what about money during a scouting visit?

[MARY-LOU RAMPOLD]

Hi..I’m planning on spending 4 months in Panama looking over the country hoping to find my perfect place to retire. Wish to rent at first of course. What do visitors do for money while staying? Travellers cheques? Open a bank account? Not sure how to pay rent, etc. without a chequing account there but I understand the banks can be difficult. Don’t know if my client card from here works at ATM’s there?? Really need some advice for this please.
Mary-Lou

[COUNTRY EXPERT- JESSICA RAMESCH]

Dear Mary-Lou,

This is a great question. The below advice is for both people like you, who plan extended stays, and for expats who are making a permanent move but don’t yet have everything figured out.

Many visitors (and some expat residents) manage perfectly well in Panama with home-country credit and debit cards. If your ATM card has a “Plus” symbol on the back, it should work for cash withdrawals here in Panama. ATMs in Panama dispense only US dollars.

You may also find yourself operating via credit cards. Note that traveler’s checks are rarely used anymore. You can sometimes use U.S. checks in Panama, but locals prefer not to accept them because they take double the time to clear (and sometimes the local’s bank will charge extra fees, taking out a chunk of the check).

ATMs:
In Panama City and other major destinations like David and Santiago, there are ATMs around nearly every corner. After all, Panama has one of the largest financial districts in the world, with some 80-plus different banks operating here. You’ll also find ATMs in most supermarkets and shopping malls. (Watch out when visiting the islands or remote areas, though. There’s no ATM on Contadora Island, for example.) Take into account fees you may be charged to make withdrawals while abroad; you could pay anywhere between $3 and $5—or even more—each time you use the ATM.

Credit cards:
If you’re planning to use your credit cards in Panama, again, take into account fees each card’s issuer may impose for use abroad. Many credit card issuers now shamelessly charge not only a fixed fee for every international purchase but also up to 3% on the purchase amount.

Before leaving home, tell your bank representative that you’re planning on spending time in Panama and discuss these fees. You may find that opening an account in a different bank in the U.S., Canada, or wherever home may be, can save you money when you get to Panama. Some banks—like Charles Schwab—have special offers for things like foreign ATM fee reimbursement, or better bill paying options, while others (like Capital One) may offer credit cards with no foreign currency fees. You’ll find it well worth your while to research these options exhaustively. Find out before you start your long-term stay here so you know what to expect and how to save on fees where possible.

Wire transfers:
You may need to use international wire transfers to get your money to Panama, but note that fees are usually charged on both ends. Happily fees often are the same no matter how much money you wire, so this can be the better option for large amounts. Be sure to ask what your home country bank charges to wire the money internationally and what the Panamanian bank charges to receive it. Ask your bank if you can lower the fee by transferring the funds yourself over the Internet. Also ask your bank whether or not you need to be there, in person, to sign a wire order. Thankfully, Panama’s currency is the U.S. dollar, so if you are from the U.S., you generally don’t have to worry about exchange rates.

Safety and contingency plans

No matter where you travel, have a contingency plan and expect the unexpected. For example, what will you do if you find yourself out of cash or lose your credit cards? Know your credit card pin for cash withdrawals (though these can be so expensive they should only be used as a last-ditch measure). Keep emergency numbers, credit card numbers, and any other pertinent information listed in a secure location, so you can call to report card losses immediately (again, online banking is a plus, as you can access your information securely online with your secret password). Back up your contacts on your phone and cell phone regularly. Talk to loved ones about being away and ask who will be available to help in a pinch (Panama has several Western Union and MoneyGram branches you can use to get funds to you in an emergency.)

Though many of the banks you may know back home have branches here—such as Scotiabank—don’t assume the systems are the same. A bank branch here in Panama won’t have your account information or waive ATM fees just because you’re an account-holder in another country.

Opening an account in Panama (Mary-Lou, this may apply for you later on down the line, if you decide to move here permanently. Including it because other readers may also want to know).

For permanent or very long sojourns, opening a bank account in Panama is the best solution. Keep in mind, however, that this takes extra time (and patience) in Panama’s ultra careful, conservative banking environment. You may be surprised to learn that the banks have many “suitors,” so rather than courting your business, they vet you to ensure you’re a legitimate customer.

Usually, the bank will want lots of documents like utility bills or references showing that you and your interest in Panama are legit. Some of the things you might need include tax returns and credit reports. A local introduction (from your Panama attorney or another business contact) can get you in the door with a good bank and speed things up considerably. You do not need to be a resident of Panama to have an account, but it helps, as few Panama branches cater to non-residents unless they are opening large businesses here.

It’s always a good idea to keep your home accounts open. Even if you have a Panama account, it’s likely you’ll want to use your U.S., Canadian, or other accounts to do business or maintain residence at home. If for some reason you wish to close them, make sure your Panama account is set up (and that you’ve started using it to ensure all is well) before closing your home accounts.

Long-term, most expats end up wiring funds from home to a Panamanian bank account. They then conduct day-to-day transactions with a local (Panama-based) ATM card, credit card, and/or checkbook. You’ll find Panamanian bank accounts are easy to use, as many offer modern online banking access and free bill paying. Ask about these services. You’ll likely find that banks here generally charge much less in fees than U.S. banks. Get a Panama-based credit card and you can earn points or miles, avoid foreign transaction fees while in Panama, and pay the monthly bill online from your Panama account.

[SUSAN CLOUD]

Jessica,

I was under the impression (based on the number of refund checks I’ve gotten within the last year) that
US banks can’t charge an ‘exchange fee’ for International transactions. When using my credit cards in Panama in January 2013, there were no extra fees on my CC bills. Has something changed?

Thanks,

Susan Cloud

[JESSICA RAMESCH]

Dear Susan,
Many credit cards charge foreign transaction fees. Here’s an article from this year detailing some of the better products (according to the author): http://www.nerdwallet.com/blog/top-credit-cards/no-foreign-transaction-fee-credit-card/
Best regards,

[Author]

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