Thursday, October 18, 2012

How Many Banks Does It Take to Live in Italy?

Today was banking day.  Which means draining and a bit boring.  If you are having trouble going to sleep, maybe this post will help!

No, it's not an Italian holiday, but it was an interesting day nonetheless - a bit draining and a bit boring.  If you are having trouble going to sleep, maybe this post will help!  We have been living in Naples for approximately 4 1/2 months using only our American bank.  We have a branch here on the base, so we are able to do most things easily.  Even withdrawing euro from a local bank has been easy.  They only thing we have been taking a hit on has been when we use our Visa or Check Card out in town.  We are charged a 1% International Transaction Fee.  Not a lot of money, but it sure can add up and downright clutter your bank statement!

In preparation for moving out of our hotel and into our home we have to establish an account with a bank that will allow us to electronically transfer funds to pay our rent.  It used to be that Americans would pay rent in cash and then the landlords would not claim the full amount for taxes...well, not the landlords and us are required to do these transactions electronically so there is a record of it.  Also we need it to pay any utilities in town that are not in the landlord's name and the Telepass.  Telepass is like the various toll booth passes in the states.  You are able to bypass the lines and have the toll automatically debited from a credit or debit card.  The Telepass works only on Italian system.  Stopping for tolls is not always a big deal, but when Chris rides his motorcycle, it can be downright dangerous for him to stop and fumble with a wallet at the toll booth.  So we need at least one unit for him to commute.

The other thing we have to consider is exchange rates.  When you are exchanging large sums of money for rent and other things, a small fluctuation in the exchange rate could result in $50-$100 difference depending on where you buy Euro.

On the base there are two options.  One is Banco Di Napoli (Italian Bank) and one is Community Bank (An affiliate of Bank of America, and American with special privileges).  Both have their good points and bad.

We first went to Banco Di Napoli and briefly heard them.  Their banking fees are expensive.  Some fees are monthly, some are quarterly, and in total, the add up to approximately 90 euro annually.  The advantages are they normally have the best buy/sell rate for converting dollars to euro and you could like the Telepass directly to your bank account.  The down side is that they do charge a 6 euro fee to exchange any amount of money, they have a lot of account fees and they charge for money transfers to the landlord and such.

Then we went to Community Bank.  Community Bank as I mentioned is an American bank that whole job is to provide military and military contractors a way to bank in the economy of the host country without being banking with the host country.  They can set up the electronic payments with landlords and with utility companies by doing cashier checks.  If you set up a recurring payment (for instance, rent is always the same each month) there is no fee.  However, if you do any one-time payments (like for utilities) there is a $2 fee for each.  However banking is completely free!  Free checking and savings.  Another perk is we can transfer money online from our other American Bank.  If you want an interest bearing checking, then you must keep a minimum of $500 in your account.  I doubt we would do this because they do charge $1.50 for each ATM use that isn't their bank.  And the only ATM machine that exists here is NOT convenient for us.  So it would only be used to pay bills.  The biggest downside is that although the exchange rates are better than we have been able to do up until now, they are almost never as good as Banco Di Napoli.  Also, the Telepass cannot be linked to this account.

There is one other option for the Telepass - The base provides a service that can set you up with a Telepass linked with an American credit card.  You have to pay a $48 deposit refundable 2 months after you return the equipment, AND you have to pay them a $10 fee per month for just providing the service!  OUCH!  That adds up!

So, what are we going to do?  Well, we are going to go gray (or gray-er) a little early and work the system.

  1. Chris has the task of creating a spreadsheet so on any given day, we can plug in the exchange rates at all the banks and find out who has the best rate that day. 
  2. We will open a Community Bank account and use that to pay the landlord and the kids Italian school via free Automatic transfer
  3. We will also open a Banco Di Napoli account.  This will give us even better exchange rates than the person walking in off the street and it will allow us to use the Telepass system hassle-free.  The fees here are just as cheap if not cheaper than the fees on the base for the Telepass and there are more benefits.  Also easy to use it if out in town or anywhere in Europe where the Euro is used.
  4. When it is time for use to transfer money, we will find out who has the best rate, buy euro and deposit it into the best account.  We will not hold large balances on any of these accounts.  Just enough to do what we need to do.
  5. We will also be researching some online currency traders to find even better deals on buying euro.
If you have more than $10,000 in an Italian bank you have to disclose it for tax purposes.  The last time I did this is when I had to withdraw over $10,000 in cash in a single transaction during the foreign adoption of our son.  It's not really an issue to do this but there are stiff penalties if you don't.  However I don't foresee ever needing that much cash in our Italian bank. 

Ok.  Glad I got all that down because I'll likely forget by tomorrow! :)  So much to keep straight!  But I think once the routine is established, it will get easier.

If any of you Italian friends or American friends have any advice to add I'd sure appreciate it!  Leave me a comment!


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