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Some banks now charge higher fees on Money transfers between Spain and the UK, so the search is on to find ways to minimise or avoid these costs.
Brexit has given banks in Europe an excuse to slap new charges on money transfers to and from the UK, and some Spanish banks appear to be taking full advantage of it. However, there are ways to minimise this new cost, and maybe even avoid it all together.
Last week I asked if anyone was getting hit by these new charges on money transfers to and from the UK, and received close to 50 irate responses confirming the problem. “I have made transfers on numerous occasions, but this is the first time a fee has been applied,” wrote one respondent. “It’s very annoying.” I would like to say thank you to everyone who responded.
What’s going on? Well it seems that Brexit gives European banks an excuse to earn new fees off the millions of British expats with bank accounts in Europe, and Europeans with accounts in the UK. With interest rates offering no income, banks have a bigger incentive than ever to go after every new source of fees with alacrity, so nobody should be surprised if they do.
I’ve seen people complaining that, because the UK still participates in SEPA (Single Euro Payments Area), transfers should not be affected by Brexit. But SEPA is just a protocol that runs the European payment system, and reduces the cost for all involved. Unless I am mistaken, it was EU membership that ensured low-cost or free transfers between the UK and Europe, not SEPA. With the UK outside the EU after Brexit, EU regulations equalising domestic and cross-border fees no longer apply, and thanks to SEPA, new fees will be very profitable. It might not be cricket, but banks are now free to take a bite out of transfers to and from the UK.
It’s not just a problem in Spain. “British expats in the EU face financial headaches as European banks hike international payment fees, and British ones close their accounts,” explains an article at This is Money. Transfers with Italy and the Netherlands appear to be the most affected, but it’s a similar story in Portugal and France.
Just some banks?
From what I can tell, not all banks have decided to impose new fees, and the article at This is Money can only confirm that “Some European banks now appear to be raising the cost of payments to and from the UK after Brexit, despite the UK remaining a member of SEPA.”
In Spain, my readers confirm that Sabadell, CaixaBank, Bankia, and BBVA are now charging fees, but nobody has mentioned Santander, Bankinter, Banca March, CajaSur, IberCaja, or any of the others, so maybe not all of them are doing it.
Those that are charging appear to be setting a landing/reception fee of something between 0.20% and 0.35%, with a minimum of between €15 and €20. One respondent was charged €650 euros on €80,000 transferred to the UK. “What did you expect after your beloved Brexit kicked in,” he writes, I hope not directed at me personally. “We are a third tier country in their eyes. You need to prepare for a few more surprises!”
One reader received an email from their bank that spells it out. “One thing is SEPA, but another thing is the bank’s established conditions for transfers outside the EU. The bank is guided by the latter. The UK, having left the European economic area, will now be charged commissions established by the bank, which are more expensive for sending, and for receiving are 0.35%.” Another reader was advised by his bank to “make larger transfers on a more infrequent basis.”
One reader sounds like he has had enough. “I love Spain, and will find it a drag to cut ties with the country – but I cannot keep funding this holiday home if the drain from the banks and authorities continues,” he writes.
How to minimise or avoid these new charges on money transfers to and from the UK?
It looks like these new charges are discretionary, which means individual banks decide what to charge, if anything, and maybe not all banks are hiking up fees. I would love to hear from any Santander or Bankinter clients out there, to know what they are up to. Get in touch through the contact form below.
If not all banks are charging, then you can simply threaten to move banks. At times like this, banks should be accommodating in order to avoid losing profitable customers. However, if these new fees on UK transfers are non-negotiable at the branch level, threatening to leave won’t work. You might actually have to switch banks, assuming there are decent alternatives.
But there are other ways to reduce or avoid money transfer fees. I have sketched out in my mind ways to use the latest innovators in the consumer finance sector to reduce or get around them. I need to do more research before I can report back, but I’m looking at ways for non-residents to almost entirely avoid using a bank account in Spain, and for residents to reduce their costs. If anyone has any good suggestions, I’d love to hear from you.
Follow up article now ready. Find out how to get around money transfer fees to and from the UK
Paul says:
By far the easiest way to handle this, IMO, is to get a Transferwise account.
Transferwise offers two main services. First is their namesake, money transfer/exchange; you log in, set up your account to connect to your UK (or wherever) bank as the funding source, and then you can send your Spanish bank money.
TW gives you the BEST rate you’ll find anywhere; people sometimes slag on TW because they charge a small fee (variable, no more than 1%) on the transfer, but they forget that the banks or “no-fee!” services are often sucking you dry of anywhere from 0.5% to 2% on the exchange rate itself.
When you do it over time, you see that TW is the best deal.
The other big service that TW offers is you can get a multi-currency account. They’ll give you, for free, a UK bank account number and sort code; a US account and routing number; a European IBAN (including a Spanish IBAN if you choose); or account numbers for various other nations (Australia, New Zealand, etc). (https://transferwise.com/gb/multi-currency-account/pricing)
And it’s all free.
You fund your account with pounds, and then when YOU choose you change it into Euros. Immediately, later, whatever, it’s up to you. You can use that IBAN number to pay your Spanish bills.
Speaking as a non-EU person (USA! USA!) that’s dealt with moving both living sums and large sums (down payment for a flat) to Spain, and heard from lots of other non-EU expats, Transferwise constantly wins out as the best-reviewed service.
They do have a couple of occasional hangups. Transfers of a couple thousand euros or less are usually very quick, often I get same-day service (instantly or within a few hours), but larger than that and it can take a couple of days. There’s some limits on how much you can do using various funding methods (direct debit from your account is usually the least expensive, using a debit card can be instant; but using a debit is limited on amounts) and if they have any reason to sniff out money laundering or something dumb, it can take a little while to straighten things out.
But all in all, best service out there, IMO.
Richard says:
Paul, thanks for the information, very helpful.
I am not sure however that with the TransferWise Borderless Account you can choose to have an IBAN for a specific country.
My Borderless Account has allocated me a Belgian IBAN which seems to be what everybody else is getting as well.
I will follow this up with TransferWise and see if, as you say, it is possible to obtain a Spanish IBAN which would be perfect for me and many others no doubt.
Thanks again and all the best.
Susan Hands says:
You can also open a Starling bank account which offers a euro currency account. Unfortunately this has a GB IBAN. However you can then open an N26 euro bank account online, which offers a Spanish IBAN. Transfer your euros for free from Starling to N26 and use the N26 account with the Spanish IBAN to pay your Spanish bills for free. Slightly more convoluted than the TransferWise suggestion above, which I may look into, but it works for us.
Indecision says:
Does this just affect those of us with holiday homes and non-resident bank accounts or does it also affect UK nationality Spanish residents who rely on the transfer of pensions to Spanish bank accounts?
In either case, is there not a market for a bank who will support the UK market in Spain, which is not inconsiderable in size or value.
Jacob says:
American banks are notoriously bad for international bank transfers. Digital banks don’t need branch offices with employees in every city. I’ve been using TransferWise for years. I’ve transferred thousands between EUR, USD, CZK, HUF, and probably others. Even just the convenience of not having to remember a pin code or go to an cash machine.
Revolut is also an option.
harry bowden says:
I have found that N26 A GERMAN BANK is linked with WISE and will give you a Spanish IBAN they are free banking and will pay all your Standing orders in Spain . I am with Bankia they since Brexit are charging me euros 14 per month i always transfer money to them in euros
Brian Meek says:
Just to inform you that Recently i tried to send money from my HSBC account to Sabadell bank in Lanzarote the procedure worked which I have used for a number of times, but two days later the transfer was returned to my account ( at a reduced amount), I have yet to find out why it was returned.