Should I bring pounds in cash from the UK to Chile?

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Britkid
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Should I bring pounds in cash from the UK to Chile?

Post by Britkid » Thu Jul 25, 2019 11:27 pm

La Serena
A few weeks ago, my Dad was here visiting. We were in La Serena and he had some pounds in cash that he wanted to change to pesos. So we went to the money change place. I looked up the live middle rate on my phone and it was between 859 and 860 pesos to the pound. They offered him 880 pesos for each pound which is better than the middle rate by 2.3%. At first I thought they had confused the buy and sell rate but I double checked and he explained that it is convenient for him to offer this rate in order to get pounds to sell at a higher rate.

Online Santiago
I just looked online and right now the pound middle rate on xe.com is 867.7. I googled money change places and found one called https://www.cambiosantiago.cl/. If I click on "mas divisas" they (at the time of writing) say that they will buy pounds at 900 which is 3.7% better than changing at the middle rate (and they are selling pounds at 970 which is a shocking commission of 11.8% from the middle rate).

Reason?
It seemed strange at first, but I suppose the logic is that there are more Chileans needing pounds ahead of a visit to the UK, than UK visitors turning up with cash. (It still seems a bit odd to me, you would think with the eclipse this year there would be more foreigners turning up with pounds to La Serena that week than Chileans wanting to leave the country.)

Math
So, as someone who is paid in pounds into UK bank accounts but lives in Chile it seems to make sense for me, on my next trip to the UK, to bring say £3000 and get a rate say 3% better than the middle rate with which I might potentially save £90.

I also have to pay ATM fees in Chile to get from pounds to pesos. To withdraw £3000 I would typically pay about £30 in fees to Chilean ATMs and I probably pay about £10 in cash interest fees on my Halifax Clarity UK card so that is a total of £90+£30+£10=£130 that I could save (about 4.3%). I.e. a profit of about 3% vs the middle rate instead of a loss of about 1.3% vs ATM runs.

Transferwise is getting more expensive and is charging about 2% now I think (maybe even a little higher, it keeps sneakily putting up the fees a little bit so often, it's hard to keep track). So if, as is more likely, such a cash transaction replaces a Transferwise transaction the savings are about 5% in total. I.e. a profit of 3% instead of a loss of about 2%. That's £150 saving per £3000.

Risk
I wouldn't have to hurry to Santiago either. I could just keep the cash until I was next going there a few months later.

The only downside I can see is the risk that, after a tired long flight, you could make a mistake and put the bag with the money in down in the wrong place, or get pickpocketed in Santiago on the way to change the money. However, the amount of gain seems worth the risk.

It also perhaps seems to make sense to tell our British family/friends visiting us to come with cash.

Variations
I think more data is needed though. It could be a short term fluctuation caused this month by something to do with markets, i.e. a temporary supply and demand imbalance that will naturally be corrected at some point. I did wonder if it could be specifically because in mid July Chileans are going abroad due to their winter holiday (and needing pounds) whereas Brits are not coming here with pounds because their holiday is not until the last week or two of July and August.

Has anyone done this? Am I missing something? Has this been covered in any other threads?

Other Currencies
Incase anyone is wondering if this idea is worth looking at for other currencies, I had a look and it looks like the numbers don't work as well for Euro, dollar, Yen, and others. There might be a smaller profit but looks less worth it. You would have to look at the specifics for each case.

mem
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Re: Should I bring pounds in cash from the UK to Chile?

Post by mem » Fri Jul 26, 2019 12:22 pm

Wow that is great for you. Assuming it all keeps going this way you may want to do more than 3000 gbp.

The fact you have to pay atm withdrawal fees is what really puts this over the top as a win in gbp

paladin
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Re: Should I bring pounds in cash from the UK to Chile?

Post by paladin » Fri Jul 26, 2019 6:30 pm

I would suggest you follow the rates for a while and see what movement there is. I do think that the holiday seasons make a difference, and for those going from Chile to the UK, they are in the unfortunate situation of having a currency ( Peso) which is useless outside of South America. So if they want to arrive in the UK with some cash to spend, they have to pay the high rate here that you mentioned, or buy US$/Euro cash here with the high exchange rate, then suffer once again on arriving in the UK, when changing those US$/Euros at the airport. I go to the UK and Europe once or twice a year, and take no cash at all. I use my Chile credit card which charges no commission, even for small purchases. If I’m really in a situation where I must have cash, I get it via my debit card.
So in summary, if you want to make a bit on each trip, yes, bring cash back, but with its inherent risks

Britkid
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Re: Should I bring pounds in cash from the UK to Chile?

Post by Britkid » Fri Jul 26, 2019 11:14 pm

I was in Costanera Centre today and the middle rate was 861 but they were offering to buy pounds for 902. That's a difference of 4.7%. I will keep an eye on it. I might go back to the UK in 2020.

MrDuck
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Re: Should I bring pounds in cash from the UK to Chile?

Post by MrDuck » Mon Sep 02, 2019 9:40 am

Don't bring cash to Chile, open a UK Revolut Bank account instead (underwritten by Lloyds Bank). https://www.revolut.com/
You'll get the Interbank Rate 0% on currency conversions from GBP to CLP. There are limits on the 0% rate from the ATM per month (2% there after) depending on the type of account you get and local bank ATM charges for foreign client, apparently Banco International doesn't charge up in Santiago...need to look into this a bit more.

I use my Revolut to pay for many things in shops. Oh, you'll not get 0% at the weekends as the currency market will have changed by the time it is processed Monday morning, not sure what it is but it's fair enough. I'm really impressed by Revolut, had a second card sent to me the other week here, loads of options from the phone app, freezing/unfreezing cards, apply limits... can have a virtual card, one use cards if you want. If you need help they operate via message in their phone app, I found you had to wait for an agent on the free account, on my Premium account it's faster.

BTW, I convert from my GBP account at 0% into my USD account in Revolut (there's loads of different currency's you can hold money in with them but unfortunately nothing for Chile or South America, they also deal in Crypto currency's), then us Lloyds International account from the Isle of Man to transfer to my wife's account paying ALL associated changes so the wife gets the full amount and isn't charged by the Banco Chile all for £20, otherwise Banco Chile piles on a huge charge just to process it! I need to a better bank than Banco Chile, they charge 2% on conversions to CLP....

paladin
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Re: Should I bring pounds in cash from the UK to Chile?

Post by paladin » Tue Sep 03, 2019 10:46 pm

Mr Duck, I cant see any mention of Lloyds in any of the reports on Revolut. I did read about the problem they had with unpaid staff and various other accusations that wouldnt be expected of a reputable bank. I dont like the names of the owners/founders, nor their backgrounds and although it does have a banking licence from the European Central Bank, it really is a financial technology company. It isnt a company or bank that I would send any money to. It hasnt been operating for long, and could easily be yet another of these wonderfully cheap companies that offers for nothing or next to nothing, to transfer your money around the world, and one day you wake up and find it has closed it’s offices and your money has disappeared.

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Space Cat
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Re: Should I bring pounds in cash from the UK to Chile?

Post by Space Cat » Wed Sep 04, 2019 2:35 am

Yep, Revolut's CEO does shady things while being abusive. TransferWise is a much safer option but I'd still avoid keeping large sums there because it's not a bank.

MrDuck
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Re: Should I bring pounds in cash from the UK to Chile?

Post by MrDuck » Thu Sep 19, 2019 2:26 pm

Interesting reading space Cat. My account has been restricted pending the validation of the source of my funds, this has taken some weeks and been slow due to the work load in that department, understaffed for sure and maybe there's a push across lots of accounts to prove they're not involved in money laundering... I can still use my card but bank transfers has been frozen (shame because there's a good exchange rate to CLP at the moment).

As for the Lloyds connection, I've had my Revolut account for a good few years, opened it but didn't like the service back then so just left it dormant. In the last year or more I looked at it again, made a transfer but it went astray because the BIC code was wrong/old, that was Barclays code. So had to get that transfer recovered by Revolut (with a small charge, no problem). The updated BIC was for Lloyds. But saying that it has been updated again a few months back using a Revolut BIC (probably something to do with the banking licence from the European Central Bank).

Apart from that I've had no problems exchanging my GBP to USD and the 0% is well worth it. It is a Fin Tech and has grown very quickly, like any company seems with growing pains from those articles. They just closed another round of private funding, was over subscribed. Personally I can't see them disappearing and do not use them to make transfers around the world (just within the UK), Lloyds International offers good rates and security for that.

Cheers for the info!

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