Banking in Costa Rica
Costa Rica has a fully-developed and robust banking system filled with state-owned and private banks, savings and loan cooperatives, investment funds and financing companies. Banking with any of these organizations is typically a straight-forward affair with many similarities to banking in Europe or North America. But like many things in Costa Rica, banking also happens at a much slower pace. Whether you're working with a national bank or a private, international subsidiary, you'll find that each bank (and even each branch) has their own brand of service. Navigating the Costa Rican banking system will take some patience and probably some assistance from local friends and colleagues who already have bank accounts in the country.
Costa Rica's currency is the colón or colónes (CRC). There are 5, 10, 20, 25, 50, 100 and 500 colón coins and the banknotes come in 1000, 2000, 5000 and 10,000 colón denominations. There a few nicknames for the colón and its coins and notes. It's sometimes referred to as the peso, which was the currency before the colón. Another slang name is caña, Spanish for cane. Teja, or roof tile is a slang term for 100 colónes, so the 500 colónes coins are referred to as five tejas and 50 colónes coins are known as media teja or half a roof tile. The 1000 colónes note is a rojo because it's a red banknote and the 5000 colónes note is called a tucán because of the image of a toucan on the note. The 5000 colónes note is also known as five rojos, which also applies to any amount that is a multiple of a thousand colónes.
While colónes are accepted everywhere in Costa Rica, the United States Dollar is also widely used in the Central Valley and in larger tourist centers. These US Dollars and traveler's checks can be exchanged in banks and many hotels but other currencies are difficult to exchange, even in the banks. It's a good idea to have both colónes and dollars on hand, using colónes for smaller, local purchases.
State-Owned and Private Banks
Prior to the mid-1990s, only state-owned banks had the ability to offer personal banking services like checking and savings accounts to individuals. These days, the private banks are able to offer the same services and you have the choice of doing business with any bank, private or national. Many expatriate residents choose to have accounts with a number of banks in Costa Rica and also keep accounts in their home country.There are as many ways of banking and managing your money in Costa Rica. However, there are some significant differences between the state-owned and private banks that you may want to consider.
All deposits in state-owned banks are secured by the government, without limit. There is no such guarantee with the private banks. State-owned banks have more branches across the country but longer lines are usually the norm. While private banks may have fewer branches cross-country, they typically have more multilingual staff members, as their primary customers are foreigners. You will be hard-pressed to find service in any language other than Spanish at any of the state-owned banks. Plus, private banks usually offer a wider range of services including more access to international banking (since most of them are owned by multinational banking institutions).
There are three state-owned banks backed by the government:
- Banco Nacional de Costa Rica
- Banco de Costa Rica
- BanCredito (formerly known as Banco Crédito Agrícola de Cartago).
The private banks are:
- Banco Promerica
- Citibank (recently bought Banco Uno and Banco Cuscatlan)
- HSBC (recently purchased Banex)
- Banco de San Jose
- Scotiabank de Costa Rica (bought Banco Interfin)
- Banco Cathay de Costa Rica
- Banco Lafise
- Banco Improsa
- Banco Popular
All banks offer checking and savings accounts in either dollars or colones; having a dollar account will protect you from frequent devaluations of the colón but it can be useful to have both. Each bank has its own qualification process and minimum deposit to get an account but generally the bank has more stringent requirements for checking accounts. For example, you have to be an Costa Rican resident to get a checking account. Many banks will allow non-residents to get a savings account only. Though each bank is different, there are a few items you may need to acquire any account. These may include your passport or residency documents, utility bills to prove your address, letters of recommendation from financial institutions in your home country and reference letters from current account holders at the bank to which you're applying. And applying for these accounts may take one or more visits to your local branch to check on the status of the application or to provide more documents.
Debit and credit cards are also available from every bank, provided you meet the requirements, and these cards sometimes cannot be used outside of Costa Rica or even for online shopping. Online banking is also available though the level of service differs from bank to bank; if this is important to you, it's best to check with the specific bank to find out what they offer. ATMs are available throughout the country but your debit cards, from either Costa Rican or foreign banks, may only work in certain machines and they may only dispense colones or dollars at any given time.
The term 'banking hours' has a few meanings in Costa Rica. Most banks are open between 9 a.m. - 4 p.m., with some banks also opening on Saturday morning. However, if you need to visit the bank for any transaction, it could take hours, literally. It is well-advised to bring a book and a sense of humor because it's not unusual to see lines snaking out of the front doors, especially on the second and last Fridays of each month, paydays for most Costa Ricans. Direct deposit is an unknown concept here.
Cashing or depositing checks and accessing wire transfers sometimes take days and weeks, especially at the state-owned banks. Private banks are only slightly better when trying to deposit a check from another Costa Rican bank or from an overseas bank. Wire transfers need to be monitored closely, with almost daily visits to your bank to ensure that the funds are deposited to your account quickly. Many foreigners bypass the banks altogether and use Western Union to get money quickly and easily and bypass the extensive fees charged by the banks.
Loans and Mortgages
All banks in Costa Rica, state-owned or private, offer mortgages to anyone who qualifies. The catch is that mortgages here are a completely different animal than in North America or Europe, and qualifying for them is an exercise in patience and persistence. Mortgages in Costa Rica are a shorter-term, higher interest rate proposition, with stricter qualifications. Applicants require flawless credit and pages of documentation to back that up. Mortgages can take up to a year to be approved and the bank fees for this process can be near ten per cent of the total loan.
Mortgages are available in both dollars and colones but dollars command a better interest rate since it is less volatile than the colón. Interest is recalculated every few months in Costa Rica which has the potential of raising your interest rate many times over the life of your loan. On the good side, mortgages are typically shorter-term deals, with few 20- and 30-year mortgages being issued. Mortgages in Costa Rica are usually loan-to-value ratio deals, with the bank only loaning a portion of the cost of a house, and the remainder being paid off in a few years. Many foreigners have learned to go into a real estate deal with a very large down payment and the ability to pay off the loan in a short period of time (as little as a year). There are private mortgage lenders in Costa Rica that can process applications at a faster rate but their rates are typically much higher than either private or state-owned banks.