Costs of moving money to Spain constantly reducing for Expats
One of the most overlooked difficulties of moving abroad is transferring your belongings, assets and funds to your new country of residence. Not only this may be a long and bureaucratic process, it is also expensive beyond imagination. The more nice and heavy things you have, the more expensive your shipping will be. The more money you have, the more you are going to pay in fees.
Transferring money between accounts globally is easy to do. In fact, most international banks nowadays enable you to do through the online platform or even through the app. The fees aren’t cheap, but aren’t particularly life-changing with an average of £10-15 in the UK, €10-20 in Europe, or $20-$30 in the USA. So, what’s so expensive about transferring money abroad to Spain?
The answer is that if you are moving to Tenerife from a country that doesn’t use the Euro – you are bound to receive poor Euro exchange rate from your bank. That means that for every pound, dollar, dirham, renminbi, yen or whichever other currency that you are exchanging into Euro you will get much less than the interbank rate. How much less? That depends on your bank, and the terms you have negotiated for yourself, but it is very likely to be above 1%, and likely to be above 2.5% even. Send one dollar and instead of getting 0.86, you’ll get 0.85 or 0.84 Euro. Doesn’t sound too bad, doesn’t it? Losing a fraction of a fraction of each dollar.
Well if we were to look at the holistic picture of immigration to Tenerife, it adds up to a lot of money. If you are pensioner couple who has moved to Santa Cruz, you will be transferring at least €1,000 for your expenses to provide for yourself. That should be just about £10,650 for the year using the real exchange rate, but if you were to make 12 even bank transfers costing you £15 per transfer, and pay 2.5% in exchange rate margins, you’ll end up paying more than £11,000 for the year. We can take an even more drastic example of a buying property – a three-bedroom terraced house at Golf course Costa Adeje costs a million Euro. Even a mere 1.5% in exchange rate fees amounts to €15,000 in fees for a one-off transfer.
With that being said, bank wire costs are much lower than they were years ago, and the exchange applied of 1-2 per cent, normally, is a million times better than it was just 2-3 years when the average margin was closer to the 3 per cent mark. What is leading to this slow decline in fees taken by banks for international money transfers to Spain and everywhere else in the world? The answer is competition.
Transferwise is one of those money transfer companies that really came out with a bang, at least in the UK, and has earned itself huge following in recent years. Currencies Direct is a very friendly company that is specifically tailored to assist expats and have 30 offices just in Spain including one in Tenerife (Los Seres) – they have been operating in foreign currency transfers for the past 2 decades. How about companies like World Remit and Azimo which are literally changing the world by enabling overseas employees to transfer funds back to their families at minimal costs?
When transferring money from UK or USA to Spain it is paramount to do the following:
- Choose a provider that is transparent about the exact fees that will be levied from you in the process.
- Choose a provider or a bank that is able to provide a great exchange rate (the precise margin will be a function of how much money you are transferring, so hard to provide specific figures)
- Choose a provider that offer extensive support through multiple channels if you are moving a life-changing sum of money
- Always look at the big picture. Choose the company or bank you would like to engage in business with, not whoever is willing to flash off with attractive offers and discounts