Permanent Residents Pay Less in Chile

I have often said that a professional or retired person can live twice as well in Chile for half the price. But that statement is qualified, of course, according to where one lives, his desire or need to travel, what he chooses to eat and where, what kind of transportation he prefers, and how much insurance he needs to buy (especially if he has a large family). Booking flights on Lan Chile's Spanish language site from within Chile yields very attractive airfares, as much as 80% less than the gringo price paid by those logging into the airline's English language site. This benefit is available to all immigrants, new and old. But some benefits only accrue over time. One pertinent economic consideration has to do with special discounts associated with obtaining a permanent residency visa and its corresponding ID card.

For instance, there are many more credit card options available to permanent residents than to those with (a) temporary visas or (b) visas subject to contract. While Visa and Mastercard cards are not available to those with temporary visas, they often are available to those holding a visa subject to an employment contract. But neither of these visa holders will be able to get department store credit cards. This fact is important because Chilean department store cards, which carry no annual fee but do incur nominal monthly fees and taxes when used, are used to obtain discounts all over Chile. These benefits come in addition to items placed on sale only to cardholders within the store that issued the card and its related chains.

In Líder super-centers (now owned by Wal-Mart), for example, shoppers who use their Presto card receive 6% off their total shopping bill on items purchased on Monday; 25% off meats, fruits and vegetables purchased on Tuesday and Wednesday; 25% off cakes and pastries on Thursday; and 25% off fish on Friday. Gasoline has been 10% cheaper on Fridays (during June 1-September 30, 2010) if purchased at Petrobras service stations. Purchases are discounted 15% at many name-brand shoe outlets. Presto has 55,000 affiliated merchants in Chile (searchable) that provide some discount when one pays with the card. Presto users also receive 6% off any real property tax bill, called contribuciones, paid on Monday, and 10% off car registration fees (taxes), called permiso de circulación, paid in March, if they pay with the Presto card (both transactions now available online). Obviously, these savings are significant and add up to a considerable sum over the course of a year. There are many other discounts on goods and services available when paying with Presto too, as well as in-store promotions which yield discounts (of perhaps 10% to 40% off) on certain brands or sizes of grocery items. The Presto card can be used to make purchases with an optional repayment schedule over three months without any interest or fees, making its use even more attractive in terms of financial planning. The catch is that not paying the the normal payment due (either in full or the cuota due that has been spread over three months) is very costly since the interest rate on the card is around 44% annually.

The Cencosud chain's más credit cards (for Jumbo, Paris and Easy stores) and the CMR credit card (Falabella, Sodimac/Home Center, and Tottus) also offer significant and important discounts. Two-for-one is not uncommon. These discounts apply to in-store purchases of appliances, furniture, building supplies, plants and household goods, as well as discounts on certain groceries and other featured items at Jumbo and Tottus super-centers. Moreover, major purchases, when made with these cards, are often also permitted with up to 12 (and even 18 or 24) monthly payments without interest charges. The cards provide significant discounts in certain pharmacies too. Local (Santiago) ski areas provide a 50% discount on ski lift tickets on Monday at the El Colorado resort (with CMR) and on Thursday at the La Parva resort (with Cencosud). Youths (students up to 24 years old) can often ski all day for only $17 with these programs.

Note: Not paying the full amount due for the month results in very expensive interest and card fees. Like with the Presto card, CMR and Cencosud cards must be used with caution. Yet, instead of paying cash, prudent card use can be a significant financial planning tool that yields important cost savings when the "amount due" for that month is paid in full.

The El Mercurio (newspaper) sponsored American Express card for its Club de Lectores ("reader's club") provides savings of up to 25% at many businesses. For instance, movie theaters, participating restaurants, certain wine dealers, certain Goodyear automobile service centers, and admission tickets to many cultural events or performing arts grant this discount. The savings can be  up to 70% off for travel purchases. One nice thing about this card is that immigrants with visas subject to an employment contract (not just permanent residents) may be able to get one. Another nice thing is that most businesses only require a customer to show the card in order to get the discount. They will accept payment in cash or with another type of credit card. That means, for instance, that one can still get the 25% discount and at the same time get airline mileage points by paying with a Banco Santander Visa card. Some bank issued cards, including the Club de Lectores Amex, also offer temporary gasoline price reductions for the first couple months of their use, usually for gasoline purchases on the weekend. Surely this discount is worth taking advantage of.

The three major pharmacies offer credit cards that can be used to provide special discounts in their pharmacies. But I have found that bank-issued Visa and Mastercard cards have overlapping benefits in pharmacies quite often, in addition to accruing points on Lan Chile airlines or other points schemes. Thus, the benefits of pharmacy credit cards are relatively minor compared to using the Club de Lectores Amex, Presto, CMR and Cencosud cards.

If food, entertainment, restaurants, gasoline (for part of the year), recreation, pharmaceuticals, and property taxes make up 40% of the household budget, then saving an average of 20% on these things translates to an 8% reduction in one's cost of living. Put another way, permanent residents who use these cards as prudent financial planning tools will live 8% better than those who do not, in addition to being better off than recent immigrants with inferior visas. Considering purchases of appliances, kitchenware, shoes and clothing might boost that 8% figure even higher.

The coupon-clipping housewife, famous in the USA, has to adopt a different line of attack in pursuing her craft in Chile. There are no significant or regularly-issued coupons to speak of in Chile. There are instead discounts offered for using the aforementioned credit cards, and a good housewife will learn to optimize her household purchasing by making efficient use of them. One hassle that she will find is that these cards often require a personal trip to a Banco Santander branch (which issues the Amex) or a branch of the issuing department store, to pay the bill, rather than using one's online bill payment services (which are still not universally available to pay it). This process tends to consume a considerable amount of time.

Nevertheless, permanent residency and prudent use of department store and Club de Lector Amex cards can significantly reduce the cost of living in Chile. New immigrants should look forward to having such cost-saving options available to them after 2 or 3 years of residency. Until then, their cost of living will be higher for purchases, not to mention the normal higher costs due to the language barrier and lack of information.