Banking

Foreword About Honduran Banking   Basically, just about all of Honduran banks offer accounts in U.S. dollars and Honduran Lempira’s (Honduras currency).  Even though the exchange rate has been somewhat stable for the past year, it's best (in our opinion) to maintain accounts in both currencies. Some companies, such as cell phone, cable, and others, bill you in U.S. dollars and charge a higher exchange rate if you pay in Lempira’s.  

If you live in Honduras and you have monthly income from the U.S., have it sent to a U.S. account from which you can write checks and have online access. Write a check from your U.S. account and deposit it to your Honduran account.

You will need to plan ahead because the cash won't be available for at least 3 weeks.  Moreover, you will save a lot of money on bank transfer fees or courier services. Mailing checks from the U.S. through regular mail is certainly not a good idea, since it may take forever to get to you.
 
Before opening an account in any bank, read their brochure or internet site to find out what services are offered. Do not rely on what the clerk may or may not tell you. Not all banks have online access or the ability to accept payments for utilities or government-related things, such as taxes or car registrations.

It is not unusual to have to withdraw money from one bank and physically take it to another bank to make a payment, which can mean an hour or more in each bank. Checks will not be accepted. And don't even think about sending a payment through the mail.

Ensure that your joint accounts are properly set up or you will find that your spouse can’t replace a debit card or order checks without your permission. Don't take the clerk's word for it. Verify it with a supervisor. Set up online banking access for your Honduran account.

Transfers between accounts (dollars to Lempira’s, Lempira’s to checking) can be made online, but be sure to print out a copy of any dollar conversions to take to the bank to get official “divisas” if you need them for your residency requirements. (And don't believe the clerks when they tell you that they don't give “divisas” for online transactions - it is required by law.)

Utilities, cell phone bills, and car registrations can be paid online. Since bills are rarely sent and the mail is unreliable, online banking is the best way to keep up with these bills. Payments to third parties who have accounts with your bank can be made online as well.  Get an ATM debit card. Just a few years ago only some of the gas stations and larger stores accepted debit cards. Now more and more stores and some smaller restaurants are accepting them.
 
There is no fee for ATM cash withdrawals on certain 'premier' accounts and even on smaller accounts, the fee is only 12 - 35 Lempira’s (approximately $.75 to $2.00) depending on whether you use a ATM machine within your bank's system.

An ATM card is not only more convenient, it is much safer than carrying around wads of cash. Just be sure to ask if there is an extra charge; some stores add anywhere from 4% to 12% for the privilege of using a card. Online banking and an ATM card will greatly limit your need to actually go to the bank.

When you do have to go in person, try to plan your trip for Monday through Thursday but not on the 15th or end of the month, since this typical pay days for most Honduran workers.  Don't go at lunch time because invariably the only person who can help you will be at lunch. 

Keep your American credit cards and pay the monthly bills online with your U.S. account. Honduran credit card companies charge monthly interest and service charges totaling approximately 60% annually. Yes, 60%, you read that right! Don't expect to be able to pay by check anywhere.

If you have been doing business with someone for awhile, you may be able to write a check but most one-time or large purchases will require a cash payment or a direct bank deposit to the person's account. If you do make a direct deposit to someone's account, be sure to get a legible copy of the receipt.

And finally, save your debit card receipts and check your accounts and balance them monthly with a calculator. In Honduras accounting systems, debits do not have to equal credits.

US Credit Cards  I must admit that I'm one of those Gringos that hates to needlessly part with my hard-earned cash. Some people might think I'm a tightwad, but I prefer to think of myself as either frugal or thrifty.

One of the things that always irked me is the 3% - 6% transaction fee that American credit card companies charge on all purchases outside of the USA. So far, I've only been able to find two credit cards that do not charge this fee: cards issued by Capital One and Charles Schwab.   

Between Charles Schwab and Capital One, I prefer the Schwab card because in addition to not charging that pesky foreign transaction fee, it also pays me back 2% of total purchases. The Capital One card gives airline points, so I'll keep it for backup.

Take Notice of Loans If you want to get a loan to buy property in Honduras, then it would be prudent for you to take a few moments to read the following.  It could save you a lot of time in the future!   Since we moved here a few years ago, we've been plagued with the exhausting problems associated with the local mentality and policies of the Honduran banking system.

If you are a "gringo" and want to finance the purchase of property here, you have literally had to "pull teeth" to do it. As a "legal resident"... it's slightly easier... (Heavy on the slightly).  The outdated banking laws and customs here have continued to make even the simplest of transactions.... a living nightmare!

As a foreigner, you can pretty much put an "X" next to "getting a loan in Honduras". Reams of paperwork, ranging from when, how, why, what, where, who, ...... personal information that is irrelevant to anyone (except the loans officer across the desk), back or "stale-dated" document requirements, your father's political status, and your grandfather's social security number (they might even ask you what college and degree you expect your current 5 year old  kindergarten child will have 15-20 years from now) are just a few of the hurdles one has had to deal with here if you want bucks.

Whatever happened to the simple approval system like we have in the US? What about the simple questions that modern lenders need satisfied? How much do you want? Can you pay it back? AND, most importantly, if you don't pay it back, is there sufficient collateral for the lending institution to foreclose on? ----that's what I miss. Just this week one of my clients was jerked around by the local system.

Applying for a loan more than 5 weeks ago and offering their $multi-million dive resort (free and clear) as collateral, they were told the sum of money they required "should not be a problem" as the value of their property (purchased more than a three years ago) would easily cover the LTV (loan to value) ratio the bank required (set by law).

As you 'pay to play' here in this country, the client paid all application/survey/loan document and appraisal fees up front and entered into a conditional sales agreement on another piece of property...believing the financing to be in the bag. Using an Appraiser from one of the big cities, San Pedro Sula, the bank began the tedious process of loan approval.

This week, the Appraisal came in at less than ONE THIRD of what they paid for it, let alone today's value....meaning...there is no way in Hades that they are going to get even close to the required funding amount.

What the heck did the Appraiser use for comparables? Certainly, they did not access the MLS here for comparative data. Certainly they didn't pick up a Real Estate guide and see what property values are doing here in the Islands.... and certainly, this "appraiser" or "civil engineer” (civil engineers are the ONLY recognized and legal appraiser by law) does not possess the information, credentials, or mental capacity to professionally and accurately evaluate property.... anywhere! ---are you getting the picture yet?

The banking system is only slightly ahead of the old IBM Select writers.... remember those? They still use them... typewriters... to update your bank book at many institutions in Honduras. How can they possibly be competitive in the loans business....? THEY CAN'T, but they have, or should I say HAD a monopoly here. 

But alas, there is light at the end of the tunnel... or better yet, there appears to be a fly in this thick, slow moving ointment that may just "leaven" the entire loaf.... it's called HSBC... or Hong Kong Shanghais Banking Corporation and it's one of the largest financial institutions in the world!! Oh, and now they are here! They have bought out one of the local banks (BGA) and have now changed over to HSBC officially.

Will we now get more professional and accurate service? YES!! Is the resounding answer I am told by a well known international banker from the Caymans? With that said, you’ll see the entire banking system brought into the 21st century in a very short timeframe.   HSBC does not mess around and they WILL reform the way present banking is done in Honduras. 

So, there you have it. Within a short time we'll be able to walk into the bank with the appropriate documents, apply for a loan and get approved in a reasonable timeframe.   Gone will be the days of Seller take back financing at high interest rates.... gone will be the days of 3-4 month approvals..... And gone will be the days of miss-appraisals and unprofessional service.

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