Interest rates, accounts, etc.

0POSTS

11 years ago

Hello,

Was wondering if someone could provide some information about the interest rates that are in Ecuador or direct me to a website. Let's say an individual moves to Ecuador with an investors visa and puts their $25,000 in the bank, could more be put in? What is the actual interest rate? I hear that people can live off of interest there by putting a bit more money in the banks. Any help would be appreciated.

Thanks.

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cccmedia Ecuador/Colombia Expert

10285POSTS

11 years ago

lale4 wrote:
Let's say an individual moves to Ecuador with an investors visa and puts their $25,000 in the bank, could more be put in? What is the actual interest rate? I hear that people can live off of interest there by putting a bit more money in the banks.

First, there is no single interest rate. The rate Stumpy found is probably in the ballpark.

Some cooperatives, not necessarily covered by the same depositor insurance as an EC bank would have, have offered rates of about 10 percent. Investors lost plenty when Coopera in Cuenca was looted by its managers several years ago after Expats invested at a supposed 10.5 percent rate of interest.

Even at 10 percent, the annual interest income would be $2,500. The only folks possibly living off interest with that investment or "a bit more" are those who live rent-free in the sticks and grow their own food.

cccmedia in Quito

Guest098872 Guest

0POSTS

11 years ago

Thank you. Anyone else have any input? Or someone that has done something like this before?

I guess the looting part is a bit sour. Everyone just lost all their money? Yikes.

netbean Active member

78POSTS

11 years ago

Please recommend some cooperatives around quito. The Pichincha is always full of people, and jep no agency here.

Cuenca boy Active member

83POSTS

10 years ago

First! The Ecuador government insurance similar to FDIC in the States is COSEDE. "All" banks and many Coops "Pay" for this insurance. It is good for $32000 per account. You can go online to COSEDE and see what organization is insured or not. Coopera said they had insurance but did not. A quick check of the COSEDE website would have saved a lot of misery. I blame that on lazy gringos for their losses. Banks will pay typically 5-6% on accounts of $25,000 - 100,000. Most Coops will pay 10% on accounts that add up to $100,000, example--3 30K and a 10K. All 4 accounts are insured. The money is paid out each month into your savings account at the same institution. JEP is the oldest and largest Coop in Ecuador. 760,000 members (depositors) They have a AAA rating. They can be the institution for your "investors" visa deposit. A notarized copy of the CD has to be filed with Ecuador Central Bank . This is true no matter what financial institution you may use for your 25K CD. JEP will pay appx 7.5% on $25K Simple to see if you have 100K in CD's at 10% you will receive 10,000 a year in $833 monthly payments. That plus SS is a quite nice living!!! 200K is even better!!! Note: they issue a VISA debit card. You can draw a max of $200 a day in 2 $100 draws. You can make purchases of $500 a day You can pay almost all types of bills (cell,Electricity, IESS, Internet ect) using their online service.

3 members reacted to this post

cccmedia Ecuador/Colombia Expert

10285POSTS

10 years ago

Cuenca boy wrote:
First! The Ecuador government insurance similar to FDIC in the States is COSEDE. "All" banks and many Coops "Pay" for this insurance. It is good for $32000 per account. You can go online to COSEDE and see what organization is insured or not. Coopera said they had insurance but did not. A quick check of the COSEDE website would have saved a lot of misery. I blame that on lazy gringos for their losses. Banks will pay typically 5-6% on accounts of $25,000 - 100,000. Most Coops will pay 10% on accounts that add up to $100,000, example--3 30K and a 10K. All 4 accounts are insured. The money is paid out each month into your savings account at the same institution. JEP is the oldest and largest Coop in Ecuador. 760,000 members (depositors) They have a AAA rating. They can be the institution for your "investors" visa deposit. A notarized copy of the CD has to be filed with Ecuador Central Bank . This is true no matter what financial institution you may use for your 25K CD. JEP will pay appx 7.5% on $25K Simple to see if you have 100K in CD's at 10% you will receive 10,000 a year in $833 monthly payments. That plus SS is a quite nice living!!! 200K is even better!!! Note: they issue a VISA debit card. You can draw a max of $200 a day in 2 $100 draws. You can make purchases of $500 a day You can pay almost all types of bills (cell,Electricity, IESS, Internet ect) using their online service.

This is the best post I've seen anywhere on bank and co-op investing in Ecuador.

Take notes, folks.

Great job, Cuenca Boy.

cccmedia in Quito

1 member reacted to this post

cccmedia Ecuador/Colombia Expert

10285POSTS

10 years ago

Cuenca boy wrote:
JEP will pay appx 7.5% on $25K. Simple to see if you have 100K in CD's at 10% you will receive 10,000 a year in $833 monthly payments. That plus SS is a quite nice living!!! 200K is even better!!!

Yes, a safe 7.5 percent interest return is outstanding in this era. If you can arrange separate accounts within JEP or can find another institution this historically safe, you might even invest more than 32K.

In sizing your investments inside Ecuador, keep in mind not only the percentage your money earns and the 32K protection offered, but also the fact that five percent of your savings will be extracted by the EC government on any money wired out of the country.

If you possibly won't be staying on 'permanently,' this five-percent tax could seriously cut into the interest income value that your savings or CD supposedly earned.

cccmedia in Quito

Cuenca boy Active member

83POSTS

10 years ago

Thanks cccmedia. So many post with just guesses. As you know from the IESS and Electronic $ posts I made I try to do my homework and give accurate info. It is surprising here in Ecuador how much is online for those who really want to know.

Your right about the 5% penalty for sending money out of Ecuador. But! at 10% please show me any other place you can get 5% (difference from 10) still the best deal probably in the world. I have, like the example I wrote, multiple accounts at JEP so I do know it works. Not supposedly but actually. I plan on some day in the far? future dying here so no problem for me. A person who wants more choices of Coops can go to the COSEDE web site and see all of the Coops that are insured. There are literally 100s! That is a fact, I have of course looked. Take care--CB

Cuenca boy Active member

83POSTS

10 years ago

#10

netbean: Go to the COSEDE web site and you will see many Coops that are insured. There will be many in Quito I am sure. Remember, max account size is $32,000 but you can have multiple accounts.

netbean Active member

78POSTS

10 years ago

#11

Thanks, Cuenca boy. I will check the site.
We know the bank and coopertiva has different interest. What is the different ways of them to make money? And the cost of cooperativa is much lower?

Cuenca boy Active member

83POSTS

10 years ago

#12

Netbean: The banks make more commercial type loans. The coops are more for micro business like local farmers, livestock ranchers and other small business's. They also make personal loans and some secured car loans. The borrower's pay higher interest rates because it is their only means of capitol infusion. The only security they can offer is often assignment of receivables from buyers (like factoring). The failed Coopera even had many retail stores to sell the farmers/ranchers products. The rate was 18 to 22% just like most credit cards in the States. Most loans were paid back in 3 months or so. So paying 10% to the members was and is financially sound. Remember the Coops are not set up for us particularly but small local business's. There are close to 4000 coops in Ecuador. Remember a Coop is set up for members by members not for profits to "stock" holders like Banks. Although the banks in Ecuador are owned by the richest family's.
Coopera had a very good model for making money and helping the community. The problem was the top executives were laundering money and embezzling also. The government arrested and has jailed 4 of the crooks. Coopera had the basis and direction to be very successful. It was the largest financial failure since the banks failures in 1999.
The SEPS (Superintendency de Economica Popular y Solidaria) started refunding money using a formula that was not fair or totally legal. Coopera had appx 100,000 members (depositors) They first gave back "all" the money to account holders of $10,000 or less. The then went to $32,000 or less. The next two were based on percentages of deposit. As far as I remember that went up to $100,000. There are as I have read 1000 or so depositors, locals and gringos alike that have anywhere from 150,000 up to over a million that have not received a penny. The gringos have a couple attorneys that have told gringos they are suing the Govt. to get the money that was not refunded. One of them was put in jail last April 25th. For going with a group of investors to Alianza País executive secretary's house and harassing her. (Dont want him !) They are proud to claim to have paid back 99% of investors. Big deal!! the 1% are the largest!! I have read that this represents about 16 million dollars.(not verified)

All this to educate so when you see a COSEDE insured institution you can feel safe and to understand why. I have read about several insured Coops that have failed and all of the members received all of there deposits up to $32,000 per account. So the system works.
Note: I read a quote from a gringa that said "her and her husband did all of there due diligence before putting ther 100k plus into Coopera but the Govt screwed up and that is why they lost their money". Hello!!! I would think "due diligence" would include verifying Coopera's word and check (5 min max) COSEDE to see if they really did have insurance.

Well I answered your question and more to give you more information on how it all works here in Ecuador. I hope you are not bored. Take care------------CB

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netbean Active member

78POSTS

10 years ago

#13

excellent, thanks, CB.

cccmedia Ecuador/Colombia Expert

10285POSTS

8 years ago

#14

cccmedia wrote:
Some cooperatives, not necessarily covered by the same depositor insurance as an EC bank would have, have offered rates of about 10 percent. Investors lost plenty when Coopera in Cuenca was looted by its managers several years ago after Expats invested at a supposed 10.5 percent rate of interest.

I am resuscitating this thread because a story that broke this weekend is a cautionary tale for Expats who might get greedy seeking high interest rates in South America.

MTCoin Banco del Futuro was offering rates between 13 and 22 percent to Cuenca depositors, apparently including many Gringos.

That is, they were offering these too-good-to-be-true rates until Friday (June 23, 2017), when the authorities raided the operation's offices in Cuenca and Santa Isabel. Arrests were made and "bank" vehicles and equipment were seized.

The prosecutor is alleging money laundering by the operation's managers -- the bank was dealing in Bitcoin, which is illegal in Ecuador .. and usury -- charging illegally high rates for loans .. and operating without a proper license.

Additional charges may be forthcoming, according to the authorities.

source: www.cuencahighlife.com

j600rr Serial expat

579POSTS

8 years ago

#15

cccmedia wrote:
cccmedia wrote:
Some cooperatives, not necessarily covered by the same depositor insurance as an EC bank would have, have offered rates of about 10 percent. Investors lost plenty when Coopera in Cuenca was looted by its managers several years ago after Expats invested at a supposed 10.5 percent rate of interest.

I am resuscitating this thread because a story that broke this weekend is a cautionary tale for Expats who might get greedy seeking high interest rates in South America.

MTCoin Banco del Futuro was offering rates between 13 and 22 percent to Cuenca depositors, apparently including many Gringos.

That is, they were offering these too-good-to-be-true rates until Friday (June 23, 2017), when the authorities raided the operation's offices in Cuenca and Santa Isabel. Arrests were made and "bank" vehicles and equipment were seized.

The prosecutor is alleging money laundering by the operation's managers -- the bank was dealing in Bitcoin, which is illegal in Ecuador .. and usury -- charging illegally high rates for loans .. and operating without a proper license.

Additional charges may be forthcoming, according to the authorities.

source: www.cuencahighlife.com

WOW!! 13-22% Do you no how long they were offering those rates? Seems like that's pretty much waving a red flag, and saying come investigate me.

cccmedia Ecuador/Colombia Expert

10285POSTS

8 years ago

#16

The prosecutor says MTCoin "bank" was in business for almost a year.

The investigation is proceeding on the basis that MTCoin was attempting a "pyramid scheme," which is apparently how they could temporarily offer such high rates.

source: Cuenca Highlife

Sophems Contributor

150POSTS

8 years ago

#17

I never believe any of the interest rates I am told here. As an accountant, I kept calculating my monthly interest on my investment CD, and it never worked out. After numerous inquiries to my attorney who set up our bank accounts, I found out it was in the bank his cousin is manager in. So I made him go with me to the bank and her office (cause I now know he gets a kick back from all of the accounts he sets up there and it's the only bank he uses for all expats here in Manta). Apparently, since we had to make the investment CD's before we could get our cedula and open our bank account, they were subtracting 2% each month for taxes as they viewed us as a foreign investor cause they claimed they didn't have our cedula information that listed us as residents. We provided all info numerous times and for 2 years, never got it resolved. They do what they want here, and after a year quit depositing our monthly interest on our CD's into our bank account. However, when we cashed them in a year later, we did get the additional interest. Aside from the exit tax, we keep very minimal cash in the bank here and just wire money in when we need it. Never ever rely on what you think is a sure thing in the US and especially here. Just from my experience.