💳
Members
Money & Banking
Which banks still work for Americans after 2025's FATCA fallout, real transfer costs, and three worked tax examples.
FATCA doesn't just make some Mexican banks cautious about US citizens. In June 2025 the US Treasury cut Intercam, one of the banks most commonly recommended in older expat guides, off from the US financial system entirely over money-laundering allegations. "Which bank" is a genuinely live question here, not a settled one.
Opening the account, in order
- 1. Residency first: unlike some countries, most full-service Mexican banks (Santander among them) won't open an account on a tourist visa; you generally need your residente temporal or permanente card and CURP in hand first.
- 2. Everyday banking: BBVA and Banorte are the two names that come up most for reliable branch and ATM coverage; Actinver is the one to check if international transfer flexibility is your priority.
- 3. Who to skip: Intercam, sanctioned by the US Treasury in June 2025 and no longer viable for US citizens, is a reminder to check a bank's current standing before opening, not just its reputation in an older blog post.
Moving money without losing 5%
- Wise: total fees running roughly 0.5–0.8% on USD to MXN transfers, about $10–16 in fees on a $2,000 transfer.
- Bank wire: a flat wire fee (commonly $25–50) plus an exchange-rate markup around 2.5% add up to roughly $95+ on that same $2,000, more than double.
- Before a large one-time transfer (a home down payment, a fideicomiso setup fee), get a live quote rather than assuming the percentage math holds at every size. It usually favors Wise, but "usually" isn't "always."
The peso isn't a stable "cheap forever" assumption
- 2023: the peso strengthened 15% against the dollar, ending the year near 17 to the dollar.
- 2024: it weakened back out to roughly 21 to the dollar by year-end.
- 2025: it strengthened again, to around 18 by year-end, a roughly 16% move in a single year.
- What that means for you: for a retiree living on a fixed dollar income, that swing alone is the difference between a comfortable month and a tight one, with nothing in your own spending changing at all. Treat "Mexico is cheap" as a snapshot of today's exchange rate, not a permanent fact.
Credit, cards, and the filing obligations that don't go away
- Daily card: a US no-foreign-transaction-fee card stays the default for most retirees; building Mexican credit rarely matters unless you're financing property locally.
- FBAR/FATCA: foreign account reporting continues regardless of residency, an FBAR is required once your combined foreign accounts exceed $10,000 at any point in the year, and Form 8938 kicks in above $200,000 in foreign financial assets for a single filer living abroad.
- No totalization agreement: the US and Mexico signed a Social Security totalization agreement back in 2004; it has never been ratified or entered into force. For a retiree simply drawing US Social Security while living in Mexico this mostly doesn't matter (your US benefit keeps paying regardless of where you live); it matters more for anyone who also worked and paid into the Mexican system and expected combined credit.
- State tax domicile: same issue as anywhere else, some states (California, New York among them) don't release residency ties easily, worth addressing before the move.
Worked tax examples
Scenario A
Couple, Social Security only
Annual income$38,000 SS
Est. US tax$0
Est. Mexico tax$0
Below the US taxability threshold on its own, and Article 18(5) of the treaty reserves taxation of US Social Security to the US only, Mexico exempts it outright.
Scenario B
Couple, SS + IRA withdrawal
Annual income$38K SS + $35K IRA
Est. US tax~$4,200
Est. Mexico tax~$800–1,500 net
The IRA withdrawal pushes more of the Social Security into taxable territory in the US and is itself taxed by Mexico as country of residence, with a treaty credit meant to absorb the overlap. The order you claim that credit is where people get it wrong.
Scenario C
Couple, SS + US rental income
Annual income$38K SS + $24K rental
Est. US tax~$1,700
Est. Mexico tax~$1,000–1,800 net
US-sourced rental income keeps a US filing obligation alive after the move, and Mexico still counts it toward your worldwide income as a resident, with credit for the US tax already paid.
Where self-filers get tripped upSocial Security, IRA/pension income, and US-source rental income are treated three different ways by the treaty: one is US-only, one is taxed by your country of residence with a US credit, one stays taxable at the source. Cross-border preparers who work with American retirees here consistently point to that income-type-by-income-type mechanic, not the headline tax rates, as where people who self-file get the math wrong. If your own income mix includes more than one of the three, get a quote before your first filing year, not after.
Illustrative 2026 estimates built from published IRS thresholds and Mexico's ISR brackets (11 brackets from 1.92% to 35%, top rate starting above roughly $195,000 in taxable income). Not tax advice, confirm your numbers with a preparer who handles both returns.