Questions, Questions, Questions 6

Thanks to several readers who just sent in questions on thus subject,  I’ll try to lump a few of the common interest items together here, please feel free to ask more about anything I fail to cover adequately.  I really get a charge out of the help I am getting from everyone on this questions and answers theme, thank you all!


How Do You Move Money and Pay Bills


This has been a perennial question and will not die off any time soon, because when you live in one country and have money (or bills) in another country, easy answers are few and far between.  I’m going to talk about what works for me … I don’t know all the answers, but there is money in my bank accounts and no “past due” mails in my inbox, so my methods work … for me … YMMV.

Where to Keep It: Of course the best answer to where do you keep your money has a lot to do with where your money comes from.  In my case I have two government annuities, both paid by an agency known as DFAS (Defense Finance and Accounting Service).  DFAS makes direct deposits to banks in the US and about 42 other countries.  At present, the Philippines is not one of those countries.  Full list of IDD (International Direct deposit) countries is here.  This means, for sure, I need a US bank account(or some other approved country bank account) in order to get paid.

I also receive Social Security Retirement Benefits.  The SSA is more complicated in their overseas regulations than is DFAS, depending upon citizenship and status one might, or might not, be able to receive payments directly in the Philippines.  I chose not to even try. I just have it Direct Deposited in my US bank.

I also receive income from a number of my online business ventures.  Many of them, are US based, several are not.  Currently almost everyone I receive money from on line feeds through my PayPal account which is also tied to a US bank account.  Mostly I just leave my money in PayPal and pay for things I buy with it … it’s a very convenient quasi bank, open 24/7.  A few sources, Google for example, make direct deposits to my US bank.  Most of these companies will not make direct deposits to Philippine banks.

So, case closed as far as needing a US bank (or home country bank for my Australia, Britain, German, et all readers).

But what about using a US bank like Citi Bank with offices here and just transferring as required?   Good idea, however, it isn’t normally possible.  Citi Bank US and Citi Bank Philippines are two completely different entities.  Likewise a suggestion I received from a reader a while back … use HSBC.  Hmm, last time I looked HSBC was the Hong Kong and Shangri Banking Corporation.  US-based?  ;-).  Not hardly … the US HSBC operations are just one arm of a huge international banking empire.  You can have an HSBC account in the US and you can have an HSBC account here, but there are virtually no HSBC branches outside Manila and I don’t know what costs may be involved in transferring.  I need a local bank, so that’s what I use.

It is my understanding that you can use PNB (Philippine National Bank) of New York as a direct deposit source and transfer simply to your PNB account in the Philippines.  I don’t know the details and/or any charges involved, but I also don’t have PNB account so I will leave this as an exercise for the reader

OK, so have a Home Country Bank and a Philippine Bank, but the hassles! Actually I find the only ‘hassle’ if you will is the already well known and well lamented Philippine banking laws that allow Philippine banks to hold foreign checks for as long at 45 days.  This is annoying and counter-productive to trade, but it’s a fact of life and unlikely to change soon.  Personally, I just ignore it.

Every month I write a check on my regular checking account in my US bank.  There is no charge at all for this service beyond whatever I paid for the original checkbook.v  I just took a look and I seem to have at least a 15 years supply of checks … each little 25 check ‘pads’ will last two full years, after all.  By the time I run out of US checks the currency will probably have changed to Chinese Yuan anyway, so no problem.



I deposit (by the way, in the Philippines we call this making a  “depose-it”, say to the teller that you want to make a “deposit” and you will likely get a blank stare ;-)  More on the “common language” here.

This requires one simple deposit form and a trip to the personal service counter where the helpful teller will accept the check and enter it into my passbook … I don’t get monthly statements, all my accounts here are passbook based … I always have access to my account data.  I can easily view my account online at any time and see which checks have cleared and which are ‘in the queue’.

What About paper Statements and Mail: This is an issue to some, indeed.  US military retirees and civil service retirees have access to a volunteer organizations here in the Philippines known as RAO’s .. (Retired Affairs Offices).  There are three major ones and satellite offices spread across the Philippines.  You can receive and send  US mail via these kind folks and I do use them.

But what about the folks who don’t have these services?  And what about people like me who really want to get off all paper possible.  Not really a problem.  If you are still in your home country planning for a move, take inventory.  What financial-related paper do you get every month?

Bank Statements? Why?  If you are planning to continue with the bank sending you paper statements, and they do not have a useful online account service, dump them … almost any bank has perfectly useable online access these days, I can log on and check activity in either my US or Philippines accounts 24-7.  If you use a smart home budget program, like Quicken or Microsoft Money they can do the information gathering for you.  You want paper?  Print a statement once a month … the statement the bank prints and the one you print all come from the same computer.

Bills? Well how many of these are you going to have after the move?  Which bills do you get that you can not access online?  My US bank has a free bill pay service which will let me pay any company or individual in the USA, one-time or recurring.  If the receiving party is set up for electronic transfer it happens in one business day, if electronic transfer isn’t possible, the bill pay service will mail a check.  I currently have only two annual bills I pay in the US, aside from that I pay no one there.  Almost all banks have equivalent bill pay systems, if they don’t, change banks before you move … they are back in the buggy whip era.  For those who keep a tight reign on their money, the bill pay service will also integrate with a book keeping program.  If I did business with someone who would not give me online access I would just change my address to a US-based mail forwarding service.  There are dozens of them available.  Most will, at your direction, open mail upon your instruction and read you the amount or even fax you a copy … along with their normal service of receiving mail, bundling it up and sending it to you by courier at you own agreed upon time and method.  I just don’t see a need for paper to travel from the Us to the Philippines or back again very often.

What about just using your US bank and living off your ATM Card? This can certainly be done.  Many folks do this routinely.  Different banks have different charges but there are a number of US banks with free ATM withdrawals.  My bank isn’t free but if I use my US ATM card in a teller machine here I pay, on average, about a one peso per dollar loss on the ‘street’ exchange rate and $3.67 total in ‘cross border’ charges.  Truthfully I don’t know my daily limit, I know it’s at least $500 a day which is enough for me.

I don’t feel comfortable in using the ATM card as my only lifeline, but it is certainly an important backup … I use mine about every three months just to keep it ‘alive’.

OK.  As usual I have written more words that I intended to …if only all of them actually imparted information ;-).  This should help some of you with your planning, please ask if there is anything I didn’t cover … the concept of writing yourself a check seems to throw a lot of people off, but it works for me. Just part of Living Here in the Philippines.



Comments

  1. pogidaga says

    Until recently, i had a cheap and convenient way to transfer money from the US to the Philippines and have easy access to it while in the RP.

    I opened a peso savings account with PNB in the Philippines a few years ago. I have ATM access to the money while in the RP. And online access to the account anytime from anywhere. Before leaving the US for the RP, i would transfer money from my US bank to the PNB account via the PNB branch in Los Angeles. The money would be converted to pesos automatically minus the $7 conversion fee. For a while it was very easy and convenient.

    Then PNB decided to change my account number and i had to re-register for online access. I also had to reestablish the transfer from my US bank to to PNB. Then my US bank got stricter on setting up new transfers. I haven’t been able to get my online access back yet and i need it to get the transfer working again. Big headache. I might need to get my sister-in-law to go in to the bank branch as my personal “fixer’.

    I would still recommend that people open an account in the RP at a bank like PNB that also has branches in their home country. If you are lucky, everything will work smoothly as it did for me for years. But if there are problems, be prepared for it to take some time to get worked out.

  2. says

    @pogidaga: Yep. I’ve heard this sort of story a lot of times. Transfers that work some of the time, transfersthat used to work, etc. What especially gets in the way isn’t always legal issues either, it’s often the two IT staffs in the two different countries. Sometimes they don’t ‘play well’ together.

    I note you were paying$7 a transfer when it was working? Just as a point of reference, with RemitHome it is 8 dollars per transfer from any bank to any bank, so not as much difference as I thought.

  3. Tim says

    Good morning from Seattle

    Questions on your thoughts on the following. I am planning to retire in PI in April and would like you opinions.

    My plan is to save up some cash prior to retirement to tide me over until the stock market recovers so I won’t have to touch my stocks or 401K for a while. I’m thinking that it might make sense to open an account in a PI Bank so I could avoid the transaction costs and hassles in transfering the money from the states. In order to do this I could bring cash with me when I visit in December and again when I move there in April.

    Does this make sense, or are there no advantages over paying myself monthly from my US Checking account deposited into my PI account?

    Are PI Banks secure as in FDIC type insurance?

    If I were to do this, what is better, a peso or dollar account?

    Which banks in PI are considered financially strongest, most honest, easy to work with, and accomodating to US retirees?

    Thanks alot. When I get to PI, I can serve as a Subic contact if you need one.

  4. says

    Hello Tim,

    Welcome and thanks for commenting. A whole lot of questions rolled into one there, and the way I write I’m liable to go on for page after page … so I’m going to break som eof your questions out into separate articles. If you look at my topic/series on moving here you’ll find I have spent quite a few words on some of those questions including the bank I use, why, etc.

    To answer one or two of your queries right off the bat:, many retirees operate wihtout a bank here but I couldn’t live that way, I want a bank around the orner that I can deal with. And yes there is depositors insurance here … PDIC. it’s much like the FDIC in the US with an important difference … it hasn’t been caught with no money in it’s funds like the FDIC was a few weeks back ;-)

    I’m always a bit amazed by how important depositor insurance is to the average American … in the real money centers of the world, Switzerland, Hong Kong, Cayman Islands, etc. there is no insurance… the FDIC is just a crutch to let dodgy banks work too close to the edge, in my view and recent events seem to bear me out on that.

    Anyway, welcome to the ‘club’ here and best wishes for success in your future plans

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