Banking issues, interest rates, RMB vs $, traveler's checks

[rogerluli]

When we arrived in China we already had all the money in a Bank of China account in RMB for our house purchases. We had the bank card with us but the bank book was still with baba in Hunan. Laopo assured me that with the card we could access the money at any BOC branch in China... B) When we attempted this on Hainan we were informed that there was in fact no money on the card but yes the money was in the account but we could not withdraw 1 jiao unless the money from the bank book had been transferred to the card or we had both together... B) Luckily we had enough cash for the deposit with us.

 

When we got to Yunnan we sent the card to baba and then he was able to make the transfer of the funds to buy that house.

 

When we left China we placed the remaining RMB in a 2 year account paying 3.06% interest. For 9 and 12 months they were offering 2.25 and 2.52% respectively for RMB accounts. But for $ accounts of $5000 you were paid 5% for 9 months or 8% for 12 months... Do you think they just love American money so much that they are willing to pay a large premium for those greenbacks??? I doubt it. It seems to me they are pretty durn sure that the $ is going to fall substantially against the Yuan over that time so that they still come out ahead.

 

I think it's a good idea to take some traveler's checks to China just in case you get robbed. But it is a real hassle to cash them. How many branches of the BOC are there in Guangzhou? How many will cash traveler's checks??? Just one...

 

Banks in China are not aware of the term "Customer Service". They hold all the cards and you will dance to their tune or sit this one out...

[ameriken]

Roger, are you able to make deposits in/from the US to the China account, and have the money converted into RMB when the deposit is credited?

 

I would like to open an account there, make deposits while in the US to get the $$ converted at todays RMB rate and protect it from the falling USD.

[stacato]

Roger, are you able to make deposits in/from the US to the China account, and have the money converted into RMB when the deposit is credited?

 

I would like to open an account there, make deposits while in the US to get the $$ converted at todays RMB rate and protect it from the falling USD.

 

Ken,

 

I copied this from another thread for you:

 

Option1: Suppose you have $1,000 invested in U.S. stock or bond market for 10 years and receive an average of 7% annual return. After 10 years, you decide to retire in China and convert your U.S. investment into RMB at the rate of $1 = 5.5 RMB, then you will have 10,819 RMB.

 

Option 2: you decides to convert $1,000 now into RMB at the exchange rate of $1 = 7.8 RMB. Then you put that money into a China bank at an annual CD rate of 3%. Then in 10 years, you will have 10,483 RMB.

 

From above, you can see you are slightly ahead in your U.S. investment option. From 7.8 RMB/$ to 5.5 RMB/$, that is a 29% drop of the dollar against RMB in 10 years. So it all depends how much (or whether) the dollar will drop against the RMB in 10 years. Remember the tax consequence, as all RMB savings in China are taxed at 20% while USD investments could be tax deferred in an IRA account. Taxes will reduce your return significantly.

Edited November 17, 2006 by stacato (see edit history)

[ameriken]

Roger, are you able to make deposits in/from the US to the China account, and have the money converted into RMB when the deposit is credited?

 

I would like to open an account there, make deposits while in the US to get the $$ converted at todays RMB rate and protect it from the falling USD.

 

Ken,

 

I copied this from another thread for you:

 

Option1: Suppose you have $1,000 invested in U.S. stock or bond market for 10 years and receive an average of 7% annual return. After 10 years, you decide to retire in China and convert your U.S. investment into RMB at the rate of $1 = 5.5 RMB, then you will have 10,819 RMB.

 

Option 2: you decides to convert $1,000 now into RMB at the exchange rate of $1 = 7.8 RMB. Then you put that money into a China bank at an annual CD rate of 3%. Then in 10 years, you will have 10,483 RMB.

 

From above, you can see you are slightly ahead in your U.S. investment option. From 7.8 RMB/$ to 5.5 RMB/$, that is a 29% drop of the dollar against RMB in 10 years. So it all depends how much (or whether) the dollar will drop against the RMB in 10 years. Remember the tax consequence, as all RMB savings in China are taxed at 20% while USD investments could be tax deferred in an IRA account. Taxes will reduce your return significantly.

 

thanks Stac.....that is something I have been considering too........

[rogerluli]

Roger, are you able to make deposits in/from the US to the China account, and have the money converted into RMB when the deposit is credited?

 

I would like to open an account there, make deposits while in the US to get the $$ converted at todays RMB rate and protect it from the falling USD.

 

Not quite Ken... We used wire transfers to send the $ to our account in China at BOC. Then laopo's father had to go to the bank in person and they allowed him to transfer the funds to RMB. I am not actually sure about the mechanism for this but it worked. It may have helped that laopo's friend is the branch manager... But it may be easier to open an account with a bank like HSBC that has branches in the US and China, or Citibank which has China branches now also.

[pkfops]

Try CitiBank.

[SirLancelot]

I think it's a good idea to take some traveler's checks to China just in case you get robbed. But it is a real hassle to cash them. How many branches of the BOC are there in Guangzhou? How many will cash traveler's checks??? Just one...

 

Banks in China are not aware of the term "Customer Service". They hold all the cards and you will dance to their tune or sit this one out...

 

 

Roger, I agree with everything you say except the part about traveler's check. I have not tried to convert currency in GZ, so it might be the case in GZ, but I find that very hard to believe. Everywhere you go in China, they give you two rates: one for CASH and another one for traveler's checks. The traveler's check rate is always better. All these banks which show the traveler's check rate doesn't really allow you to exchange using a traveler's check? That can't be right.

 

And what about the hotels? The big hotels also list rates for both cash and traveler's checks. Do they also not accept them? I find that very hard to believe.

 

I hate banks in China. They're worse than the DMV in the States.

[Randy W]

I think it's a good idea to take some traveler's checks to China just in case you get robbed. But it is a real hassle to cash them. How many branches of the BOC are there in Guangzhou? How many will cash traveler's checks??? Just one...

 

Banks in China are not aware of the term "Customer Service". They hold all the cards and you will dance to their tune or sit this one out...

 

 

Roger, I agree with everything you say except the part about traveler's check. I have not tried to convert currency in GZ, so it might be the case in GZ, but I find that very hard to believe. Everywhere you go in China, they give you two rates: one for CASH and another one for traveler's checks. The traveler's check rate is always better. All these banks which show the traveler's check rate doesn't really allow you to exchange using a traveler's check? That can't be right.

 

And what about the hotels? The big hotels also list rates for both cash and traveler's checks. Do they also not accept them? I find that very hard to believe.

 

I hate banks in China. They're worse than the DMV in the States.

 

You need to find a bank with a foreign exchange department - we had to go to three different banks in GZ before we found the "one". There are plenty of cities in China that don't have them at all, including Jiaying's home town.

 

Or a major hotel.

[yuehan123]

Roger, I agree with everything you say except the part about traveler's check. I have not tried to convert currency in GZ, so it might be the case in GZ, but I find that very hard to believe. Everywhere you go in China, they give you two rates: one for CASH and another one for traveler's checks. The traveler's check rate is always better. All these banks which show the traveler's check rate doesn't really allow you to exchange using a traveler's check? That can't be right.

 

And what about the hotels? The big hotels also list rates for both cash and traveler's checks. Do they also not accept them? I find that very hard to believe.

 

I hate banks in China. They're worse than the DMV in the States.

Although my sample size is very small, I agree with Roger. We went to a BOC on Shamian Island in Guz during our interview stay in summer 2005. That branch refused to cash our travelers checks, and yes, I have cashed travelers checks at BOC all over China. The refusing branch told us 'the only' place to cash the checks was at the White Swan branch. Further, lots of other banks like the Ag bank, China Bank, the Industrial Bank and others, whose exact names I've forgotten, absolutely refused to cash travelers checks. As for Hotels, yes, they will sometimes cash travelers checks, if you show your room key. Some Hotels' workers are not so fussy and will cash the check anyway, if they have enough cash on hand. One small branch of BOC in Nanning refused to cash my travelers checks because the signature in my passport, which is 8 years old, didn't exactly match the signature on the travelers checks. This, in spite of them requesting multiple signatures on the checks which did match, exactly.

[Guest Byron]

When we arrived in China we already had all the money in a Bank of China account in RMB for our house purchases. We had the bank card with us but the bank book was still with baba in Hunan. Laopo assured me that with the card we could access the money at any BOC branch in China... When we attempted this on Hainan we were informed that there was in fact no money on the card but yes the money was in the account but we could not withdraw 1 jiao unless the money from the bank book had been transferred to the card or we had both together... Luckily we had enough cash for the deposit with us.

 

When we got to Yunnan we sent the card to baba and then he was able to make the transfer of the funds to buy that house.

 

When we left China we placed the remaining RMB in a 2 year account paying 3.06% interest. For 9 and 12 months they were offering 2.25 and 2.52% respectively for RMB accounts. But for $ accounts of $5000 you were paid 5% for 9 months or 8% for 12 months... Do you think they just love American money so much that they are willing to pay a large premium for those greenbacks??? I doubt it. It seems to me they are pretty durn sure that the $ is going to fall substantially against the Yuan over that time so that they still come out ahead.

 

I think it's a good idea to take some traveler's checks to China just in case you get robbed. But it is a real hassle to cash them. How many branches of the BOC are there in Guangzhou? How many will cash traveler's checks??? Just one...

 

Banks in China are not aware of the term "Customer Service". They hold all the cards and you will dance to their tune or sit this one out...

 

I have cashed American Express Traveler's checks all over China with absolutely no problem. You need to go the a bank that exchanges currency. I also cashed at the airports and major hotel no problem. I do not bring traveler's checks anymore because I have to pay to get them then pay again to cash them. I bring cash now. China does not exchange at the going rate but less. I just got back from China yesterday and the rate was 7.86 but they stated their rate was 7.78 and that is what I got. In US at airport their rate was 7.1 rmb to one dollar. I assume they lower the rate because of the fees. This was Bank of China.

[SirLancelot]

I have cashed American Express Traveler's checks all over China with absolutely no problem. You need to go the a bank that exchanges currency. I also cashed at the airports and major hotel no problem. I do not bring traveler's checks anymore because I have to pay to get them then pay again to cash them. I bring cash now. China does not exchange at the going rate but less. I just got back from China yesterday and the rate was 7.86 but they stated their rate was 7.78 and that is what I got. In US at airport their rate was 7.1 rmb to one dollar. I assume they lower the rate because of the fees. This was Bank of China.

 

 

You have to pay to cash your traveller checks in China? That's news to me. You actually should be getting a better exchange rate for the traveller checks than cash.

 

China doesn't exchange at the going rate? Have you ever done exchanges in the US? From the sounds of it, I don't think so. NO WHERE exchanges at the going rate. What you think of as the going rate (as reported on in the Wall Street Journal or on Finance Yahoo website) is the rate that banks use to buy and sell $1 million USD. Anything less and you get a lower rate. All banks--including US banks don't exchange at the going rate unless you're exchanging $1 million or more at the time of the transaction.

 

All currency exchanges at airports (again, no matter where in the world) have the worst exchange rates. It's due to the convenience factor of having a branch at the airport for you to do an immediate exchange. Just like buying anything at the airport costs you a lot more than buying it outside of the airport, it is likewise the same with currency exchanges.

 

At the San Francisco International airport, one currency exchange counter was selling 6.8 RMB for 1 USD and offering 1 USD for 9.1 RMB.

 

I maintain that you will get a much better exchange rate in China as compared to trying to exchange the same amount of currency in the US. The fees and rates in the US is always worse because cost of doing business is always more in the US.

[yuehan123]

You have to pay to cash your traveller checks in China? That's news to me.

News to you? Have you cashed traveler's checks in China? Nevermind, a silly question, it's irrelevant. He paid a fee. I "buy" my travelers checks for free and and, as best I can recall, have always paid a fee to exchange travelers checks.

[SirLancelot]

You have to pay to cash your traveller checks in China? That's news to me.

News to you? Have you cashed traveler's checks in China? Nevermind, a silly question, it's irrelevant. He paid a fee. I "buy" my travelers checks for free and and, as best I can recall, have always paid a fee to exchange travelers checks.

 

Honestly I have not, but I've never seen any signs or indications that cashing a travelers check would be assessed a fee. New knowledge for me. Always willing to learn something new.

 

Do you remember how much they charge? Is it a flat fee or a %? Thanks.

[Trigg]

You have to pay to cash your traveller checks in China? That's news to me.

News to you? Have you cashed traveler's checks in China? Nevermind, a silly question, it's irrelevant. He paid a fee. I "buy" my travelers checks for free and and, as best I can recall, have always paid a fee to exchange travelers checks.

 

Honestly I have not, but I've never seen any signs or indications that cashing a travelers check would be assessed a fee. New knowledge for me. Always willing to learn something new.

 

Do you remember how much they charge? Is it a flat fee or a %? Thanks.

I've cashed travelers checks in china with zero fee.

[rogerluli]

You have to pay to cash your traveller checks in China? That's news to me.

News to you? Have you cashed traveler's checks in China? Nevermind, a silly question, it's irrelevant. He paid a fee. I "buy" my travelers checks for free and and, as best I can recall, have always paid a fee to exchange travelers checks.

 

Honestly I have not, but I've never seen any signs or indications that cashing a travelers check would be assessed a fee. New knowledge for me. Always willing to learn something new.

 

Do you remember how much they charge? Is it a flat fee or a %? Thanks.

I've cashed travelers checks in china with zero fee.

 

Sure maybe back in the Eocene... I cashed $1000 in traveler's checks last month at BOC and paid a $7.50 FEE... Banks in America have discovered fees make them more $$$ and China banks have figured it out too...so now in addition to horrendous service, it costs you money...