos from your home country bank through a local ATM, it may offer you an exchange rate and a possibly high mark-up percentage.
Many users might simply accept it without further thought. But you can reject it, and declining the ATM’s currency conversion offer does not cancel the transaction.
If you decline the currency conversion offer, you will then be charged at your bank’s exchange rate and the usual foreign transaction fees.
Unfortunately, you will not know the exchange rate your bank is using until later, unlike the ATM’s guaranteed rate. Here is where knowing your bank’s foreign transaction fees and an approximate exchange rate will be useful. So, you can decide if you should decline the ATM’s conversion offer.
The dynamic currency conversion is also what happens when a store gives you the option to pay in a foreign currency and you accept it.
4. Avoid using ATMs not operated by banks. ATMs not operated by banks can usually have higher fees. So, try to use ATMs of main banks, which are widely available.
5. Avoid multiple withdrawals. Multiple withdrawals equal multiple per-transaction costs. For example, if your bank abroad has a flat foreign ATM fee of US$5, and you make multiple withdrawals, they can add up.
Mexican ATMs’ withdrawal limits (in USD equivalents) might be less than what you are used to in your home country. And to get a larger amount from your overseas bank, you may need to make multiple withdrawals over a short period.
This is where using an international partner ATM of your home country bank or using a bank account/card with lower fees can come in handy.
6. Use the ATM network of your Mexican bank. An option to avoid ATM fees is to open a bank account in Mexico. Many expats use local accounts to make hassle-free domestic transactions and withdrawals, and transfer money from overseas to Mexico.
For more information on opening a bank account in Mexico, read our article, “How to Open a Bank Account in Mexico.”
Safety Tips for Using ATMs and Bank Cards
- Use ATMs at bank branches. Ideally, use an ATM that is inside the bank’s premises, or right outside. These ATMs are generally well-monitored by the bank, reducing the risk of card cloning. Avoid ATMs in isolated locations and during late hours.
- Be alert when using an ATM. Stay mindful of your surroundings to notice anything that sends off alarm bells. And remember to cover the pin pad when entering your passcode. On a related note, consider buying an RFID wallet for your cards to reduce the risk of card cloning.
- Inform your home country bank that you are in Mexico if you are traveling or have recently moved to the country. You can generally do this online. Letting them know that you are in Mexico can help avoid the bank blocking your cards unnecessarily. The bank will also inform you if they notice suspicious activities in your accounts. So, keep your contact information updated.
- Have low transaction limits on your accounts. Low transaction limits can minimize your loss if an ATM/debit card gets compromised. Generally, your bank will refund the amount after an investigation, but this can take some time.
- Keep an eye on your bank accounts. Checking your transactions frequently is a good idea to not miss any suspicious activity. Sometimes fraudulent transactions can be small and easily missed. Make sure you get notified via email or text when there is a transaction. If you suspect your cards are compromised, cancel them immediately. Keep your bank’s contact information with you, so you can contact them in an emergency.
And, of course, continue to use general precautions with your financial and personal information as you would in your home country.