I personally bank at three Costa Rica banks: BAC San Jose,  Scotia Bank and Banco Nacional.  All were subject to various schemes that could easily cause serious security problems, especially if the customer did not use adequate security protection in their computers or worse, used Internet cafes or a wireless connection while banking online.

Now along comes Banco Nacional with a high tech but easy-to-use gadget that all but guarantees your security even if banking from an Internet cafe or using a wireless connection. I got one about three weeks ago and have since been trying to figure out how someone could get into my account. My conclusion?  They cannot or if they can, they are a whole lot smarter than I am.

If this topic interests you, read on!

So how does it work?

Well first let’s look at security at most Costa Rica banks.  Almost all use a password that must be longer than x but shorter than y numerals or numbers.  Because of their antiquated operating systems,  symbols cannot be used i.e. ^%)@ etc. Most require that you change your password regularly. but people being people, folks often choose passwords that can be “guessed”.

All have a login name as well, of course.  Logins are often easy to find, however, as they often are your cedula numbers, email address, account name… whatever.  So, if the password gets compromised (stolen),  entry to your account is not hard and you have issues. All of these things are made far worse if you are using wireless or are on a computer where a keylogger has been installed without your knowledge.

So what has Banco Nacional (BN) done that is so great? Well they still require a login and it is usually your cedula # (dumb),  passport number (dumber) or other and is thus NOT very secure.

After you enter that, you are then taken to a pop-up window that is just silly! (yeah, I know, the good part is coming!). In this window you type 4 characters and use your mouse to click 4 numerals.  Why is it silly? Because it is fully visible to anyone standing or seated anywhere near you while you are typing this stuff…  Then they have (well they had) all they needed to get into your account.

But…. here is the cool part:

If you look at the picture above left at the beginning of this post, you will see what looks like a key fob with a little window.  You get this from BN for 3,000 colones (but see below).

With this gadget BN adds a final login step which makes everything incredibly secure!  After you log in doing the same old useless stuff… you are asked for a code number.  You now press a button on the key fob (llevero in español) and enter that generated number.  Also available is a card type device (see right) for generating the code. You now have access to your account.

Why is this cool and more important, safe?  Because each number generated is “one-use”.  Even if someone sees you entering it or actually sees the number, it can never be used ever again.  This number is mathematically tied to your account, and no other llavero (or card) will work in your account.

This thing is called a token. You can either go to your local BN office and get one for 3,000 colones or, if you have them, you can use your entertainment points that you get for paying bills online.

With this new security option, I would say this places Banco Nacional miles ahead of their competition in terms of keeping your account safe. As I know many of you here must use Internet cafes, shared computers or wireless, this new gadget can now make all the difference in keeping your money safe.  In fact, until the other banks “catch up”, I would suggest using BN as your primary bank using other only for spreading the wealth.

Well.. I was wrong.  It seems there is a process in Costa Rica that can take less than a decade to change for the better.  Today was my appointment for my cedula renewal at at the American International Mall branch of Banco de Costa Rica in Alajuela.  It went without a hitch… and if this interests you… read on!

Twenty Three Minutes!  OK.. actually it was about 28, but I spent 5 minutes chatting up the young lady at the renewal desk.

And! The new cedula is for TWO years.

Those of you who have had the pleasure of a 5-6 hour wait at immigration whilst being moved from room to room and rows of seats to standing areas in 90 degree heat standing near people who did not bathe that day….  well those people know exactly what I am talking about! And that was for a ONE year renewal.

Today was sweet! Seems immigration has gotten their act together!

The Process

The bank security guard took my old cedula, gave it to the woman at the renewal desk (yes, it is a dedicated desk in an air conditioned branch).

She waggled a come here finger to me and it was all over just that quick.  I gave her my address, phone number and the closest Post Office branch (Belen) as they deliver the cedula to the closet branch of Correos de Costa Rica (Post Office) and about three weeks.  I bet they do too!

The only “issue” was the 329 times I needed to press my index fingers (both) into the little fingerprint reader thingy. Apparently it is not a very good fingerprint reader thingy as she mentioned a lot of folks have finger print issues. Apparently it requires a correct reading 4 time in a row per finger.  I’d get 1 then 3 then 1 then none… and eventually 4.  The other digit… sigh.  No big deal! Probably did not help that my fingers are the size of most Tica’s feet… but I digress!

That’s it… a boring post if ever the was one!

This year, though, things have changed!  OK… I know better than to say such a thing. Let us just say that the process has changed, and we shall see if  “things have changed”.

What are the big changes? Well the biggie is that this year, it seems, that I will not need to make the trek to immigration.  The other stuff will be gravy. So here is the new process:

Making that trip to immigration has always been a pain. While the vast majority of dealing with any branch of the Costa Rica government is a lesson in inefficiency, any sojourn to migracion is the premier example on how NOT to deal with the public.

The changes? For starters, renewal can now be done at any of thirty-two branches of the Banco de Costa Rica (BCR).  In fact, they have even devoted a web page to those who will be renewing residency at that bank. It is, of course, in Spanish as bank web sites in English are still not common.  I will, however, be happy to do some translating of the more important goodies!

Before I do… one alert reader commented that there is a link ti the English version. Either I missed it or they have added it.  I am getting olde… I probably missed it… Either way, you now can click the link above for GringoSpeak!

• BCR promises that the process can be finished in twenty minutes.  The operative words here are “can be”.  I will, of course, report on the accuracy of that semi-commitment.
• BCR offers this service for renewals and for lost residency cards (cedulas)
• They are staffed to do this at any of thirty-two offices throughout the country (see list below). I am guessing that they may add more in the future, but these seem to cover just about the whole country so nobody need travel a great distance.
• Cost is $48.00 and is paid at the BCR branch at the time of renewal (but see below!)
• They provide a number for making appointments.  It is toll free, 800.227.2482. It is answered in Spanish, and when I called, the person was not multilingual. English speakers may be available though, I did not ask.
• You will not get your cedula at the time of your appointment. It is promised to be sent to you by la  Dirección General de Migración y Extranjería (immigration) no more than 25 calendar days after your appointment. No mention of how it is delivered.

That’s it!  Seems simple enough. So here is how it worked for me.

I called the toll free number, was placed on auto-hold for maybe 3 minutes until a nice  lady answered. I was given an afternoon appointment in mid August at the BCR branch in the Mall Internacional not far from the San Jose airport. I was told to bring my cedula and my passport.  That’s it!  Now you will all have to just wait to find out if the above promises bear any semblance to reality.

Oh… and I saved the best for last!  If my Spanish did not fail me, this renewal will be for TWO YEARS!!

Here is a list of the 32 branches set up for renewing or replacing cedulas.

Easy answer! I have not a freaking clue!

Todays exchange rate of about ¢511.41 / ¢518.71 makes absolutely no sense whatever and to me, smacks of some serious manipulation.

I am not the only one who is raising questions about changes that fly in the face of logic. Sadly, Central Bank manager, Roy Gonzalez, rather than reply directly to the many questions, has stated more or less that we must defer to the vast experience of other central banks. Say what?? News flash! The dollar is DOWN. Just which central banker are you listening to? Certainly not the Federal Reserve as they most assuredly know the dollar is down.

Economist and expresident of the Central Bank, Rodrigo Bolanos, thinks that this strong growth that has occurred within the past few days due mainly to a change in the expectations of people. More people having dollars accounts. Say What #2 ??? Let me get this straight! The people decide the value of currency here? Well maybe if the colon were traded internationally in the currency market, but the colon has not yet attained the status of the Euro. Another news flash! There has ALWAYS been far more investment in dollars than in colones. That is why the Central Bank was so worried about “dollarization” in the Costa Rican economy.

The dollar is horribly overvalued here and probably should be floating arount the ¢470 area. The fact that it is not and is in fact being set at levels not reflective of how the dollar is really faring world wide indicates to me some serious hanky panky. Que sorpresa!

One the other hand, this is great news for those who ignored my warnings to get out of dollars (last fall) and later took it in the shorts when the dollar fell. Of course now that the people who DID heed my words are taking it in the shorts… though as they made a nice windfall last December, they actually have made money as they presumably earned interest on their wind fall.

My advice? Pay no attention to me. Take your best guess.

As logic (and the world economy) are clearly not what is affecting the US dollar, there is no point in even trying to make any sense of a system clearly controlled and manipulated by forces that we know not.

Me? As the colon is not reacting normally, I’ll probably split my $$$ equally in colones, dollars and euros, and try to figure out who really is manipulating the currency in Costa Rica.

As some of you know, several of my companies here in Costa Rica are “high tech” related, especially the web hosting business where we host thousands of customers world wide. Server and computer security are paramount issues as you might guess.

So when I got a phone call yesterday asking me my thoughts about this rash of Internet bank fraud and seeking advice, I decided rather than answer her question immediately, I would BLOG about it and maybe pass on some ideas for my readers. While this relates to the banking thing, it is really germane to ANY Internet transaction that uses passwords, bank information, credit cards or ANY confidential data.

This will not be a “techy” post. I’ll try to keep it very basic so non-techies can understand what they can do (MUST do) to avoid Internet fraud.

I am sorry, but this will be a long post, but I cannot recommend strongly enough that your read this.

If this topic interests you, read on!

First, let me begin with this. Internet banking or for that matter any Internet commerce IS inherently safe if you take responsibility for protecting your computer, protecting confidential information, and learning about Internet safety.

The problem, of course, is that many people either do not know how to do this, think it is too technical, or frankly, cannot be bothered to learn (until they lose some large green, then amazingly, they have all sorts of time!).

Connection to the Internet – Computing Environment

Of course the first thing to discuss is your connection to the Internet. Basically, there are three ways you can connect and variations of those that we won’t get into here.

• Connect via modem
• Connect by cable modem, DSL or another “always on” connection, meaning you do not have to LOGIN each time you use the Internet
• Connect via a wireless connection, meaning you have no wires hanging off your computer when actually on line. You are sending and receiving radio signals from your PC to a box often called a wireless router, most capable of handling a number of wireless computers at the same time.
• Connect via and Internet cafe or other public locations that offer use of a PC to go online.

RULE ONE: YOU SHOULD NEVER FOR ANY REASON CONNECT TO YOUR ONLINE BANK ACCOUNT (OR ANY OTHER WEB SITE THAT INVOLVES YOUR FINANCES OR CREDIT CARD INFORMATION) FROM ANY INTERNET CAFE OR PUBLIC LOCATION USING COMPUTERS OFFERED BY THE CAFE OR PUBLIC LOCATION.

RULE TWO: YOU SHOULD NEVER FOR ANY REASON CONNECT TO YOUR ONLINE BANK ACCOUNT (OR ANY OTHER WEB SITE THAT INVOLVES YOUR FINANCES OR CREDIT CARD INFORMATION) FROM ANY INTERNET CAFE OR PUBLIC LOCATION USING COMPUTERS OFFERED BY THE CAFE OR PUBLIC LOCATION.

RULE THREE: YOU SHOULD NEVER FOR ANY REASON CONNECT TO YOUR ONLINE BANK ACCOUNT (OR ANY OTHER WEB SITE THAT INVOLVES YOUR FINANCES OR CREDIT CARD INFORMATION) FROM ANY INTERNET CAFE OR PUBLIC LOCATION USING YOUR OWN LAPTOP OR OTHER COMPUTER UNLESS YOU HAVE INSTALLED THE NECESSARY SOFTWARE TO PROTECT YOUR COMPUTING ENVIRONMENT.

RULE FOUR: YOU SHOULD NEVER USE A PUBLIC WIRELESS CONNECTION AT ALL.

It is important that you understand that regardless of how you connect, the instant you connect to the the Internet, your computer is vulnerable. Note the word instant. Therefore, you must have your computer protected before you ever connect to the Internet.

If you do not, you are exposed to potentially serious issues.

Your computing environment

What do I mean by “protection”? There are two critical items.

Anti Virus

First, you absolutely MUST have a good anti-virus program on your PC. By good, I mean a program that updates itself with new virus, worm, and Trojan horse information every time you log on the the Internet. Many of the best known names say they do. They do not. Most only update what they consider to be critical. The rest are updated once per week. This is nonsense! As it is estimated that between 20-40 new virus’ are released DAILY, updating once per week is just nonsense!

There are two excellent programs available, both from Europe and can easily be configured to update the virus info as often as hourly. On all our business PC’s, we have it set to every three hours.

Kaspersky and F Secure are the names of the software that we use, and you can find links to their web sites at the bottom of this post. Just scroll on down!

**Quick note to modem users! Modems users often login and immediately start reading emails or surfing. This is a mistake. Even if you are using high quality anti-virus programs like the ones I mentioned above, it takes time to download the newest virus information. Depending on when you were last online and your connection speed, from a minute or so to maybe ten minutes! Login by modem… then WAIT until your protection has caught up with you.

Firewall

The second thing that is needed, whether you have an “always on” connection (cable, DSL, etc.) or use a modem, is a BI-DIRECTIONAL firewall.

A firewall is a program that keeps the bad guys from getting in to your PC over your connection to the Internet. Many users of Windows PC’s use the firewall that is included free in the XP or Vista Operating systems. This is not enough!

Why?

Nowadays, the use of keyloggers is everywhere and especially at public locations and Internet cafes. A keylogger is a tiny program that can be installed on your PC without your knowledge. It is ridiculously easy to do this! It can be sent in an email, downloaded from a web site you visit, hidden in a Microsoft Word document… and in many other ways!

Then, every time you touch your keyboard, this tiny program records every key stroke you make! That information is then sent over the Internet to the bad guys!

They key phrase here is: “…sent over the Internet to the bad guys!”

This means that the keylogger program must have outward bound access to the Internet in order to send the information. THAT is why you need a firewall that not only controls (blocks) what wants to come IN to your PC, but also can block what wants to get OUT of your PC without your knowledge or permission. Most firewalls (Windows XP for example) do not do this. There may be other firewalls that do so. I use a product by Checkpoint; again, there are links at the bottom of this post so you can get more information.

Wireless (inalámbrico)

Wireless is just that. Your computer transmits and receives just like a little radio station. That means anyone near you can easily intercept those radio signals and can see them on their computer. The software to do this is free on the Internet. While it is a bit more complex than a keylogger, it does not take a computer scientist to do this.

EMAIL

So you may say, “All I do is check my email!” and surf the net”.

OK… so now, the bad guys can have access to your email! THAT means they can now ask for a lost password in your name, then get or change the password and erase all trace they were there!

OK, now some users use a webmail connection!  This is very common.  Or, they use Tahoo, etc.  THEN they leave the old messages stored on their account.  NOW, when someone gets access to their email, they can read old emails… and there they can find a treasure trove of things including passwords or lost password email, etc.

RULE FIVE:  NEVER LEAVE EMAIL ON A SERVER (your email account online).  USE A GOOD EMAIL PROGRAM AND DOWNLOAD THE EMAIL TO YOUR COMPUTER AND STORE IT THERE.  Just think of what someone can find reading the past years of your emails.

Also, a really knowledgeable hacker person can get into your PC via a wireless connection! There, they can read, copy files and do other bad things. Every time I go to Bagelmans or Dennys or some hotel lobby, I see people logged on wireless thinking all is well. One day I saw a guy sitting in his car just outside one of these locations obviously using his laptop.

Was he just using the wireless for free? Probably. Right?

While there are ways to 100% protect a PC in a wireless environment, they are simply too complex for this post.

In any case… can you see the problem here? It is amazingly easy to get someone’s confidential information via the Internet.

Couple this with people who still open email that is clearly SPAM (and make no mistake, people open millions every day!) or from unknown persons, and you can see why the burden has to fall on you to protect your computing environment. Now ad a little surfing and this problem begins to take shape.

Want more? Add kids and teens! They surf everywhere and a favorite trick of hackers is to place malware (bad programs) on sites kids will be attracted to as they KNOW the kids are using mom and dad’s PC!

Passwords

Many think that using a good password and changing it regularly is enough . It is not. However, it is important to know what is a good password. For all my business access, I use complex passwords i.e. “wV1E4GJY18Ct5″. Nasty, but required in my work. Sometimes we throw in random punctuation marks as well.

However these kinds of passwords are not practical nor necessary for an average user who needs to remember the password (as everyone knows it should never be written down, RIGHT?).

So here is a little password trick.

Look around you. Find two items totally at random. From where I am writing, I can see a gourd and a table. Now, think of a number between 19-99. OK so now take that number and place it between the two words thus: gourd79table.

Now randomly capitalize 2-4 letters thus: gouRD79tAble.

You now have a pretty nasty password nearly impossible to guess and even a random password generator will never find it. Whether you use this technique or another, NEVER EVER use birthdays, names, places, ANY ID numbers of any kind for passwords. You would be flabbergasted at how much of everyones private life is already on the Internet.

Those “security test questions”

How many times have you seen a password test question something like, “What was your mother’s maiden name?” used as the test question? How dumb! Your mother’s maiden name (also probably known as your grandfather’s last name) can likely be found on hundreds of genealogy web sites or other public databases! Piece of cake for any good hacker. That is why I use the first name of the second barber who ever cut my hair as my correct answer to what was my mother’s maiden name. Let them try to find THAT out!

Summation

You must have your PC protected. I can promise you that Internet Cafes do NOT have this protection. While protecting one PC is not expensive, protecting 20-30 computers is not cheap. Also, they just do not care of course as it is not their responsibility.

• Download, install and learn to use good anti-virus and firewall software and keep them current
• Use proper passwords like those above and change them frequently
• Make sure that any time you are entering private information over the Internet that the web site is using a security certificate. You can tell this by 1. Checking for a little “lock” icon at the bottom of the web page in the browsers border. To see what I am referring to, go here.Now down at the bottom of your browser, you can see the little lock! That indicates a secure web site.Another way is to make sure the URL (web address) begins with https:// and NOT just http:// without the “s”. The “s” indicates that a security certificate is present to encrypt what you type (but remember, NOT over wireless!!)
• Avoid using wireless… period!
• Avoid using any public PC anywhere.
• If you chose to ignore this, never ever use a public PC if you will be entering even ONE piece of confidential information.
• Never open unsolicited email. Sometimes just opening an email can do damage!
• Surfing can be OK if and only if you have ALL the proper protective software installed and current on your PC.

Protection must be on your PC and for that reason, if you MUST use an Internet cafe, install these protections on your PC first and connect your PC (laptop more likely) directly (via cable) to the Internet cafe’s connection. Just about all locations offer this provision as do most hotels nowadays.

Here are links to the companies mentioned above:

But, I have also received a lot of email about this topic, so here are some things I am noticing in my travels around San Jose in the past few days. I think they may be important.

First, thanks to all those who wrote to me. If you are one of the many who made a nice “profit” last week, I am happy for you. If you took a little hit, I am sorry, but it is not too late. See below!

Exchange Rates on the Street

You need to be careful out there! Ask about the exchange rate if it is not posted.

I will tell my tale of a visit to ICE, the friendly local communications and electric utility monopoly. For one of my businesses, I buy international calling cards in bulk, usually $200-$400 worth at a crack.

As I have long since learned to never trust someone else’s calculations in financial matters, I was not surprised to find a discrepancy in the amount of my bill. As ICE, in their wisdom, does not accept dollars in payment, I had to pay in colones. This was no big deal, but what WAS a big deal is that they had not changed their computers last week to reflect the new exchange rate. This resulted in them handing me an invoice for 7,000 colones ($14.00) too much. Why? Because calling cards are in dollar units ($10 and $20), but I had to pay in colones! They used 517 colones instead of 498 colones for their calculation!

After a 45 minute wait and much telephone calling, they adjusted their rate of exchange to the rate given by Banco de Costa Rica (who share all ICE facilities). The bank knew and had the correct rate posted, but ICE did not!

Thus here is my first warning to those with ANY financial dealings; be careful that you are getting the correct exchange rate! In the other 15-20 places I visited this week, a surprising number knew nothing of the Central Bank’s changes! At least half were using 520 colones /dollar. Now if we are talking a dollar or so, no big deal. But $400 DOES make a difference. On the other hand, I suppose if you are receiving change from a purchase, you should keep quiet.

Colones vs Dollars

Exchange rates are moving in VERY odd directions… all down. This is odd! On Monday, many banks were at 499-505 buy-sell or even higher.

By mid week, this started dropping! Today, at Banco Nacional, the rate was 495 – 500!

As I have written, the Central Bank had to act and this recent drop was far from unexpected. What IS unexpected is this continued downward movement past the limit set by the Central Bank.

As you know, I feel that the correct exchange rate should be around the 460 colon/dollar mark. As I wrote last week, I thought another 4-7% reduction would occur in early 2008. Maybe though, the Central Bank is going to permit the local banks to continue adjusting downwards similar to how they used scheduled raises for so many years!

If this is true, then I would again suggest getting your money out of dollars and into colones. It may be best not to wait until January. I would also suggest you watch carefully to see if this downward trend continues. If it does, this marks certainly a move by the central bank that will affect you! You would be very foolish to continue to hold dollars if you see this downward trend!

One week is not enough to spot a trend, but clearly, another (almost) one percent was lost this week if you continued to hold money in a dollars account.

Euros

Many folks wrote about putting money in Euros. Euros are at an all time high against the dollar, but that trend will likely not continue. The central banks will only allow it to float so far. It also means little to nothing against a non internationally traded currency like the colon.

However, if you do not wish to take my advice regarding colones, then the euro may be ok. You might not lose anything anyway. This is far more difficult to predict though as NOTHING is valued in euros in Costa Rica, and the only reason banks even have an exchange rate for them is because of the tourists coming from Europe. Me? I am very happy with the Central Bank’s actions, and I believe the colon will continue to gain value over the next six to twelve months.

See related posts:

http://blog.therealcostarica.com/2007/08/12/the-colon-vs-the-dollar-watch-your-money/

http://blog.therealcostarica.com/2007/11/22/central-bank-revalues-the-colon/

Back on August 12, 2007, I wrote a post entitled “The Colon Vs The Dollar – Watch your money!” In that post, I cautioned my readers that the weakening dollar could not long stand firm against the Costa Rica colon. I urged readers to move their funds from their dollar accounts (in Costa Rica banks) to colon accounts as I anticipated that the Central Bank had to act soon to bring the dollar down and increase the value of the colon.

Last night, they did just that. The colon has been revalued to about ¢497 and ¢498.39 to the dollar.

So what is the effect of this? Here are some examples:

First, it means that people with money in Costa Rica dollar accounts lost about 4% of the value of their accounts last night. This is true also of CD accounts. Sadly, those who are here seeking residency (pensionados and rentistas) have lost that percentage from any US dollar accounts they opened as deposits for their residency requirements.

Now let’s be clear on the word “lost”. You lost money only if you intend to use those dollars to buy goods and services in Costa Rica. If you were to withdraw those dollars and return to the US for example, you lost nothing. The US did not devalue the dollar. Costa Rica did!

A standard $60,000 rentista deposit is now worth only about $57,800 or so. I say “or so” as each bank in Costa Rica can still set the exchange rate as they see fit, so long as it stays within Central Bank guidelines. Either way, the money is gone.

If, however, you had your money in a colones account, your money now buys about 4% more than yesterday. If exchanging for dollars, you now need shell over only about 498 colones to get one dollar. If you have CD or deposit accounts, they buy 4% more when they are cashed in.

If you are working here in Costa Rica and you receive your salary or wages in colones, your paycheck just got bigger! Example: Your ¢300,000 paycheck now is worth about $602.00. Yesterday, it was worth about $580.00.

However, if you are paid in dollars, something that has been happening more and more frequently in the past couple of years, you just got hosed (unless your employer is really nice), as you just took a about a 4% pay cut.

I also feel that this will not be the end. The true exchange rate should be, in my opinion, now closer to about 460 colones to the dollar. I think the Central Bank simply could not make that large a change in one shot.

However, I think there is a good chance more adjustments are coming. I am expecting that these may be made in increments of 4-5% each until the proper exchange rate is reached.

I do not think that the next change will be in the very short term (2-3 months) BUT, if you read the August Post, I stated. “It is now my opinion that sometime within the time period of from 4 to 8 months from now…” Well clearly I missed that but came close. Almost 4 months! Therefore, when (and if) the next change comes, I think we should be looking at January-March, 2008.

For the almost fifty persons who wrote to me after the August post and told me you were making the switch, felicidades! For some of the others who thought I had lost my marbles (see some of the comments after the August post) , I hope you at least had your money in euros.

What to do now?

I believe we need to wait and watch a bit to see how the banks in Costa Rica value the dollar. I am 99% sure it will stabilize around ¢500 to the dollar (except at Scotia Bank of course!). If it continues to remain solid, then I believe the Central Bank will make at least one and perhaps two more adjustments.

Polite comments welcome as always!

In that post, I left readers hanging a bit regrading BAC San Jose and their policies regarding the depositing of checks from outside Costa Rica. You may recall they have this little “gotcha” policy that prohibits the depositing of any check from outside Costa Rica for the first year, a truly stupid and needless policy for most people and for businesses especially. After 18 months of 100% trouble free banking, I asked that my company accounts be allowed to deposit checks, all from the USA. Here is what I was told:

“BAK San Jose no longer permits the depositing of checks drawn on foreign (non Costa Rica) banks.”

“HUH”, says I. “That makes no sense. I maintain a large balance and have been a totally trouble free account for almost two years. I am a legal Permanent Resident and own multiple businesses”.

“Sorry”, says she, manager of the branch. No explanation.

“Does this affect all account holders or only me?”

“It affects everyone”.

I believe that statement to be 100% false, but have no way to disprove it. With no other options, I transferred nearly all the money to Banco Nacional who had no problems accepting foreign checks. I left open the accounts with small balances so my Costa Rica customers could continue to make transfers.

As this bank policy is so utterly STUPID and devoid of any logic whatsoever, I now change my rating of BAC San Jose to ZERO and would caution all to be cautious in their dealings with them. Something is amiss I fear!

I am now doing a 100% change in that position. If this subject interests you, read on…

When I first arrived in Costa Rica, the colon was valued at about 372 colones to the dollar. I watched it devalue every day until last October, 2006 when the Central Bank changed its policy and allowed the colon to float against the dollar, thus allowing the market to determine the exchange rate. I blogged about this here. The Central Bank permitted both the state and private banks to set their own exchange rate.

At the time, I had no idea exactly what would prevail, but after ten months, I am amazed that that the colon has maintained total stability against the dollar. If you look at the exchange rate chart in that October post, you will see the exchange rate today is within 1-2 colones set by the banks in October 2006! Incredible…

So why the change in position?

It is becoming more and more clear that the correct exchange rate against the dollar should be (depending on your source) somewhere around 464-468 colones to the dollar. The Central Bank has been making noises about this for some time now as have the World Bank and others. This makes perfect sense if you think about it as the dollar here in Costa Rica has not seen any devaluation even though all other major currencies (The Euro for example) have reflected this devaluation. Why would the dollar be worth the same here when it is worth less in nearly every other country?

It is now my opinion that sometime within the time period of from 4 to 8 months from now, the Central Bank may very likely set the exchange rate to somewhere in that range (high 460’s). See why below. This will devalue the dollar against the colon and THAT will have a profound effect on those of you with dollar accounts or CD’s here in Costa Rica.

Just some of the effects will be:

• You will be able to buy dollars with fewer colones.
• You will receive fewer colones when you exchange dollars. Not good.
• Anyone receiving a salary or other income in colones will receive a windfall increase in pay or income.
• The cost of tourism will increase accordingly as the dollar will buy less as it does now in numerous other countries. The Euro is a great example.
• Money kept in a dollar account will be worth about ten percent (10%) less overnight.
• Those who have their social security benefits sent to Costa Rica will find they will have less buying power.

The Central Bank has for some years been very concerned about dolarization (see other Post) and this change would not only resolve that issue completely, it will have a profound effect on the national debt.

The national debt is currently running to about $10 billion, and has become a huge problem for Costa Rica. To retire this debt would require a payment of almost $3.000 per person, a staggering number given that that is about the average yearly income for a family in this country. In fact, the servicing of this debt is so expensive that only a small portion of the country’s income is actually being spent on maintaining Costa Rica. This helps explain the poor roads condition, insufficient policing (crime), and numerous other issues with the country’s infrastructure. Thus it is easy to see why it is truly is a possibility that the the Central Bank may take this action. This in turn, would likely allow the country to borrow at lower interest rates.

So what if the Central Bank does not do this? Well before October 2006, if you held colones, you watched as your money devalued daily. Not a happy condition! But since October 2006, this is no longer an issue! The currency is stable.

So as you now have a choice, why take the chance? You have nothing to lose and a lot to gain.

Therefore, it is my opinion that the smart person now hold colones and not dollars. If the Central Bank does revalue the colon, you stand to make a windfall of about 10% if your money is in colones! If they do not revalue, who cares? You really lose nothing as the colon is now stable against the dollar.

Comments welcome!

Follow-up and related posts have been made.

To see them please click http://blog.therealcostarica.com/category/banking-in-costa-rica/

There are many banks here, and no one person could possible review all of them unless they actually had accounts in all banks, a scary thought indeed. I use three banks here, one state bank and two private banks, so today I am going to rate these banks based on my experiences over the past several years. This is a very long post, but I saw no way to shorten it.

If this topic interests you, then read on!  Also, see my follow up regarding BAC San Jose.

I currently have accounts with three banks here in Costa Rica. They are BAC San Jose, Scotia Bank (both private banks) and Banco Nacional, a state bank. For the differences in state vs local banks read this.

Why three? Primarily to spread the risk.

I am by far not a wealthy person (much to my wife’s dismay), so we are not talking a ton of money here, but still, it would not be a happy day if I were to lose all my available funds because some bank took a powder or just failed… and yes, banks do and have failed here, one as recently as two years ago.

While the state banks are theoretically protected, it is my understanding that it can take months or years to get the money replaced… thus three banks.

Each of my banks has its own personality as I am sure do all the others. Each had its own process to open an account. Each has its own infrastructure and ease (or unease) of use. For that reason, I designed a very informal rating system to quantify my admittedly personal opinions of these establishments. My system is simple and rates ten things.

My Bank Rating System

1. Ease of opening a new account
2. Number of Branch Locations
3. Foreign language speaking employees available in branches
4. Website functionality and usability
5. Online banking – ease of use – functionality – support
6. Attitude toward foreigners
7. Overall banking services offered and ease of use
8. Speed of service while in the bank – lines etc.
9. Attitude/friendliness of bank employee
10. Cost of bank services

Each of this carries a rating of from one to five, thus a perfect score would be 50. An average rating would be 30 as I am using only whole numbers and a 3 rating is in the middle.

This is of course, totally subjective. These are my opinions and others may disagree. An old saying (slightly modified) is: “Opinions are like feet. Everyone has ‘em. Everyone thinks theirs don’t smell”.

I welcome opposing or supporting opinion in the comments area following this post!

Scotiabank de Costa Rica

This may be the bank that the most foreigners (read that as North Americans) use when arriving in Costa Rica. Why? They hands down have the most English speaking employees especially in those branch offices in and around Escazu, a gringo stronghold. It was also the first account I opened personally when I got off the boat.

My first impression of Scotia Bank was that they seemed polite, but distinctly unwelcoming to newcomers… again read that as North Americans. This attitude was not displayed to Ticos (Costa Ricans). It was nothing in their words or behavior exactly; it was just a deep suspicion that our banking relationship was… not cordial. I have long believed that employees of any organization reflect exactly the attitude of management. While not always true, it is pretty much always that way if you think about it. How odd is THAT considering they are foreigners themselves. Part of Scotiabank in Canada.

Thus it should not have come as a surprise when several months later, I learned that a very senior officer of Scotia Bank took a very anti north American attitude while speaking with a close friend of mine wondering “why all these foreigners were coming here and where did they get their money to put in his bank” (quoted but really a paraphrase).

This attitude prevailed for at least 2-3 three more years, but has since gotten a little better. Still, if I go to any branch other than the one where my account is located, the level of service and friendliness drops significantly.

Their debit card is pretty useless. It is not a real credit card even though it has a VISA logo. Nobody accepts it as it is not embossed. Sadly, you do need it at teller windows or when using their ATM machines.

Scotia Bank is located only the Central Valley in and around San Jose.

Scotiabank

Rating – Subject
Comments

2 Ease of opening a new account
bit more than normal hassle – passport – requires letter from bank “back home”

1 Number of Branch Locations
around 16 – San Jose area only!

4 Foreign language speaking employees available in branches -
Lots in the Gringo strongholds

4 Website functionality and usability -
Offers English on both main bank home page and the online banking site

1 Online banking -
Online banking is incredibly slow and almost totally useless. Only reason they get a 2 is their telephone support is excellent. The 2 was a gift though.

2 Attitude toward foreigners –
Improving, but compared to other banks, even banks where I do not have an account, it still needs changes.

2 Overall banking services offered and ease of use -
Still does not offer interbank transfers nor transfers between bank customers.

2 Speed of service while in the bank – lines etc. –
Crummy. Local branch managers have never learned or been taught to open a new teller window when lines get long. Escazu office the worst! Bring lunch on paydays or Saturdays. Rohmoser branch excellent though!

2 Attitude/friendliness of bank employee -
Depends on branch and on the manager. Improving for sure, but after 5 years, I still prefer to use my other banks. Again, Rohmoser branch is much better!

2 Cost of bank services -
They charge more for everything. Probably have pay toilets.

Rating: 22

I still maintain an account with Scotia, though I am tiring greatly of how hard even the most mundane tasks have become. They have rules that other banks, even the state banks, do not have. If you speak Spanish or at least can get someone to help you at first, there are better banks in which to place your money.

BAC San Jose

Formerly called Banco de San José, is part of the BAC Credomatic Network, comprised of eight banks (not branches) in Central America, the Caribbean, and Panama, and Credomatic, the largest credit and debit card issuer and processor in the region. They have offices in all provinces of Costa Rica i.e. San José, Alajuela, Heredia, Cartago Guanacaste, Puntarenas, and Limón. They also have offices in the USA – Florida only.

I first opened my account with them less than two years ago based on frequent visits I made with my wife as she had one of her accounts at BAC. Their branch offices (sucursales) are far more modern and I noticed that there always seemed to be adequate teller windows open so the wait was negligible. I was planning to open a business account, so I knew I would need the usual letters of reference, a corporate personeria, my cedula (corporate and personal) in order to open the account. I went to my attorney for the legal stuff. I probably should have listened to him when he asked why on earth I would want to open an account there. I told him I had a lot of clients with accounts there, and I needed to be accessible to them. His comment was to be prepared for a LOT of issues. How right he was!

It took ELEVEN visits to get the thing opened! Granted, I can take responsibility for four of them that could have been avoided had I been a bit more organized, but what a production it was. However, after I started the process and had paid for the documents my attorney prepared, I was sort of stuck, and I was still brainwashed by the no waiting thing.

I then learned a LOT… too late… about just how screwy is BAC San Jose!

The first surprise is that regardless of anything, BAC does not permit the deposit of a check drawn on a non Costa Rica bank for the first year! HUH? Is it me or does that make no sense whatsoever? First, most banks will not make funds available from a foreign check for about three weeks even though that check can clear easily in 3-4 business days. So what is the risk to them? Too late, I had to live with these rules.

So after about 18 months, I merrily went in to the bank to deposit a check from the USA. Nope! That one year thing is not automatic. I again had to go visit the manager to get approval to do this… and this after having had my trouble free account for all that time. THAT was two weeks ago. I was told the approval was pretty much automatic and should be set up “tomorrow”. Ha! As of yesterday, it still had not been processed. I was told it would be “tomorrow”. We shall see.

Next, I found that to transfer funds to another BAC account holder required a trip to the branch to manually add them before you could make a transfer online. Now as I said, the teller lines are short, but that does not apply to those waiting to speak with a “personal banker” type person. Those lines are much longer. This problem has since been remedied however and as of now, this is no longer a requirement.

I will say that after all the hassles mentioned above, BAC has proven to be an OK bank, and the teller lines are still short. Their web site is functional and online banking is available in English though I no longer need it to be so.

Ask for a debit card. They are available for in-country use, and you can request in international card you can use while traveling or on the Internet. Very handy and not available at Scotiabank or Banco Nacional.

So here is how BAC stands up:

BAC San Jose

Rating – Subject
Comments

1 Ease of opening a new account
Nasty! Read the text above. Be prepared for a LOT of wasted time. This is not just for foreigners. Everyone has the same problems.

4 Number of Branch Locations
All over Costa Rica in many major towns. Not as good as Banco Nacional (below) but still far better than Scotiabank.

2 Foreign language speaking employees available in branches -
Almost none. Be prepared to speak Spanish or take someone with you to assist.

4 Website functionality and usability -
Bank’s home page is only in Spanish, but the online banking is available in English, is very useful (now) and getting better.

5 Online banking -
Online banking is very good and easy to use, though you may have to visit the branch for assistance. You must sign up for online banking at the branch. Do this when you open the account. Available in English. No online help. Free next day interbank transfers. Very good thing especially for businesses.

4 Attitude toward foreigners –
Seems OK. I never felt the discrimination and over my many visits, they have always been friendly and helpful.

4 Overall banking services offered and ease of use -
Offers a full range of banking services, though as I mention, nothing is easy to set up. They are tied to Credomatic, so that may help you for both personal and business banking.

4 Speed of service while in the bank – lines etc. –
Very good if waiting for teller service. If waiting for a banker, visit the bank early and avoid lunch hours, paydays, etc.

4 Attitude/friendliness of bank employee -
Above average. Nice folks.

3 Cost of bank services -
Reasonable. Free next day interbank transfers.

Rating: 35

If you can deal with all the silliness and caveats above, a good choice.
Banco Nacional de Costa Rica

This is a state bank and by now, you should have read about state banks in Costa Rica. They are the closest thing you will find to a secure location for your money, though that is not to say the private banks are not financially sound. It just means you have more recourse should anything bad occur.

Banco Nacional (BN) has locations just about everywhere in Costa Rica, including just about every town and village of any size.

To open an account is pretty much of a no brainer. You just need your passport or cedula, 2 or three reference letters (this changes) and some money. I say that as they do have minimums to open though no minimums to maintain. They also will not provide a checking account if you are not a legal resident, but that really means nothing as unless you are a business, you will not pay bills by check anyway.

Lines are always nasty… worse than Scotiabank! I have rarely been able to visit a teller without having to wait at least 10-15 minutes, though again, if you go early, you stand a much better chance of getting in and out quickly. Talking to a banker is also a hassle as there are always lines.

I have my own formula to determine if I even want to wait! I take the number of people in line in front of me and divide that number by the number of open teller windows (never enough). If the answer is 4 or less, I wait. If more than 4, I plan another visit unless I am feeling really patient. Keeps my blood pressure down!

English is never spoken, and in several years, I have yet to meet an English speaking employee though of course they must exist. This is not as important as it may seem if you can speak even a tad of Spanish. You may have to wait to talk to them, but when you do, they are very nice people… and patient!

Make sure you get a debit card! While it cannot be used for international transactions on the Internet or if traveling outside the country, it is embossed, is honored everywhere in Costa Rica and is quite useful.

Banco Nacional de Costa Rica

Rating – Subject
Comments

4 Ease of opening a new account
Easy. Savings account only. Checking a hassle.

5 Number of Branch Locations
All over Costa Rica in many major towns. Not as good as Banco Nacional (below) but still far better than Scotiabank.

2 Foreign language speaking employees available in branches -
Almost none. Be prepared to speak Spanish or take someone with you to assist.

2 Website functionality and usability -
Bank’s home page is only in Spanish as is their online banking site. You will need someone to teach you how to do online banking, though once learned, it goes OK.

4 Online banking -
Online banking is only available in Spanish. Get someone to show you how to use it. I gave them a 4 because you get these promotional credits every time you pay a bill online, and those points can be used for free admission to movies, free or discounted admission to theme parks and other stuff. A nice perk! They offer the ability to pay online to far more vendors of services than the other banks. Bad thing… they also charge for all interbank transfers.

3 Attitude toward foreigners –
Seems OK. I never felt the discrimination and over my many visits, they have always been friendly and helpful.

4 Overall banking services offered and ease of use -
Offers a full range of banking services, but I suspect a working knowledge of Spanish will make that process go smoother.

1 Speed of service while in the bank – lines etc. –
Go early or bring your patience. If stuck in a long line, be nice! Practice your Spanish. Make a friend.

4 Attitude/friendliness of bank employee -
Above average. Nice folks.

3 Cost of bank services -
Reasonable, but they do charge for all interbank transfers, so if you cannot pay using their pre-set online payments, it will cost you money

Rating: 30

Regardless of the average rating of 30, they are still probably the best first bank account you should open when coming here.