Should You Send Money to Mexico Through Your Bank?
Banks are something of a one-stop shop selling everything from student loans to share portfolios – but when it comes to sending money to your friends and family in Mexico, is the convenience of using your local account enough to make it worthwhile? Our helpful guide breaks down the jargon, investigates the costs involved and explains how banks compare to money transfer companies.
The United States to Mexico remittance route is the most popular route for transferring money worldwide, and this means that there is a wealth of options out there Our helpful guide compares the difference between banks and money transfer companies and gives our readers a better understanding of the costs and factors involved in sending cash across the border.
The Cost Sending Money to Mexico Through Banks vs. Money Transfer Providers
When sending money from the United States to Mexico, there are two main costs that you need to look at; the exchange rate margin and any associated transfer fees.
The exchange rate margin is simply the difference between the interbank rate, the rate used when banks transfer currency between each other, and the rate that currency is sold to consumers. Whilst the interbank rate is usually reserved only for big banking corporations, it is typical for most money transfer companies to offer rates of less than 3% above the interbank rate on this competitive route. At the time of writing (Sep 22, 2022) WorldRemit has an exchange rate margin of 0.98%.
Banks aren’t always as transparent about their exchange rate margins as money transfer companies and they are usually only available to account holders. At the time of writing, Chase Bank had an exchange rate margin of 3.10% over the interbank rate and Bank of America had a very high exchange rate margin of 5.73%. This means that when transferring USD 1,000 USD to Mexico you would receive MXN 19,571.60 with WorldRemit and just MXN 18,832.39 if transferring the same amount with Bank of America.
Exchange rate margins are not the only charge that you’ll be required to pay on your transaction. Both banks and money transfer companies charge a transaction fee for initiating the transfer. This table highlights the fees each provider charges for sending money to Mexico via bank transfer:
|Chase Bank||Account holders receive 3 monthly transfers to Banorte bank in Mexico. Otherwise, there is a USD 5 fee or no fee if sending over USD 5,000.||1-2 days|
|Bank of America||According to their website there are no fees for international wire transfers (although documents elsewhere state USD 35).||1-2 days|
|Wells Fargo||Fees are disclosed at the time of the transaction but range from USD 35-40.||1-2 days|
|U.S Bancorp||USD 5 personal account holders. USD 70 for business account holders.||1-3 days|
|CitiGroup||These range from USD 0-35 depending on your account type. View our Citigroup guide for a breakdown.||1-2 days|
|WorldRemit||Range from USD 1.99-3.99 depending on the pick-up method and paying-in bank.||Instant|
As you can see it is common for banks to charge up to USD 50 in fees for processing a remittance, while the same transaction with WorldRemit has a maximum fee of USD 3.9.
Sending Money to Mexico through Banks Pros and Cons
Sending Money to Mexico through MoneyTransfer Providers Pros and Cons
Wire transfers can take up to two business days to process and can only be initiated when banks are open. Therefore, banks have daily cut-off periods, with remittances received after this time being processed the next working day.
As banks are closed over the weekend, a remittance sent after the cut-off period on a Friday won’t be processed until the following Monday morning. This means your cash may not arrive with your recipient until Wednesday. Any public holidays taking place in either Mexico or the United States can also affect the arrival time of your remittance.
The following table displays the cut-off time for the five main banks in America and WorldRemit.
|Provider||Cut Off Time||Delivery Time|
|Chase Bank||16.00 (EST)||1-2 business days|
|Bank of America||17.00 (EST)||1-2 business days|
|Wells Fargo||17.00 (EST)||1-2 business days|
|US Bank Corp||16.00 (EST)||1-3 business days|
|CitiGroup||17.15 (EST)||1-2 business days|
Should You Send Through Your Bank or an Alternative Provider?
While it can be tempting to lump your remittance together with the rest of your banking, rarely does this make financial sense. With banks charging excessive exchange rate margins and high transfer fees the cost of using a bank to send an international transfer quickly adds up.
Banks may not offer great rates on international remittances, but they also face the issue of being far slower than money transfer companies. If you need to send money to Mexico quickly and cheaply, money transfer companies are the clear winner. Why not take a look at our USD/MXN comparison table to find the current best rate.