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.
As soon as I can, I’ll write a follow up report on the ways to reduce or avoid fees on money transfers between Spain and the UK.