Money Math

Shockingly almost everyone in South America seems to want money for their goods or services. In my bank account sits the money that both they and I desperately need. Finding the best way to access this money is a recurring problem that I have been studying for the last few months. With globalization on its unstoppable march it is now possible to walk up to any ATM and withdraw money in your choice of US dollars or the local currency, nuevo Peruvian Soles in my present location. Sounds incredibly simple, but lets take a deeper look. A quick look at my online bank statement after my first withdrawl showed a 5 dollar foreign ATM transaction fee in addition to a $1.50 fee charged by the local bank. The maximum amount of Soles that can be withdrawn from most ATMs is maddeningly capped at 400 soles. At the current interbank exchange rate of 2.88 soles per dollar that amounts to 138.88 dollars. Now with fees equaling 6.50 dollars per transation, 4.8% of my money is lost before it even reaches me. Another look at my online bank statement and a little more math shows me that they have not given me the interbank exchange rate of 2.88/dollar, but instead 2.79/dollar. This is a 3.2% gap. If we add this to our transaction fees, we see that a full 8% of my money disappears in the move from Bank of America to my hand in Peru. This was an unacceptable situation; maddening in fact becuase the money simply vanishes and I have nothing to show for it.

After a bit of investigation I discovered it was possible to withdraw larger amounts from the bank tellers. This requires one to jump through a number of hoops, your origanal passport is necessary and also possibly another form of picture ID, driver´s licence; the bank may also want you to produce copies of these document that they can keep on file. But eventually they will give you a large lump sum of US currency. They will then offer you an insultingly low exchange rate which you refuse.

Now you step out on to the street with 500 dollars in your pocket. Your eyes are a little sharper. You are a little more aware of your environment, who and what is around you. Near the banks you find ´casas de cambio´, money changing shops. People sit in small booths advertising what currencies they exchange, almost always only dollars or Euros. Shady looking men sit outside the shops with huge stacks of dirty looking bills in their hands. They try to catch your attention, promising higher rates than the people in the booths. They have no real estate overhead so they probably do offer marginally better rates, but making these transactions on the busy sidewalk doesn´t feel right. You´ve also been warned that many of these individuals are slight of hand artists and operate with ´fixed´calculators to fleece the mathmatically lazy. After entering a number of casas de cambio you decide the best rate you can get is 2.87 soles/dollar, wonderfully close the official rate. You tell the woman behind the glass that you would like to change 200 dollars. She punches some buttons on her calculator and pushes it toward you through the hole, it reads 574. You take a few second as the gears in your head go to work 100 x 2.87 easy 287, multiple that by two...... yes 574. OK, you hand over the two 50´s and one 100. She inspects them very carefully and when she is satisfied begins counting out your money below the counter out of view. She passes it to you through the hole in the glass. Now, when you turned down the bank´s exchange rate of 2.80/dollar the friendly teller lady told you to make sure and check the bills from the casa de cambios. A quick inspection shows you that the bottom 100 sole note in the stack is clearly a counterfit note. It is dirty and worn, probably in an attempt to hide the low quality of the forgery. The real give away is that the purple ink forming the large 100 does not change to black as you tilt the note to an acute angle to your eye. "Este billete no esta valido", you say, handing the note back through the glass. The woman on the other side cracks a knowing smile and changes it for a real note. After one more count you pocket the bills and walk out. It´s one of the only times on this continent you have neglected to say "gracias" after a transaction.

The bank would not say how much the transation fee would be for a 500 dollar withdrawl. A quick look on the internet shows the withdrawl and directly after it a 15 dollar fee, an even 3%. The difference between the official 2.88 rate and the 2.87 is about .3%. So, was this all worth it to save 4.7%? You think so, if only to abate your anger at some faceless corporation skimming your hard earned money with impunity.