Money Stories from Argentina and Chile

I planned to write this after I return from my vacation to Argentina and Chile, but since I’m currently held hostage in a hotel by an indefinite general strike in southern Chile, I might as well do it now when I have nothing else to do.

The general strike affects the entire Magallanes region in Chile. People went on strike because the President of Chile would cut gas subsidies to this region. The protestors set up blockades on all roads into and out of cities. I don’t quite understand what exact purpose blocking the road serves, but that’s the way they do it. As a result, no one can go out to anywhere. There are also twice-daily rallies in town with people driving around honking horns and waving black flags, which I take as the symbol for strike. There have been no violence or rioting except one broken window at a restaurant which served tourists lunch on the first day of the general strike.

Now, money stories.

Cash Is King

I first went to Argentina. Compared to the current situation in southern Chile, Argentina was like heaven, but I didn’t know it. Cash is the preferred and expected way to pay in Argentina. Even in the capital city of Buenos Aires, at least half of the stores don’t accept cards. Stores that do accept cards often offer a discount for cash, as much as 10-15%.

The cost of accepting cards must be quite high in Argentina. If a store doesn’t offer a cash discount, it’s seen as not offering the best deal to the customers. Customers just go elsewhere. There’s really no reason to use cards in that situtation. I got cash from ATMs and just spent cash.

Cash Crunch

The downside of cash being too popular is that it can be of short supply. Some ATMs in Argentina are out of cash by afternoon. The machines that still spit out cash often have long lines. I don’t know why they don’t refill the machines more often.

All ATMs in Argentina charge a $4 surcharge to foreign cards with a low $200 per-withdrawal limit. Banking infrastructure in Chile seems to be better. Even small grocery stores in Chile accept cards. No lines at ATMs. I was able to withdraw $400 worth of Chilean Pesos although the machine still charged $5 surcharge. I’m glad I’m using my Fidelity mySmart Cash account. Fidelity reimburses all ATM surcharges, whether domestic or international.

Sticker Shock

Both Argentina and Chile are more developed developing countries. The prices, at least in tourist areas, are comparable to prices seen in the U.S. Currencies in both countries are called Pesos but their values are drastically different. 1 U.S. dollar is worth 4 Argentina Pesos. It’s worth 500 Chilean Pesos.

Almost everything in Chile is in multiples of 1,000 Pesos. My ATM withdrawal: 200,000 Pesos. A long-distance bus ticket: 12,000 Pesos. One night at a rustic hotel: 20,000 Pesos. It takes time to get used to spending in such large numbers.

So much for now. If the strike goes on much longer, I will write another post with more stories.

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• More From Argentina: Middleman and Consumption Smoothing
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