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Opening a Bank Account in Costa Rica

Costa Rica is regularly voted as one of the world’s happiest countries, so it’s no surprise that many expats are choosing to settle down there. Stunning beaches, friendly locals, and a relaxed way of life all contribute to the country’s sky-rocketing popularity. Many cities and towns are now very well set up for expats … except when it comes to banking.Opening a bank account in Costa Rica can be problematic, as there are a few restrictions and conditions that you must meet in order to get started. This article will take you through everything you need to know.

How to Open A Bank Account: A Guide

Costa Rica, Where the Banks Are as Warm as Its Climate

lady smiling in a bank office

Do you have to be in Costa Rica to open a bank account?

If you’re planning on living in Costa Rica long-term, having your own bank account is essential. It will allow you to pay for services and goods in the local currency, as well as your bills, without bad exchange rates and costly fees. If you’re working in Costa Rica, your employer will be able to pay your salary into your bank account directly.

 

Policies on who is able to open a bank account vary from bank to bank. Most banks allow foreigners with legal residency status to open accounts. Meanwhile, the state-owned Banco de Costa Rica allows non-resident foreigners to open an account, but there are various restrictions in place. This is a relatively new rule relaxation, which came into place in 2016.

 

Private banks require you to have lived in Costa Rica for a certain amount of time before you can open an account. You will need to actually be in Costa Rica when you open your account, largely because of the amount of paperwork and documentation involved.

• Identification (either a passport or a DIMEX ID card, which will be issued by the immigration department)

• A minimum deposit (usually around $25, although this will vary)

• Proof of address (such as a utility bill or rental agreement)

• Proof of income from your local employer or, if you work freelance, a letter from an accountant (alternatively, some banks will give you the option of providing proof of assets from your foreign bank)

• Three months of bank statements from your current bank (although this is not always required)

REQUIRED DOCUMENTS

What documents are needed to open an account?

Which documents you will need will depend on whether you are opening an account as a resident or a tourist. Requirements also vary among the different banks. If you are a resident, you will generally need to provide the following:

Opening a Non-Resident Bank Account at Banco de Costa Rica: Simple Process, Enhanced Security

To open a bank account as a non-resident at the Banco de Costa Rica, you simply need a form of identification, such as your passport, and a mobile phone number. This can be done online, 24 hours a day and seven days a week, through a very simple online process. You’ll receive your account number by email and/or text message, and then you can visit the branch to collect your card. This account will offer you access to all branch services and electronic channels. There is a maximum monthly deposit of $1000 when using this type of account.

 

Remember that the government takes money laundering in Costa Rica extremely seriously, and they will go to great lengths to check that the funds used by account holders are coming from legitimate sources.

What banks in Costa Rica are suitable for expats?

You can choose to open an account in either a private or state-owned bank. Government-owned banks have a large presence across the country. However, they have a less than glowing reputation when it comes to queue times. State-owned banks are generally very safe, as they don’t need to make a profit. This means there’s little to no risk of disingenuous fees, and all your deposits will be fully insured.

 

Private banks are quicker and tend to provide expats with a better service, as you’re more likely to encounter a staff member who speaks English, and you won’t have to wait as long in line. However, their ATMs can be harder to find, which can lead to charges, as withdrawing money from a different bank’s ATM can cost you.

It’s advisable that you visit ATMs with closed cabins for extra privacy. It’s also worth bearing in mind that if you are a resident applying for an account, you will have more options.

State Run and Private Banks in Costa Rica

There are three state-run banks in Costa Rica:

 

• Banco de Costa Rica

• Banco Nacional de Costa Rica

• Banco Popular

 

There are also a number of private banks:

 

• Banco BAC San Jose

• Banco BCT

• Banco Cathay de Costa Rica

• Banco Davivienda

• Banco Improsa

Navigating Costa Rican Banking: A Comprehensive Guide for Expats

It’s always best to compare a few banks and to get advice from other expats (if possible), before you decide which is the best option for you. Look for reviews about monthly account charges, withdrawal fees, and interest rates for investing or borrowing. It may be a good idea to speak to a bank advisor.

 

In Costa Rica, you can choose to open an account in either a private or a state-owned bank

Typical banking hours in Costa Rica are between 9 am and 3 pm, Monday to Friday. In shopping malls, banks usually open from 12 pm to 6 pm daily. It is recommended that you don’t visit banks on payday, due to the long queues.

 

To make an appointment, you will need to call the bank in advance. If you don’t speak Spanish, you’ll also need to ask for an English-speaking member of staff to help you. Alternatively, you could take a friend/translator with you.

Costa Rican authorities are serious about fighting money laundering, so all banks will certify the income of depositors. Costa Rican banks ask for a very small deposit—often under $100, and sometimes as little as $25.

Are there any fees involved when opening an account in Costa Rica?

You will incur some fees when you open a bank account, such as a monthly service charge and/or fees on any withdrawals made at certain ATMs. This is why it’s essential that you see your documentation in English and read through it carefully, as otherwise you may be caught out.

 

You’ll have to pay a large amount to move money between different accounts in different currencies, such as if you transfer your salary to your bank account in your home country. This will incur a charge for processing, as well as a hefty fee at the other end.

 

Remember that state-owned banks will have fewer fees and offer a good level of protection. You may struggle to find someone who speaks English in them, but you can always take a translator or a friend with you if you are concerned about this.

Once you have filled in your form and handed in your documents, it will take just a few days for your account to become active. Ensure that you have sufficient cash and that you can use your bank account back home during this time.

Financing in Costa Rica

Unlocking Costa Rica Real Estate Financing: Your Path to Paradise Found

Unveiling Your Costa Rica Dream: Navigating Real Estate Financing for a Life in Paradise

Life in paradise awaits… if only you could secure Costa Rica real estate financing? In that case, your dream may be closer than you expect!

 

You’ve probably been googling about, researching your options. And you may be a little surprised at what you’ve found: some sources claim financing is nearly impossible, while others state that there are lots of options. In reality, the truth leans more toward the latter, with a few provisos. (In fairness, the former was accurate 10+ years ago.)

 

Here’s the truth (current for early 2022): Home financing in Costa Rica is very possible. But, it’s probably not as easy or as straightforward as you’re used to. That’s due not only to Costa Rica’s propensity for paperwork (we almost act as if we love it, even though no one really does) but also because you haven’t established the same kind of financial history here as you have back home.

 

In other words, you may have a history (and present) of gainful employment, proof of income, and a great credit score in your home country, but Costa Rican banking institutions probably don’t have the same kind of access to those records. That said, you won’t be starting from scratch, either, and you can very likely secure Costa Rica real estate financing. Here are the most popular options for residents and non-residents, alike:

Flexible Financing: Exploring Costa Rica Real Estate Opportunities Through Seller Financing

Costa Rica Real Estate Financing by Owner (aka Seller Financing)

Owner or seller financing is one of the most flexible types of Costa Rica real estate financing, not only regarding terms but also documentation. You’ll find that, as people vary, so do the people (and their preferences) behind owner financing.

 

Some sellers will request proof of income while others won’t; some will offer shorter terms (ex. 1-3 years) and others are willing to go longer (up to 10 years); some request a fixed amount down (say, $100k), while others request a percentage (usually 25-50%) of the negotiated selling price; some will request monthly payments and others will prefer semester or annual contributions; some will offer interest-only loans, while others will dive into principal + interest loans. Etcetera, etcetera, you get our point!

 

Like a home’s selling price, seller financing is negotiable, to a certain extent. Of course, many sellers do not provide any financing at all. So, while owner financing has long been one of the “easiest” – and all things are relative, of course! – ways to secure Costa Rica real estate financing, it’s often not an option.

Home Equity Loans

Have you banked home equity? Then ocean views in Costa Rica could be yours!

Unlocking Ocean-View Dreams: Costa Rica Property Financing through Home Equity Loans

Home equity loans, also known as second mortgages, can be a great option for financing a property in Costa Rica.

 

One of the great benefits to home equity loans is that you’ll take out a home equity loan in your home country, not Costa Rica, which means you’ll have easy access to proof of income, your credit score, and other indicators that traditionally help you secure a loan.

 

The potential hiccup, of course, is equity: To take out a home equity loan for a second home, you must have equity in your first home. For example, if you purchased your home for $500,000 with 20% down ($100,000) and have already paid off $175,000 in mortgage principle, while your home’s value has increased to $600,000, then you’d have about $375,000 in equity ($100,000 down + $175,000 paid principal + $100,000 appreciation).

 

Typically, buyers in Costa Rica leverage a home equity loan + down payment savings to pay in full, as cash buyers, for their Costa Rican property. As a bonus, it’s fairly quick and easy, your loan transactions are conducted in English, and your loan isn’t contingent on the home you’re purchasing in Costa Rica, so there are fewer headaches. And finally, Costa Rica will see you as a cash buyer – a point solidly in your favor!

Exploring Unique Financing Avenues: Self-Directed IRAs and Costa Rica Real Estate

Self-Directed IRAs

Many U.S. citizens are unaware that they can direct their IRA retirement funds to purchase an investment property in Costa Rica.

 

The short of it is that, as you know, you can direct how to invest your retirement funds. Most people choose a mix of stocks and/or mutual funds, but an IRA also allows for diversification into real estate investing, as long as the underlying asset is a tangible piece of property. (Check!)

 

There are limitations to this investment, most importantly that it is used for investment purposes only. That means that, while you may rent your property as a vacation home or long-term rental (and accrue income and appreciation along the way), you may not vacation in the home. Therefore, most buyers use this payment method to purchase tomorrow’s retirement home, rather than today’s vacation home.

 

Bank Financing

Bank financing in Costa Rica has not always been a picnic. Traditionally, it was difficult for non-citizens to even have a chance at a loan and, when they did, the requirements were onerous, the paperwork and its necessary translations a huge headache, and the interest rates sky-high.

 

We’re happy to say, your bank financing options have improved. But, fair warning: the process is probably nothing like what you’re used to. In theory, Costa Rica real estate financing is available to anyone; in practice, they’re still a challenge to secure, even if you’re a resident or citizen.

a modern costa rican luxury home

Exploring Bank Financing: Rates, Terms, and Streamlined Processes for Costa Rica Real Estate

If you are granted bank financing, you will likely secure a 15-, 20-, or 30-year loan that requires a sizable down payment, usually in the range of 35-50%. What’s more, interest will likely be higher than what you’re used to – usually 7-10% interest for U.S. dollar loans. (Costa Rican colon loans have higher interest, up to 20%!) And of course, you’ll have plenty of paperwork to sign.

 

That said, the entire process is easier than you’ve read about (especially in older articles and posts) because the processes have become more streamlined in the last few years. If you don’t have access to owner financing or a home equity loan, or if you simply prefer local bank financing, then it is very doable.

 

Which brings us to…

 

New! BCT Costa Rica Real Estate Financing Option for U.S. Citizens

(Accurate as of February 2022)

 

Banco BCT S.A., a Costa Rican bank, has just announced a new financing option for U.S. citizen residents and non-residents of Costa Rica.

 

BCT now offers second home loans and bridge loans, with a loan-to-value (LTV) of up to 65%. In other words, BCT will finance up to 65% of a home’s value, for an amount up to $875,000 (approximately 65% of a $1.35M home). Terms up to 20 years are available, with fixed and variable rates around 6.25% to PR+4.75%. Loan details are available in English.

 

The requirements are fairly straight-forward and include your U.S. credit score, two years of tax returns, 12 months of financial statements, and similar requirements.

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