Having navigated the banking system in Chile for sometime now I feel confident in explaining it to you. Here is what you need to know to open a banking account in Chile, get a credit card, or transfer money back and forth from the USA or other country.
First know that anyone who plans to spend anytime in Chile needs to apply to sii.cl to get a RUT which is like a taxpayer identification number. A foreigner will get a provisional RUT. If you seek Chilean residency when they will give you a different RUT number called a RUN. Its basically the same thing. This number has nothing to do with social security which is called “AFP” here.
They way I send money from the USA to Chile is to use xoom.com. The way I send it the other way is to use AFEX but you can also use paypal which has recently started operating in Chile. Do not be naive about this–understand how much you are being charged by the money transfer companies. Money transfer companies will charge you twice. First, there is the obvious transaction fee which is tacked onto the transaction and clearly listed there. More difficult to understand is the profit the money transfer company will make by paying you something which is different from the currency markets exchange rate. AFEX does not charge you in this way–instead they charge you a fee and nothing more. Xoom on the other hand charges you both ways. Let me illustrate this with three examples.
On November 18 I sent $100 USD from my bank in the USA to my bank in Chile. Xoom deposited 49,437 chilean pesos (CLP) into my account. What was their profit?
On that day the currency markets paid 509 CLP per USD. This historical exchange rate is found here so that we can see what they should have paid.
For each dollar I sold them XOOM gave me (49,437/100)= 494.37 pesos thus charging me (100 * (509 – 494.37) = 1,463 chilean pesos or roughly 1,464 / 509 = $2.88. In addition they charged me $4.99 transaction fee.
So their overall fee for sending $100 was (4.99 + 2.88) / 100 = 7.8%. This is outrageous. Granted this is a small amount. That fixed transaction fee for sending money will go down as the amount you send goes up but their profit from the currency conversion will remain the same. To illustrate we have another example:
On March 4 I send $1,000 via XOOM. XOOM paid me 464,037 CLP which is 464,037 / 1,000 = 465.03 pesos per dollar. On that date the market exchange rate was 473.25. XOOM charge me a transaction fee of $9.99. So their exchange rate profit was:1000 * (472.25 – 464.04) = 8,210 or 8,210 / 473.25 = $17.35and their overall fee for sending $1,000 was (9.99 + 17.35) / 1000 = 2.7% which is roughly the same as the American Express charge card example given below. So XOOM is reasonably priced when the dollar amount sent it large.
Now going the other way on October 4 I sent $2,670 USD to the USA via AFEX. I did this by making a transfer directly to AFEX`s checking account in the amount of 1,408,864 CLP. They then sent to my account a wire transfer. The advantage of using AFEX is you can do all of this from your computer and do not have to physically go to the bank.
In this case we have to think of the exchange rate conversion the other way around as this time we are selling pesos and buying dollars. So for each pesos that I sold them on that day they day gave me 2,670 / 1,408,864 = 0.001895 dollars.
On that day 1 peso bought 0.00194 US dollars according to the currency exchange markets and the web site given above. So for each pesos that they bought they charged me ( 0.00194 – 0.001895 ) * 1,408,864 = 63 pesos or hardly nothing at all. So AFEX does not seek to profit from the conversion rate. Instead they charged me 14,000 CLP per transaction (roughly $28 usd) or in this case 14,000 / 1408864 = 0.009 or 0.9%. This is a large dollar amount but in this case the transaction fee was quite reasonable at less than 1%. So AFEX is fairly priced.
On November 30 I sent $200 USD to a person in the USA via Paypal. This transaction resulted in a $207.79 USD charge on my MasterCard with BBVA bank in Chile. So the total cost to send $200 was $7.79. Or 7.79 / 200 = 3.9%. In addition PayPal deducted $8.80 USD from the $200 I sent to the recipient. That additional fee obviously costs the sender nothing but does it add to the overal transaction cost. So we could say that to send $200 costs ($7.78 + $8.8) / $200 = 8.2% which is a lot. So you can say PayPal is not reasonably priced.
Foreign Credit Cards and Debit Cards:
First thing to know is if you are using a credit card or debit card denominated in US dollars or Euros in Chile is: stop doing that! Look at the two examples below and you will see that you are payIng anywhere from 2.6% to 4.6% transaction fee when you do this.
$2.80 transaction fee in dollars
= 2.6% transaction fee as a percentage
Wells Fargo Visa debit card:
ATM withdrawal $305.01 USD.
In this case Wells Fargo charges two fees. One comes from them bank and the other from VISA. They are shown as follows on the bank statement:
intl ATM WD service fee $5.00
intl service fee $9.15
Together they equal (5 + 9.15 ) / 305.01 = 4.6%. That is a lot of money to be paying on purchases.
Most Chilean people do not have a checking account especially if their have unpaid debts and their names are listed in the American system run by Equifax called “dicom” in Chile. If you do not have residency the bank might tell you that you cannot open a checking account only a cuenta vista. But if you have work contract and can prove your affiliation with the private pension system here (called “AFP”) then you can get one. Anyone working here as an employee is required to contribute to the pension system. In Chile there are no ATM fees and no fees to us a debit card. The checking account will have a monthly maintenance fee.
Chilean Credit Cards
When you buy anything here in Chile with a debit card or credit card the merchant will ask how “how many cuotas” or “how many payments.” This means that the merchant will change your bank x number of times once for each of x quotas. My understanding of this is it allows the merchant to charge you interest in addition to the bank charging you interest. Watch out as interest rates in Chile are extremely high by developed world standards. For example they are normally 48% here on credit cards. I was able to get a credit card only by depositing an amount into a account as a guarantee. Still this is necessary. If you read what is explained above you know you are throwing away money using dollar-denominated plastic here in Chile. If the bank gives you an international credit card then charges in dollars will be separated from charges in pesos and you pay each bill separately.
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