what are the best ways to get US$ out of DR?

[quaqualita]

hi,
today I need some advice from people who make / earn US$ here in the DR.
What do you do with your US$ ? Do you leave them on a Dominican Bank or do you transfer your $ to an account outside of the DR? If you transfer the money out of the DR, what is the best (cheapest) way to do it?
Here is my situation:
Almost 10 years ago I came to live here in the DR. I left nothing behind in Europe, arrived in the DR with only little cash and worked here most times not getting more than 7000 to 10000 RD$ / month. Therefore, the first years there was no way for me saving money, I even didn't have any bank account here at the beginning. But I worked my way up, got better jobs, and earning more and more money.
The last years I have been making considerable good money, some of my salary is even paid in US$.
I would be able now to save up to 500 US each month.
I have now a Saving account in Pesos with Cash card at Banco Popular, and also a Saving account in US$ where my monthly salary is paid to. I recently also opened an account with int. credit card in Europe.
Since I don't trust the DR economic situation very much, I don't feel save to leave my US$ in a Dominican Bank, I would prefer to transfer the US$ somehow to my account in Europe and save it there for emergencies or retirement.
At Banco Popular I got the info, that I can't make an international money transfer from my US savings account. I could make a transfer from my Peso account, however they charge 50 US per transfer. This wouldn't help me anyway, since I use the Pesos for living here and want to save up my US$.
Also at Banco Popular they offered me to open another US account with an international credit card, but I would need first to buy US$ certificates of at least 3000 US$. I'm not sure, if I should do that as soon I have the 3000 US$. And then, there still would be the very high fees the bank would charge me to transfer the money from DR to Eruope.
Are there other possiblities? Cheaper ways to get the US$ out of the country?
Since until now I never have been able to save money, this is all new for me. Any advice / info would be very helpful for me. I just want to save monthly some US, where it's saver than on a Dominican Bank and where I get better interest than just 2%.
Anybody can help?
Thanks in advance for any advise!

 

[DCfred]

First, Banco Popular is in a "negative watch," by Fitch, the international rating agency. The only Dominican banks that I did not see placed on the watch were: Citibank, Scotia and Fiduciario Gerencial. I have not been back to DR in a couple years, so perhaps the banks not listed no longer exist.


One idea. Have you considered buying US I-bonds? You can do it online, buy up to 30 thousand per year and is tax free for 30 years. These bonds are inflation adjusted, thus the name Ibonds, and currently have a yield of 4.66. You only need to hold them six months before you cash them.


From Treasury Direct:

"Treasury's inflation-indexed I Bonds are designed to offer all Americans a way to save that protects the purchasing power of their investment by assuring them a real rate of return over and above inflation. I Bonds have features that make them attractive to many investors. They are sold at face value in denominations of $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000 and earn interest for as long as 30 years. I Bond earnings are added every month and interest is compounded semiannually. They are State and local income tax exempt, and Federal income tax on I Bond earnings can be deferred until the bonds are cashed or they stop earning interest after 30 years. Investors cashing I Bonds before five years are subject to a 3-month earnings penalty."

Another option, open account in Puerto Rico, and wire money. Even with fees, you are better off getting your money out of the Dominican Republic.

 

[Escott]

I think they dropped the basis rate 1 point on I bonds and no longer pay that amount of interest. I stopped buying them a year ago once they did that.

Just get a bank check and mail it to another account you have somewhere else. Cost you nothing.

I get over 12% from a finance house in Puerto Plata on dollars. They are not subject to government confiscation of Dollars and I feel safer with them than with a bank now.

Scott

 

[quaqualita]

thanks for your quick response.
DCfred: the company I'm working for is transfering the salary to my accounts at Banco Popular - one part in Pesos to a Peso Saving account and one part in US$ to an US$ saving account. I'm not able to change their company policy, they won't transfer it to another bank. So, if fitch ratings are good or bad, I have to go with BP. But I don't feel very save to leave specially the US$ in the bank, that's why I would like to move the Dollars out of the country.
Re I Bonds: Thanks for this idea, but a) I know for US not bad, but 4.66% doesn't sound too good for me. European banks offer for different risk free saving plans around 10%. b) like I said, my money I want to save is in the DR at Banco Popular. Could I buy this bonds in Banco Popular? Probably not, so I would not be able to pay for this bonds c)most bonds / fonds from the US are only available for Americans or Canadians. I'm neither. Therefore is also your second suggestion, to open an account in Puerto Rico not for me. It's very difficult for non-US citizens to open a bank account in the US.
Scott, thank you, too for your response. To get a bank check and mail it to Europe is actually a great idea. What I don't know: My US$ account at BP is a saving account. Will they give me a bank check on the money in a saving account, or will I need a US checking account for this? And, are you sure a European bank will accept a check from a Dominican bank? I will check this out with my bank in Europe and ask for the fees they might charge.
About that 12% from a finance house in Puerto Plata on dollars you mentioned: This would be also an easy alternative. Can you get me more info on this, please? Is it risk free? Do I need a big amount of US$ to get 12%? I have not a lot $ now to begin with, but I could save from now on every month 400 to 500 US$.

 

[DCfred]

Well, I know that Ibonds are a paltry 4.66% but you won't have to worry about losing your principal. Also, you can buy them online using a credit card via treasury direct. It was just an idea.

I would not, however, under any circumstances put your dollars, your life savings, in one of those financieras. After all, this is a thirld world country. You are better off leaving the money at Banco Popular, which is less likely to fail and would probably have the support of the government if something were to happen.

I took my money out of DR when the peso was at 16. Sure, interest rates were double digits at that time. But look where the exchange rate is now, (peso has lost 50%) plus add inflation to the mix (25%). I'm quite happy with the paltry returns that I've had here. Good luck.

 

[Escott]

You don't have email or pm available to give you more info. YOu can do a search on this site for Anoeca. I have over 100k US wth them and have used the since the peso was at 16 with no problems

You can email me from here and I would be happy to discuss with you specifics.

See below for facts about Ibonds. No longer 6 months holding period. It is now 12 months.




The minimum holding period for Series EE and Series I bonds has been extended from 6 months to 12 months, effective February 1, 2003. Bonds issued January 2003 and earlier will continue to have a 6-month minimum holding period.

This means if you purchase a Series EE or I bond issued February 2003 or later, you must hold on to the bond for 12 months before you can cash it. Series EE bonds issued February 2003 and later must be at least 12 months old before they can be exchanged for Series HH bonds. Bonds issued January 2003 or earlier can still be cashed or exchanged when they are 6 months old.


Quote from savingsbonds.gov

 

[Formosano2000]

Putting a price on a good night's sleep......

hi,
today I need some advice from people who make / earn US$ here in the DR.
What do you do with your US$ ? Do you leave them on a Dominican Bank or do you transfer your $ to an account outside of the DR? If you transfer the money out of the DR, what is the best (cheapest) way to do it?
Here is my situation:
Almost 10 years ago I came to live here in the DR. I left nothing behind in Europe, arrived in the DR with only little cash and worked here most times not getting more than 7000 to 10000 RD$ / month. Therefore, the first years there was no way for me saving money, I even didn't have any bank account here at the beginning. But I worked my way up, got better jobs, and earning more and more money.
The last years I have been making considerable good money, some of my salary is even paid in US$.
I would be able now to save up to 500 US each month.
I have now a Saving account in Pesos with Cash card at Banco Popular, and also a Saving account in US$ where my monthly salary is paid to. I recently also opened an account with int. credit card in Europe.
Since I don't trust the DR economic situation very much, I don't feel save to leave my US$ in a Dominican Bank, I would prefer to transfer the US$ somehow to my account in Europe and save it there for emergencies or retirement.
At Banco Popular I got the info, that I can't make an international money transfer from my US savings account. I could make a transfer from my Peso account, however they charge 50 US per transfer. This wouldn't help me anyway, since I use the Pesos for living here and want to save up my US$.
Also at Banco Popular they offered me to open another US account with an international credit card, but I would need first to buy US$ certificates of at least 3000 US$. I'm not sure, if I should do that as soon I have the 3000 US$. And then, there still would be the very high fees the bank would charge me to transfer the money from DR to Eruope.
Are there other possiblities? Cheaper ways to get the US$ out of the country?
Since until now I never have been able to save money, this is all new for me. Any advice / info would be very helpful for me. I just want to save monthly some US, where it's saver than on a Dominican Bank and where I get better interest than just 2%.
Anybody can help?
Thanks in advance for any advise!

It seems clear that your ability to generate ?savable? money is quite recent and thus you have relatively low margin of buffer in case something goes wrong.

If you are the type who absolutely values a good night?s sleep over possible financial gains, this is what I suggest:

1. First, keep a small stash of liquid US cash (depending on your life style) in a safe/easily accessible place. (Not a local bank!) I?d say US$500 or so but in denominations no larger than $50 on each bill so you will not run into trouble getting change when you need to spend. $5, $10 and $20 are all convenient denominations.

2. Open up a bank account in the US with any bank that is a member of the FDIC. FDIC stands for Federal Deposit Insurance Corporation, which is a federal entity that guarantees your funds up to US$100,000 per account in the case of bank failure.
For details, go to: http://www.fdic.gov/


3. I?ve heard that after Sept/11th, , non-US citizens must be personally present to open bank accounts in the US with the exception of CD accounts. You need to double-check this information with whichever bank you intend to do business as the policy may vary.

4. Open CD accounts with reputable Internet banks such as E-trade Bank and ING Direct. Not only will you not have to travel to the US to deposit your money (you can either download or request an application form, fill in the form and then open an account by sending the form back along with a check), you will also be able to earn slightly higher interest rate than at most brick-and-mortar banks.

5. To insure that you always have sufficient capital available in short notice, use a ?staggered? strategy to spread out the maturity dates. For example, suppose you want to start saving starting August/2003, you could:

a. Open a CD account with 3-month maturity on August 1st,2003 with $500.

b. Repeat this process on Sept 1, Oct 1st and Nov 1st.

c. Your August CD matures on Nov 1, and your September CD matures on Dec 1st?etc, which means as long as you leave the CD?s alone and have them automatically roll over on 3-month maturity, you will always have $500 (plus small interest) available on the 1st day of each month starting Nov/2003.

d. Now, repeat this cycle, but this time with either 6-month or 1-year maturity and (hopefully) higher amount. This way, you will be able to earn higher interest on money you don?t need to touch for 6-12 months.

e. For the time being, do not open CD accounts for maturity longer than 1-year because the current US interest rate is at a 50-year low and further decline is not likely, but when the economy picks up (hopefully soon!), Alan Greenspan may actually raise rates. And you could potentially be locking yourself out of the rate increase(s) if you are committed for a long-maturiy CD.

f. When you have even more money, start staggering new CD accounts on the 15th of each month, so soon you will always have money available on the 1st and 15th of each month. Of course, simply leave them alone to quietly compound on interest rates if you don?t the money. If you need the money, simply notify the bank before maturity date and they?ll cut you a check.



5. As a non-US citizen not living in the US, you are exempt from US tax on any interests earned in a US bank account. So whatever you earn is yours to keep. (You need to certify your foreign status)



Obviously, to do any of the above, you first need to be able to take money out of DR. This can be done by having your DR bank issue you a dollar check pay to the order of your own name. Mail this check in along with the application form to open your first US account.

If your bank indeed does not allow direct wire transfer from DR to abroad, simply keep writing yourself checks each month and have the money deposited in the US. The idea is to keep as little US$ as possible in your DR bank because your funds in DR are not insured.

Because the DR peso is likely to continue losing value against the US$, consider exchanging your surplus pesos (pesos above and beyond your living requirements and emergency) into US$ regardless of the exchange rate. Suppose you are paying RD$35 for a dollar now:

1. If the peso strengthens to US$1=RD$25 (unlikely but possible), as long as you don?t convert the dollars back to RD$, you haven?t lost money. Simply use those highly-bought dollars in the US or for other goods and services that requires US$ payments. US$ will always be excellent legal tender worldwide.

2. If the peso devalues to US$1=RD$45 (not impossible), hey , you have protected yourself from lost purchasing power and net wealth erosion.


It?s not a good idea to place large amount of either US$ or RD$ in any bank in DR because you could lose all in case of bank failures or government-mandated freeze. Deposit just enough for immediate/short-term use. Move everything else abroad.

All the above steps are extremely safe but will limit your money growth becauas even a one-year CD at an Internet bank pays only around 2% per year. However, the peace of mind that comes with the assurance that your money is 100% secure could be priceless.

If you are chasing after high returns and you can stomach righ risks, I'm sure there are others in this board who are experts at such investments/speculations. Those who held money in Baninter throughout the 1990's and cashed out earlier this year have made a fortune. Those who waited only a few more months have had their fortuned locked up by the Central Bank. Nobody knows what will happen next.

Sometimes you eat the bear and sometimes the bear eats you, it's just the order of the day.


Good luck !

 

[goatfarmnga]

banking in DR

Hey Formosano, Thanks for the great banking info! Pam