How to pay for expenses in Brazil: credit, debit, cash or MEP dollar

Traveling abroad under exchange control requires planning not only stays, activities and budget, but also how each expense is expected to be paid.

With multiple exchange rates in effect, from informal to “tourist dollars” at different prices depending on consumption, it is difficult to know which is the most practical alternative to meet tourist expenditure outside the country.

And, if the destination is Brazil, the problem takes an additional turn because the usual recourse to cash as a solution is increasingly cumbersome, given the rise of digital payments in this country. Carrying reais, or dollars to be exchanged for reais at destination, is increasingly an alternative for loose change, one-time payments, and not much else. Electronic payment rules.

You can start by looking at the different exchange rates. In principle, if there are no obstacles among the dozens that interfere with your purchase, it is possible to buy dollar savings up to 200 USD at an exchange rate of 306 USD per unit (58 USD per Brazilian real).

A sum probably insufficient for a stay of several days in Brazil -Lonely Planet estimates a minimum daily budget of 380 reais, or about 75 USD-, but if you have access to it, it is probably to take advantage of it.

If you do not have access to the savings dollar or decide instead to consume with credit card oh debittwo very simple options in this country where even street vendors have wireless terminals to top up plastics, there are also different exchange rates to take into account.

For purchases under 300 USD, the exchange rate per dollar with this type of purchase is the “tourist dollarwith a surcharge of 75% (country tax plus collection on the account of personal income or assets) which becomes $325 per dollar (about $62 per real).

If consumption, on the other hand, reaches or exceeds 300 USD (1,566 reais) in a month, the exchange rate applied to credit and debit card expenses becomes “qatar dollar”, with 100% supplement. That’s about $372.50 for the dollar or $71.36 for every Brazilian real.

An important detail: if you choose to pay with debit card In order to pay either of these two exchange rates in pesos, it is essential to check with the bank that the expenses are deducted from the peso savings account and not from a dollar savings account.

And, given the little help from various banks, just in case it is convenient to “empty” the dollar savings account associated with the debit card used if you don’t want to spend them (it’s common for banks to default to saved dollars first).

However, there are unlimited exchange rates that are cheaper than the tourist dollar and the Qatari dollar. The most attractive today is the MEP -which arises from the purchase of bonds with pesos and their resale in exchange for dollars- and which is currently at $332 per dollar ($63 for each Brazilian real).

Because it’s the cheapest – and there are no limits on amounts like savings dollars – it’s the payment method that many specialists recommend.

“The best thing is to buy MEP dollars at the bank today: deposit pesos in the current account and talk to the account manager so that he buys dollars, he will buy an Argentinian bond in pesos, he will resell it in dollars and he will put in your dollar savings bank“, writes the financial adviser Salvador Di Stefano in one of his analyses.

“So when you travel abroad, you use your debit card to pay in dollars, using dollars from the savings account. You buy these dollars at $330. If you use a credit card in January, when you have to pay in February, you have to pay it in Qatari dollars, which is estimated at 390 pesos,” the economist added.

The MEP therefore appears even more convenient than the free dollar o”blue”, which closed Friday at 354 pesos.

So, from the start, the MEP exchange rate is the one that will cost the least pesos among the unhindered exchange rates.

If an Argentinian spends 1,000 reais in Brazil with savings dollars, he will have to put down 58,620 Argentine pesos (and not much more, since they are equivalent to 191 USD, almost at the peak of 200 USD per month).

The same 1,000 Brazilian reais to the tourist dollar is about $62,260. For the Qatari dollar, if the total expenditure for the month exceeds 300 USD, these same 1,000 reais cost 71,359 Argentine pesos. And finally, the equivalent in MEP dollars is around 63,602 Argentine pesos.

But these figures are those that correspond to an initial payment. Because for the comparison to be complete, it is necessary to take into account the restitution or the deduction of the Profits and Personal Goods that the AFIP carries out each month of June of the following year on the sums perceived as installments.

“If you are paying for personal earnings or assets, it is convenient for you to pay in pesos with debit or credit cards,” says the economist and means of payment specialist. Ariel Setton.

“Between 45% and 70% of the surcharge on the official dollar is deducted the following year,” the economist said. GlobeLiveMedia.

For those using the option of funding a dollar savings account with the MEP dollar anyway, Setton, meanwhile, made a more practical recommendation.

“I recommend using a credit card rather than a debit card, especially in Brazil where there are a lot of card fraud. If you pay on credit, the limit is set by the capacity of your card and you pay nothing. In the event of a debit, you can empty your account and the fight is to recover this money. And the limit is the amount that is in the account,” he commented.

the taxpayer Sebastien DominguezIn the meantime, he quantifies the value of the tax deductions that the AFIP will make in June 2024 to those who will consume plastic abroad this summer. In other words, it discounted the impact of inflation by waiting mid-2024 for the AFIP to deduct or return the earnings that make up the Qatari dollar.

“If you pay with dollars purchased through MEP, the consumption costs $332.67 and it is an expense. If you pay with a debit card, the consumption is $371.51 but there is $130.03 Since collections are going to be calculated in affidavits that expire in 17 months, if we consider an average inflation of 6%, that $130.03 today is equivalent to $48.34 in June 2024” , he calculated.

“Therefore, you would lose $81.69 by paying now. The cost of the Qatari dollar would be $371.51 minus $48.34, which equals $323.17 to the dollar,” Domínguez explained to GlobeLiveMedia.

In short, considering the effect of inflation on these amounts, you end up paying $10 less per dollar with the Qatari dollar than with the current price of the MEP dollar.

Finally, he explained, whoever does not pay personal property or earnings must wait 21 months for the return of the sums collected. In this case, due to inflation, you will pay approximately $333 per dollar. Almost the same value as the MEP, although having to make a higher initial outlay.

So things, Funding with the MEP dollar and paying with plastics seems to be the most convenient way for those not paying for profits or personal assets. For those who do, the Qatari dollar becomes the most convenient.

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