In this post we will look at the costs to transfer money from LA to Mexico. California’s immigrantt community regularly send money from Los Angeles to Mexico and as such need to to ensure they find the best peso rate for bank transfers. We will break down the best way to transfer money from USA to Mexico online.
California Grande
You should probably already know this but once upon a time, the state of California (along with a number of other American States) was actually a part of Mexico until it was ceded to the fledgling United States in the treaty of Guadalupe Hidalgo in 1848.
To this day, the state retains a distinctly Latin influence and strong Mexican flavour. Indeed, most of California’s towns and cities retain their Spanish names whether it’s San Francisco, Sacramento or Los Angeles. Delicious taco food trucks line the boulevards and even public transport announcements are often made in both English and Spanish. And of course, California has a large and thriving Mexican community that includes both recent immigrants as well as 3rd generations who still celebrate their Mexican heritage and maintain familial ties back in the old country.
An estimated 31% of California residents are of Mexican descent and many still regularly send money back across the Rio Grande to help out family members still living in Mexico. With that in mind we are going to take a look at the logistics and costs of sending money from the US (specifically from LA) to Mexico. We will examine how exactly International money transfers work, break down the costs, and try to identify some neat hacks to save a few dollars and pesos on transactions.
How To Send Money From Los Angeles To Mexico
Well one way to transfer money from LA to Mexico is simply to drive down to San Diego and then carry a suitcase loaded heavily with US bills over the border! Of course, this is not really advisable or practical so most immigrants look for altogether more sensible solutions.
The most established bank (by presence) in LA is Chase.So let’s take a look at what it could cost to send $500 from LA to Mexico using a Chase bank account. Chase charges a $5 wire fee for all international transfers under $5,000 to non-USD accounts. This fee applies whether we are sending money to Mexico or Mumbai. At a glance, $5 does not seem so bad, but there is actually a good bit more to it than this. The $5 will usually be deducted from the remittance amount before the transfer is made which means that the bank will actually send $495.
In addition to the wire fee (or transaction fee) all banks use international payments as an opportunity to make some extra, easy profit on the currency exchange “mark up” from unwitting account holders. Remember, when you instruct your bank to process an international payment for you, they get to choose the exchange rate with no room for negotiation. Rather than using the standard open market exchange rate, the bank will instead use a marked-up one that favours them and the mark-up range of banks in the US is generally around 3%.
So, the $495 that we are sending to Mexico should amount to 10092.12 Mexican Pesos according to today’s market rate. However, if Chase is applying a 3% mark-up, then recipients in Mexico will actually receive just 9,789.36 Peso’s. Ultimately, to send $500 to Mexico will cost $20 in fees and forex costs.
USD transfers to Mexico have been steadily rising year on year and In 2020 a whopping $42 billion dollars was remitted from the US to Mexico. As you can see, that means the banks made a pretty staggering little profit on turning dollars into pesos!
Save Money – Transfer Money From USA to Mexico Online
Savvy immigrants however have long known about these hidden costs and generally do not use the banks to handle international payments. Instead there is a very buoyant market of money transfer services who help immigrants send their money from LA to Mexico for less.
One such money transfer provider is WorldRemit who are very popular amongst California’s latin community. Firstly, WorldRemit’s wire fee for sending money from the US to Mexico is $2.99, – 40% lower than the fee that Chase levies. Furthermore, their mark-ups are around 1% above market rate rather than 3% above market rate.
Therefore let’s take a look at what that same $500 remittance from LA to Mexico could cost with WorldRemit. Firstly, the $2.99 wire fee is deducted at source meaning that we remit $497.01. Now, $491.01 equates to 10,133.10 Mexican Pesos but taking into account the 1% markup, the recipient receives 10,031.79 this time. Basically, sending the same $500 via WorldRemit now costs just $7.94.
Final Thoughts on Finding The Best Peso Rate For Bank Transfers
As we have seen, the booming Mexican community in California regularly transfer money from LA to Mexico, and are fueling a lucrative market in remittances. With $42 billion being sent South each year, there is clearly some serious money to be saved by choosing the right money transfer provider to send money from Los Angeles to Mexico and seeking out the best peso rate for bank transfers. If you only take away one lesson from this, then remember to avoid the banks and instead, transfer money from USA to Mexico online.
