I had to make an unplanned visit to the bank recently because of some unplanned expenses …an emergency hospitalization of a family remember … so far so good, I’ll report more on that later when things are resolved.
Anyway, even though my waiting time was brief, and the Peso/Dollar rate has been moving favorably of late, it gave me time to think about how I ought to give a blow-by-blow of how I personally mange our money here in the Philippines.
As soon as I publicize something like this, people are going to be tempted to write in and tell me what I am doing wrong. Well, I enjoy receiving comments, but don’t waste your breath on right or wrong … this works for me. For others? YMMV.
Anyway, the basics of it all is that our income comes from two distinct sources. I have several government annuities (pensions). people always tell me I’m lucky about that. I suppose I am. I only had to invest almost 40 years (28 of them wearing a uniform and carrying a gun), so those of you who have green eyes, feel free to follow in my steps, last I heard the US military is still hiring.
I also receive payments for my online enterprises. Some of these go direct to my PayPal account … I’ll talk about PayPal in a separate article), most of the others I have direct depositing into my checking account. get rid of as many pieces of paper, especially paper checks, to the maximum degree you can before you move. Trust me, you’ll be glad you did.
I maintain a bank account (more than one, actually) in the US. I inquired before I let if my banking institution would be OK with foreign residency, and the answer was yes, sure. If yours won’t give you this answer, find another. Life’s too short to put up with sh*t. I’ve had people tell me they couldn’t move to the Philippines because their bank won’t keep them as customers if they move overseas. I say, fire the fools then … they’re a bank, not a spouse … you didn’t take a vow about death us do part with your bank … there are many others out there to chose from.
Actually, I don’t use a bank. Wouldn’t use a US bank these days, they seem to be run by scoundrels or incompetents (sometimes one and the same). I use a Federal Credit Union. It’s like a bank but they are more heavily regulated and they are member owned, not traded on Wall Street.
Mine is Security Service FCU, out of San Antonio, there are many good ones to chose from and the majority of folks can find a way to qualify for membership if they take the time to search.
Anyway. Keep it simple, Dave. Most of my monthly income deposits directly in my US credit union account. I can view and manage my money there 24-7 via their online banking service. I can schedule automatic payment to any recipient, business or private individual in the US with their free bill pay service. So this pretty much covers my US money management.
Of course I live here in the Philippines, not in the US … so the majority of my money management is conducted here.
There are many ways to move money from a bank in the US to the Philippines. All of them cost something and all have their advantages/disadvantages. The method I choose to use is a check from my US checking account, deposited into my Philippine US dollar account. This is essentially free, but when I said everything costs something I wasn’t mistaken … the cost here is time. My Philippine bank (BDO) holds the funds from that check for about 25 days. So every month I deposit a US dollar check that should cover what I plan to spend the following month.
Every month the check I deposited last month has matured and is available for me to draw out. Typically, I only go to the bank once each month. I deposit my check from the US for next month’s expenses, withdraw dollars from my dollar account, have the bank convert to Philippine Pesos on the spot and deposit the Pesos in my Philippine BDO savings account.
The big thing which has changed in these past four years for me in the Philippines has been the actual handling of money … moving from almost all physical transactions. That meant getting physically large stacks of Pesos each month, carrying them to my landlord, to the electric company, the cable TV company, my ISP, my Philippine credit card payment center, etc., etc. What a pain. Long lines. Risk and inconvenience of carrying cash around, keeping cash at home and so forth.
All You Need To Pay Your Bills
Today when I do my beginning of the month banking session I rarely even take any cash away with me. It all goers into the Peso account. If I need walking around cash in my pocket I use my BDO debit card at an ATM machine and take out pesos a few thousand at a time (I can get up to P25,000 per day, but rarely want cash like that on me).
The cable TV I have to still pay in cash at a local bayad (bill pay) center that’s in easy walking distance of the house.
Everything else I can now pay with my excellent BDO Online banking service … in many ways it’s even more flexible than my US online service.
All purchase in stores that accept plastic … like SM Hypermarket where we buy most of our food down to salads an a burger for lunch from Wendy’s, which I sometimes bring home from my mall walking, I can use my BDO credit card (and earn bonus points along the way),
The credit card, along with the electric bill and the ISP monthly bill are paid, for the amount I specify and on the date I select, directly out of my BDO savings account. All for free. The difference in control and reduction of ‘hassle factor’ in the past 4 years is amazing.
Oh yes, the landlord? Well I ‘fired him’. Took out a bank loan and bought the house we have been renting … and the monthly loan payment? Well that comes directly out of the bank account, automatically for free as well.
So you do still have to pay your bills here in the Philippines, but it is one heck of a lot easier than it used to be. I’m a happy camper.
Still waiting to hear about your house purchase with Bank Loan etc.
Regards,
D. Bellini
@D. Bellini (ID 4993): Coming soon. With a little luck, the sereis will start tomorrow. Thanks for reading and thanks even more for commenting and building up the community here.
@ D. Bellini, Hello, thanks for being a reader here. I did wrap up this series a couple weeks ago with this article: Owning Your Own Home — in the Philippines — Part 6.
Is there anyhting else specifically I can help you with?
Dave;
.
Man you are on a roll!! These articles are very informative and fun to read. Glad to see that the banking system in the Philippines is going high tech. By the time I get there you should be able to pay everyone online our with the swipe of the card. Except the landlord if you rent (That’s me for a while)
I plan on doing the check to bank thing also with NFCU like 85% of you guys do. The good thing with NFCU is that they will Western Union you funds in case you need them for a small fee.
But with that said I’ve read a few articles over here in the States that some banks were going to phase out paper check and go strickly plastic hopfelly that does not happen.
@BMichels (ID 5008): Thanks, Mike. I just wanted to illustrate to people that things do change to the more modern here, even if it doesn’t always seem so obvious. I mean the TV is full of ads every night for a “big event” in Cebu and Manila … Trini Lopez On Tour … the announcer says the man entertained a “whole generation” with his music … actually it was a bit more like three generation, the guy was already a ‘discovered’ recording star before I was even in high school … there are large chunks of modernity mixed in to the 1950′s lifestyle here.
I’m actually surprised so many banks still support paper checks. They do, of course, have standard paper check bank accounts here, but I never bothered to open one. I can have the bank cut a check if I need to by asking at the counter (costs $0.60 or something like that, and I get a free one or two per month with my credit card points), but I’ve only ever used that feature once in four-plus years.
I haven’t seen a US Government check in years. Everything direct deposits into my credit union account. Due to a minor slip-up, DFAS owed me two $300-something payments a few months ago, and rather than direct deposit to my account, they sent me two ‘real’ US Government checks. Looked pretty. But my banker almost had an anxiety attack when I took them to my branch to deposit them. Had to call the bank’s head office in Manila to make sure everyone knew it wasn’t a forgery or a money-laundering operation in order to get permission to deposit the darn things. How the world has changed already. paper cheeks? Glad I am not dealing with them anymore.
NFFCU (Navy Federal Federal Credit Union)
(yes, they do have Federal in their name twice, the first ‘Federal is their incorporation name, the second ‘Federal’ is earned by being designated a federal credit union … this note provided by the department of redundancy redundancy department
)
is one of the biggest and best in the business. Some others for people not familiar, or for people who don’t qualify for NFCU, would be Pentagon Federal Credit Union, Security Service FCO … there are many others. Here’s the top 50 Federal Credit Unions in the US.
Thanks for the info, Dave. I’m planning to open an account at a bank in the Philippines soon, there’s a BDO at the SM Mall we always shop at, and deposit a monthly check like you do to avoid the ATM fees we are currently paying. Never thought of carrying the BDO plastic. Sounds like a good idea.
There are other good banks. I recommend BPI (make sure of the ‘flavor’ you are getting, there are really three BPI’s). Their online banking allows direct transfer/conversion (at the daily rate) from a US Dollar to a Philippine Peso account … BDO does not, as yet, offer this service). But a number one consideration is location and hours for me. And personalities …it’s all about personalities, really, in the long run.
Since our local SM is very close, and since I go there virtually every day, if not to buy something, then for may health walks, you can not beat the convenience of BDO mall branches. Seven days a week and about 10 hours per day opening hours, even during the holidays. And a place to park as well.
I recommend a US Dollar account nd a Peso account … I have no deed of checks, so both mine are just passbook savings (important to have a passbook for times an ATM won’t work). And, of course, an ATM card … you can request an ATM card for your Dollar account as well … and it’s very convenient for times you can’t get to the bank to transfer from Dollar to Peso. I don’t use that feature often … it appears to cost about $3 or $4 dollars … similar to using an ATM from an overseas account, but (especially if you have to travel to reach the bank), it can be well worth it.
BDO’s online banking allows you to pay bills directly to ‘enrolled merchants’ … there are several hundred of them now, the list is growing … and they, BDO, just sent me a credit card (I think just after I received my car loan back in 2006). You can ask at the bank.
And my recommendation … meet the branch manager first. Ask him/her to explain their accounts and what they offer and get his/her name. It will work wonders in the future … at least it has for me.
Hey Dave, did you ever write the PayPal article? I’d be interested in knowing what differences to expect with an account in the Philippines versus my account here in the US.
Randy C (ID 5632) » I really haven’t been working on a PayPal article … what’s that, another promise I made and haven’t delivered yet? LoL. Bob Martin has written a number of times about PayPal in the Philippines, basically it’s just a matter of signing up and then getting a debit card from the bank that PayPal is hooked up with here in the Philippines. I’ll get a PayPal account here one of these days … but it’s not high on my priority list.
Dave
I get the basics on how to bank there and such but how do you have credit card bills new credit cards etc forewarded to you there in RP.
Hello Neal, thanks for dropping by and contributing. The answer to your question is two sided. First, just don’t have any. Get rid of credit card bills as much as you can … only time I use my remaining US cards is once a year at Christmas time … I have no monthly bills from them.
To pay the bill when I do use them, I have the card companies e-bill my US checking account, or I look up my bill manually on the card’s website and pay the balance with my bank’s electronic bill pay. There is really no reason to deal with paper statements and bills, US or Philippines. Anything I want a paper copy of (say for a billing dispute), I can just print on demand from the CC company (or my bank’s) web site.
How to get replacement cards? This can pose a problem to folks who don’t have APO/FPO privileges. First class international mail should work, depending on where you are living in the Philippines. Will your bank send to you in the Philippines? That’s what planning ahead is all about, you may have to search to find a bank/credit union that will. I know you won’t, Neal, becuase you’re a planning kind of guy, but it always surprises me how many folks move here without consulting the businesses they deal with (hiding out, maybe:-( ) and then get unpleasant surprises.
I’ve been doing some more thinking on this subject lately and still have a few questions:
1) Where do you get the checks to use for your deposits? It seems to me that I would run out of those after time. Does your bank ship those to the Philippines or maybe you pick up more when you visit the US?
2) Why do you deposit into a USD account and withdraw USD from the same and then convert to Peso?
3) From what I’ve read the deposit insurance there only covers P500,000. BDO is a large outfit, but is that anything to be concerned with?
Randy C (ID 5861) » Hi Randy, thanks for dropping by and for contributing.
Q: 1) Where do you get the checks to use for your deposits?
A: I brought 400 with me, Randy … one of the standard ‘re-order’ amounts my credit union offers. (I think they have an 800 check option also). But 400 is more than a 33 year supply, I’ll be 94 when my current supply runs out, and frankly I am looking forward to being around to solve problems in the year 2039. I frankly doubt we’ll still be using paper checks by then, but if we are, my youngest son will be long retired by then and he can bring a few more boxes along for dear old (very old) dad when he comes.
Q: 2) Why do you deposit into a USD account and withdraw USD from the same and then convert to Peso?
A: I’m not sure of your question here, Randy? What else can I do? I can only write checks from the US in US dollars, I can only deposit or withdraw US dollars from my Philippine US dollar account, and I can only deposit or withdraw Philippine pesos from my Philippine Peso account. Am I missing something? Is there a simpler way I have overlooked? The actual process is very simple. I hand the teller a withdrawal slip (written in dollars, since it’s a dollar account, and instruct her to convert to pesos, and she does so. But it’s two separate processes … and sometimes needs to be, becuase I might want to convert to Pesos somewhere else where I got a better rate. I usually just accept BDO’s rate (which is the same as SM’s rate, since they are the same parent company), but I don’t want to be “locked in’ to them.
I think another idea you might be having is, why not withdraw with my BDO dollar account ATM card. Which I can do. But withdrawing Pesos from ANY dollar account, Philippine or US, costs several percent in conversion charges/ discounted Peso rates. You really aren’t withdrawing Pesos from a dollar account anyway, behind the scene dollars are still being withdrawn and the servicing bank that owns the ATM is making an instant, on the spot conversion. It may seem as if I am splitting hairs here, but the conversion is still a separate banking process, and one that you do pay for one way or another
I’m really always surprised at the number of foreigners who live here by using their dollar-denominated ATM cards, losing money on each and every transaction. Oh well.
Q: 3) From what I’ve read the deposit insurance there only covers P500,000?
A: That’s correct. P500,000 per depositor, per bank. So at today’s rate, that’s more than $11,000 for me, more than $11,000 for my wife at BDO, and without going into detail, both my wife and I also have accounts at different banks as well as BDO. (I also don’t have many accounts with more than $11,000 in them, alas).
Aside from that, I don’t worry much about deposit Insurance. The banking capitals of the world, like Hong Kong, Singapore, Zurich, etc. don’t even have deposit insurance … it’s basically an FDR invention to cover a lot of badly run banks, and Philippine banks are way, way more conservative with their money than US banks have become.
Hope that helps.
Thanks, Dave – very helpful.
I figured, I guess incorrectly, that I could deposit the US check into the Peso account and when it cleared it would be converted to Peso. Made sense to me, but now I know. I’ll need two accounts, a USD account and a Peso account. Not a problem, just an extra step and as you said I could always convert elsewhere if I need or want a better conversion rate.
I’ve been looking online a bit and unless I’m missing something it appears that I can get a much better interest rate on my money there. For instance, BDO offers:
Optimum Savings Account
A tiered interest-earning peso savings account, with rates close to those of time deposit. Withdrawals (free of charge) are limited to three per month. Deposit/withdrawal allowed through passbook, and withdrawal via ATM (for personal account)
Features
Personal Commercial
1. Initial deposit requirement
Php 30,000.00
Php 50,000.00
2. Minimum monthly ADB requirement Php 30,000.00 Php 50,000.00
3. Minimum balance to earn interest Php 30,000.00 Php 50,000.00
4. Interest rate Below Php 30,000.00 Below Php 50,000.00 No Interest
(per annum subject to withholding tax ) Php 30,000.00 – Php 99,999.99 Php 50,000.00 – Php 99,999.99 1.250%
Php 100,000.00 – Php 249,999.99 Php 100,000.00 – Php 249,999.99 1.375%
Php 250,000.00 – Php 499,999.99 Php 250,000.00 – Php 499,999.99 1.500%
Php 500,000.00 – Php 999,999.99 Php 500,000.00 – Php 999,999.99 1.625%
Php 1,000,000.00 – Php 4,999,999.99 Php 1,000,000.00 – Php 4,999,999.99 1.750%
Php 5,000,000.00 – Php 9,999,999.99 Php 5,000,000.00 – Php 9,999,999.99 1.875%
Php 10,000,000.00 and over Php 10,000,000.00 and over 2.000%
Those are much better rates than I can get here and if accurate, make me think about where to keep my money. At least some of it.
ONB also has some great rates that must be CDs but (again if accurate) are far and away better than I can do here. There does seem to be some 20% tax that I’m not familiar with though.
Anyway, I’m going to need to look this over closer on my next trip and see what the reality is.
Randy C (ID 5867) » Correct. You can’t deposit foreign currency into a Peso account. Another issue I find is that so far as I know, you can only have a Philippine peso and a US Dollar account. For you and me, no problem. For an Australian, let’s say, big nuisance/expense. An Australian dollar check or wire transfer must be converted to US Dollars, and thence to Pesos. This ads costs and time … a wire transfer from Australia, for example, typically takes 3 or 4 days to be available in Pesos in a Philippine Pesos account.
I haven’t really looked into what interest rate I am getting … I don’t keep that much money in the bank. One thing to be aware of, unlike the US where reporting on interest income is “after the fact”, the Philippine income tax is deducted and paid automatically every month by the banks, so there is no escape.
Hi Dave,
Do you know of any process to do the opposite of what you are doing? My mom lives here in the US with me now, but most of her money is still in BDO in the Philippines. Everyone once in awhile she will travel back to the Philippines to visit family and friends and withdraw more money for her stay in the US. She is getting older and does not like to travel as much anymore. Is there a way for her to withdraw her money from BDO in the Philippines to a bank or credit union here in the US?
Thanks!
Hi Arlene, thanks for writing. If your mom is going back to the Philippines one more time, then it’s easy. Just ask her to go to here bank and close the account, withdrawing the amount she has, if it’s a Peso account, convert to US Dollars and give her the proceeds in a Manager’s Check (made payable to her). This is the same as what we call a Cashier’s Check in the US, she can deposit this in any US bank. This costs her nothing except whatever loss there is on BDO’s daily conversion rate (typically they are pretty close to market), and I think 50 pesos for the Manager’s Check itself.
One caution. Everyone entering the US is required to declare any cash or negotiable instrument (such as a check) they are carrying if the amount is grater than $10,000 USD. Nothing to be scared of, but something not to forget, becuase US Customs can confiscate the money if it is not declared. People seem to get so confused on this, but don’t worry. There is NO LIMIT on how much she can carry but amounts of $10,000 USD must be declared … there’s no tax or duty, just a simple form to fill out.
She can also ask the BDO branch where she has her account to do the same conversion and then wire transfer the money to any US bank. This is faster than carrying the check back, but will have a much higher fee, Peso equivalent of $25 or $30 USD I believe.
She can. of course, leave the account open and just withdraw down to the minimum maintaining balance, typically P5000 or USD $500, if she wants to have the flexiobility of still having the account in place if she does decide to go back again in the future.
If she isn’t going back so she can make the withdrawl/transfer in person, write me direct at philly(at)philfaqs(dot)com and I’ll talk about some other strategies.
Hey Philly
So here’s my dilemma. My situation is similar to yours in the opposite direction. I have funds in a Banco De Oro Peso account in the Philippines and I am in the states. It came about because of the sale of land in Davao. The only access I have to it here in the states is for a balance check. I have been unable to find out how I can convert that to a dollar account so I can make transfers to the states without physically going to the Philippines. Any ideas?
@ Tom Mahoney
I don’t see what the issue is, Tom. Part of BDO standard service is funds conversion. In other words, ewithdraw Pesos, convert to US dollars, and they also wire transfer money from the Philippines to the US and from the US to the Philippines. They usually give me a decent conversion rate as well.
When you say you have access from the US to “do a balance check”, are you talking about the myBDO online banking website? If so, just log on there and query customer service about this. Or call BDO at 011-63-800-8-631-8000 (or) 011-632-631-8000 Have you account information (for the account you want the funds to go to also), and ask them to get the funds transferred. I’m sure there will be other steps involved, but that’s the place I would start.