Money and Banking in Ecuador
Money and banking in Ecuador is similar to the United States with a few key differences.
In this article, we’re going to share some tips about the best ways to transfer money to Ecuador, access your money from Ecuador and spend it once you’re here.
Currency in Ecuador
Ecuador has been on the United States Dollar since 2000. Back in 1999, the value of the Ecuadorian Sucre crashed so the government decided to go on the dollar to stabilize the economy.
Paper bills in Ecuador (1’s, 5’s, 10’s, 20’s, 50’s and 100’s), as well as $1 coins, are the exact same money as the US so there’s no need to convert them or learn a new currency. All paper currency used in Ecuador is printed in the US and all $1 coins are minted in the US.
All coins minted in the US can be used in Ecuador, but coins minted in Ecuador (pennies, nickels, dimes, quarters and 50-cent coins shown below) cannot be used in the US so you should convert them to larger denominations at a bank before you go back home. Coins minted in Ecuador are called centavos are are technically fractions of the old Sucre so they have virtually no value outside Ecuador.
The main difference is that your dollars go a lot further on most things due to the much lower cost of living.
Dollar coins are much more prevalent in Ecuador than dollar bills, and leave your $50 and $100 bills at home because no one will have change to break them except a bank. Cab drivers rarely have enough change to break anything larger than a $5 bill so it’s a good idea to carry lots of coins and $5’s with you.
If you would like to make your cab drivers or vendors smile, bring some $2 bills. They’re considered good luck in Ecuador and service providers love getting them!
Ecuador is a Cash Society
While the US and most developed countries are moving away from cash, Ecuador is still largely a cash society. Most small businesses and service providers like cab drivers do not accept credit cards. That means you always need to have cash handy if you take taxis or shop at small neighborhood vendors.
Larger stores like Coral, Supermaxi and Tia accept credit cards, as do chain restaurants like Noe Sushi and Fabiano’s, but they will require a photo ID such as a passport or cédula. Rather than carry those with you all the time, we recommend taking a photo with your phone so you can show it to the cashiers. They just need to see your picture and enter the ID number to complete the transaction.
Best ATM Option for Expats from the United States
Since Ecuador is a cash society, you’ll frequently find yourself standing in front of an ATM machine. Most US banks charge hefty fees to withdraw money from foreign bank ATMs, and most ATMs in Ecuador also charge fees that range from $1.50 to $5 per withdrawal.
That’s why we recommend opening a Charles Schwab checking account before you visit or move to Ecuador. Charles Schwab doesn’t charge any ATM fees worldwide to withdraw money. Plus, they reimburse all ATM fees at the end of the month that are charged by the dispensing bank. They have saved us literally thousands of dollars in ATM fees since we moved to Ecuador.
We recommend opening your Charles Schwab account while you’re still in the US. We attempted to open our account after we moved to Ecuador, but they required us to visit a local branch back in the US to show a photo ID for verification. That meant we couldn’t use the account or get the ATM card until our next trip back home.
When you start the online account creation process, you’ll need to first open a brokerage account, and then you can open a checking account that comes with an ATM card. You don’t need to use the brokerage account or keep money in it, but Schwab requires you to have one.
Once you have the account setup, you can electronically transfer money to it for free from your other US bank accounts. You’ll have to setup the remote bank info and it can take a few days for the verification process to complete so plan accordingly.
If you click this link and open an account, we’ll get credit for the referral, which helps us continue providing valuable expat advice like this article.
Best Credit Cards in Ecuador for Expats from the United States
Credit cards in Ecuador are not as commonly accepted as the United States and most other countries. Ecuador is still a largely cash society, but there are exceptions.
When you take a taxi, shop in small mom and pop tiendas, or eat at local restaurants, you’ll find that cash is king and most do not accept credit cards. Government offices often do not accept credit cards, either.
When you make reservations online, shop at a mall or at large chain stores like Supermaxi or Tía, or eat at chain restaurants, you’ll be able to pay with a credit card.
While some smaller businesses will accept credit cards, they may charge an extra 8% to 10% processing fee.
You won’t be able to get a credit card in Ecuador until you’ve lived in the country for awhile and have established a good credit history, so you’ll need to bring a credit card with you.
When you’re considering which credit card to bring to Ecuador, the main consideration is to have a card that does NOT charge international transaction fees, such as Capital One, Chase Sapphire Preferred, Discover, etc.
Once you open a savings account at a coop like JEP or a bank like Banco Guayaquil, you’ll get a debit card that you can use wherever credit cards are accepted.
You can also use foreign debit cards from banks in the US, but you may need to pay additional transaction fees. We recommend the Charles Schwab checking account that comes with a debit/ATM card since they refund all ATM fees.
CoOps and Banks in Ecuador
Ecuador has a lot of banks! We have a checking account and ATM card with Cooperative JEP, and that’s the bank most people use for the Investor Visa CD, but there are several more to choose from:
- Cooperative JEP
- Banco Guayaquil
- Banco Pichincha
- Banco del Austro
- Banco Bolivariano
- Banco del Pacífico
- Produbanco
- And more…
Most of these banks have 24/7 ATM machines, but not all of them accept ATM cards from US banks. Cooperative JEP, Banco del Austro and Produbanco don’t accept our Charles Schwab ATM card while Banco Guayaquil has been the most reliable bank for ATM withdrawals.
Big cities and most larger towns have a plethora of ATM machines, but small towns like Olón, Curía, San José, La Entrada and other small comunas along Ecuador’s coast do NOT have ATM machines so you’ll want to plan ahead if you’re going to stay in a rural part of Ecuador.
How to Transfer Money from the US to Ecuador
If you’re planning a long visit or permanent move to Ecuador, here are a few options for transferring your money here.
Are Checks Accepted?
In general, you won’t have many occasions to use personal checks from your US checking account. Very few people or businesses accept them, and you’ll need an Ecuadorian bank account to cash or deposit them. You can expect personal checks to take up to a month to clear and the recipient has little recourse if they don’t, which is why they are not a common form of payment in Ecuador.
When you open an account at an Ecuadorian bank, it will be a savings account with an ATM card by default. Once your savings account is setup and funded, you can start the longer process of applying for a checking account, which requires additional documentation and qualifications that vary by bank.
Very few people have checking accounts in Ecuador, and most bills are paid with cash, credit card or online bank deposits.
ATM Machines
When you first move to Ecuador before you have a chance to open an Ecuadorian bank account, ATM machines are the easiest way to transfer money from the United States to Ecuador.
Most ATMs have maximum daily withdrawal limits between $300 and $500 (including ATM fees), so you you may need to visit the ATM multiple times on multiple days to pay for things like rent or other high cost items.
Once you have an Ecuadorian bank account, the cheapest way to put money in it is by withdrawing cash from an ATM using your Charles Schwab account, and then depositing it into your Ecuadorian bank account. However, you’ll only be able to withdraw and deposit several hundred dollars at a time so if you need to deposit a larger amount, you may want to use an online service or a wire transfer.
Wise, Xoom, MoneyGram, PayPal, Western Union, Etc.
Wise.com is one of the most affordable ways to send money internationally. They can send money to/from most currencies using ACH, Wire Transfer, or SWIFT.
Xoom.com is an online funds transfer service that’s owned by PayPal. They claim to work with nearly every bank in the world, and we can confirm that it works with Banco Guayaquil, Banco del Austro, Banco Pichincha, Cooperative JEP and Banco Bolivariano. The fee starts at $5 to transfer $100 and increases based on the amount you want to transfer.
MoneyGram.com is a competitor to Xoom and offers better rates. This service was recommended by an Ecuadorian who lives in the US and uses it to transfer money back to Ecuador. It works with most banks, but it doesn’t work with JEP, at least JEP isn’t in the list. If you transfer from a bank in the US to a bank in Ecuador, there is no cost but it takes 3 to 4 business days. You can pay a small fee for a same day transfer.
You can also use PayPal.com to transfer money to many individuals in Ecuador, and some businesses. The recipient just needs a PayPal account of their own. Once you have their email address, you can transfer money to them. It’s free from an individual to another individual, but fees are charged for businesses, which may be passed on to you.
Western Union is also a very popular way to send money to Ecuador. They have offices all over Ecuador, including two in the small town of Montañita.
There are a number of other online transfer services with a range of fees, but these are the most reputable. Be sure to search for reviews before signing up on a money transfer website.
Wire Transfers
Due to the restrictive transfer limits and high fees charged by online transfer services, you may opt to do a wire transfer through your bank if you need to move a large sum of money.
For example, if you’re planning to apply for the Investor Visa, you’ll need to transfer $40,000 + $500 for each dependent. This amount far exceeds the transfer limits set by online money transfer services like Xoom.com.
You can expect to pay about $25 to $50 to do a wire transfer, so it makes the most sense to go that route when you’re transferring a large sum of money.
Conclusion
Money and banking in Ecuador are very similar to the United States with a few minor differences.
We lived in Ecuador more than two years before opening an Ecuadorian bank account, and still rarely use it. We currently only use it to pay our Claro mobile phone bill, and our Netlife Internet access bill.
We pay our rent using Xoom.com to transfer money directly into our landlord’s bank account at Banco Bolivariano. We use our Capital One credit card to pay for our private health insurance with Confiamed, as well as for groceries at the larger stores like Tia and Supermaxi. But most of the money that we spend in Ecuador at mercados, small stores, restaurants and for transportation is cash that we withdraw from ATM machines.
Transferring money to a foreign country can cause some anxiety, so please let us know if you have any additional questions about banking in Ecuador in the comments below.
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Hola todos! Welcome to my author bio page! Let's see. Where to begin... I grew up in the country on a lake outside a small Kansas farm town. As soon as I could, I got the hell outta there! Since then, I've lived and/or worked in Kansas City, Washington D.C., Denver, San Francisco, and Ecuador. I started and sold a dotcom, wrote a book about it, started a YouTube channel, and now I write a lot. Amelia and I have embraced the Unconventional Life and we want to help you do it, too!
Getting to Ecuador and having a good look around led me to a discovery I’m very happy about. Before I arrived, I had no idea there were decent golf courses here. As it happens, my home in Santa Mariañita is just a short drive away from a wonderful golf club, and I’m now an enthusiastic member. I could probably have figured that one out before I left the States, but it came as a pleasant surprise, and it’s a good example of how, sometimes, you find things out that you weren’t exactly looking for.
Another important item on my figure-it-out-in-Ecuador list was the whole money, finances, banking, and investing issue. I wondered how I would make it all work. Would I be best served by moving some portion of my retirement nest egg, such as it is, to Ecuador? Or would it be better to leave it invested in the U.S.? These are questions that any potential expat retiree might ask themselves. Here is what I did, and what I have learned.
In 2000, Ecuador “dollarized” its economy and now uses the U.S. dollar as its official currency, so thankfully there is no confusing or variable exchange rate to complicate these decisions and discussions.A solid foundation of research is essential.Like most retirees, I have certain criteria for managing my finances in retirement which need to be met, including:
Preserving my money and assets.
Earning a return to supplement the monthly income from pensions and Social Security.
Maintaining a reasonable level of liquidity to deal with unforeseen issues or emergencies.
And, like most people, I also have some apprehension about the seemingly inevitable cyclical correction in the U.S. economy and what effect that event would have on my financial outlook. As retirees, we don’t have the luxury of following the normal advice of just “sticking it out for the long-term” during a potentially extended downturn. When you are 68 years old, the “long-term” has a very different look.
Banking in Ecuador is similar in structure to the U.S. There are three defined banking sectors: public banks (bancos públicos), private banks (bancos privados), and credit unions (cooperativas populares y solidarios). Importantly, your savings are covered by the Ecuadorian version of the FDIC—COSEDE— which is a government-operated insurance fund to secure money that you have in financial institutions.
COSEDE is the acronym for the Corporación del Seguro de Depósitos, which translates as the Deposit Insurance Corporation of Ecuador. Similar to the FDIC in the U.S., there is an upper limit to the dollar amount of deposits that are insured, and, in Ecuador, that amount is $32,000 per person per financial sector.
Also, like the FDIC, financial institutions pay a small percentage of each deposit that they hold into COSEDE. That upper limit of dollars covered by the COSEDE government insurance fund applies to the total of funds owned by any individual in a financial institution in each financial sector.
As an example, if one wanted to deposit $90,000 in financial institutions in Ecuador and wanted it all covered by COSEDE insurance, that can easily be accomplished by depositing $30,000 in one institution in each of the three financial sectors. A prudent investor will make certain that the financial institution they choose is approved and authorized for COSEDE coverage of their deposits.
In Ecuador, all of the banks are covered, as are the majority of the larger cooperativa options. It is easy to check the coverage on the COSEDE website. There has never been a failure of any of the banks or of the top 10 cooperativas in the 55 or so years of their existence. I have deposits in three bancos and three cooperativas.
With this background, we now get to the interesting information about interest. Banks in Ecuador currently pay between 5% and 7% interest on one-year CDs. Even better rates apply to cooperativas, which currently pay between 7% and 10% interest on those one-year CDs. You read that right. That’s interest on certificates of deposit up to a maximum of 10%. My four one-year CDs are currently earning 7.75%, 8.5%, 9.49%, and 9.75%.My money management has become simplified.Additionally, even though the standard CD term is one year, most institutions will pay the interest every month if you request it. Prior to coming to Ecuador, my retirement financial planning was based on earning between 5% and 6%, and I was expecting to have to devise a diversification plan for my investments to shield them from U.S. market declines, etc. But on the funds that I brought in and invested in CDs in Ecuador’s financial institutions, my money management has become significantly simplified.
Now, I just put the money in financial institution CDs and receive the interest every month. The only diversification plan I need for these funds is to vary the financial institutions that hold my deposits to be sure that my funds are within the upper limit for the COSEDE insurance against any loss of principal.
Quito, Ecuador’s capital, nestles in the shelter of the Andes mountains. ©International Living/Jim Santos
Quito, Ecuador’s capital, nestles in the shelter of the Andes mountains. ©International Living/Jim Santos
How can they pay that much? To understand that you need to understand that the larger economy and banking sectors in Ecuador are, in general, somewhat different from those in North America, and the government and the people use significantly less debt. Government and personal debt in Ecuador is quite low. The poverty rate is down to 21% from 35% a decade ago, and the national debt of Ecuador is approximately 40% of its gross domestic product (GDP). For comparison, the U.S. national debt is two-and-a-half times larger at 104% of GDP, and the U.S. poverty rate is about 12%. Generally, poor citizens use less debt, and loans that people get are at a much higher interest rate, so they are used very prudently.
In addition, the Ecuadorian government doesn’t loan cheap money to financial institutions so that they can then lend it out at higher rates, as the U.S. does. A significant portion of the money that the financial institutions in Ecuador lend comes from the funds that others, like me, deposit in those institutions. The personal debt delinquency rate in Ecuador is approximately 6.2%, versus 2.3% in the U.S. These factors result in high interest rates for borrowers and high interest returns for depositors.
This information would be incomplete if it didn’t include the fact that, until recently, Ecuador levied a 5% “exit tax” if you wanted to take money out of the country. That, of course, was a negative influence but wasn’t overriding unless one wanted to get in and get out in a short period. If you brought money into Ecuador and earned 9% in one year and then wanted to take it out of the country, it would cost you 5%, and you would only net a 4% return on your money. However, if you left the same amount invested for five years and then took it back out of the country, you would net 8% on your money because the total exit cost would amount to 1% per year.
Cooperativas pay between 7% and 10% interest.
There were some special exceptions to that 5% exit fee, but they didn’t often fit within the needs of most investors. The exit fee wasn’t a determining factor for me because I intend to leave the money earning these excellent rates for much longer than one year. And here’s more good news: That “exit tax” policy was revoked earlier in 2019 and is being phased out completely over the coming four years through 2023, when it will be eliminated totally.
For this expat, the discovery of these excellent returns on insured bank deposits was icing on the cake and made my decision to live in Ecuador look even better. Had I known about this welcome addition to my personal finance arrangements before I made the move, it would have been another significant positive factor when I was making that decision.
And I must admit, the positives are plentiful. The sun, the beach, the spectacular variety of inexpensive fresh seafood, fruits, and vegetables, along with high returns on retirement funds…and excellent, inexpensive golf! Yes, I’m very happy in Ecuador.
Thanks for sharing! However, the exit tax is being reinstated and will still be 5%. President Noboa changed that policy introduced by Lasso, the last president. Glad you’re enjoying Ecuador!
Hi, what is the efficient way to transfer money from Ecuador to the US if it is over 40k.
Probably a wire transfer, but I recommend talking to your bank and an accountant.