Spain is one of the most loved holiday destinations in the world. Each year, they receive 83 million tourists – only second to France’s 89 million. These are global figures too — Spain receives more yearly visitors than Mexico and Thailand combined.
It’s not just the amazing weather and crystal-clear Mediterranean waters that attracts people. It’s the cheap price of beers, the laidback culture and the happiness of its citizens. This is so why it’s a major expat and retirement destination – and Brexit will not change this. It also happens to be incredibly well positioned, being in Western Europe.
This is why the matter of international money transfers to Spain, particularly from the UK and US, is so important. The need for exchanging may have slowed down because of the COVID-19 pandemic, but it’s still vital for the many expats who remain there. Plus, lockdown restrictions are beginning to ease in Spain, as their first 24 hours without a Coronavirus death has recently come.
How much does money transfers to Spain using a bank cost?
How much it costs to transfer money will depend on where you’re sending it from and what bank you’re using. Generally, USA, UK and Australian banks are relatively similar in pricing. Among the major highstreet banks in all three counties, you’re looking at an average between 3% and 5% exchange margin. That is, 3% – 5% of your total transfer amount will be lost in comparison to the real, mid-market rate.
On top of this, overseas transfers sometimes have a fixed fee. 30 GBP/USD/AUD is a rough amount you’ll commonly see. You can soon see how intending to buy €1000 will leave you with much less – perhaps even as little as €920 (€80 lost).
How to turn this €80 fee into €5 with a Money Transfer Company
Money Transfer Companies are the challenger bank of the remittance world. They’re usually FX specialists who understand the accessibility of a bank, and imitate this with e-wallets and virtual currency accounts.
Money Transfer Companies provide a much cheaper service than banks for a few different reasons. Firstly, they’re newer, so they don’t have outdated legacy systems – they’re built on state-of-the-art tech infrastructure. To add to this, some also use P2P and other methods to get frictionless conversions.
Secondly, they’re specialised. They’re not looking to hook you into a 25-relationship by selling you a mortgage. They gain their customers by offering the best rates. Some hardly even advertise, because they know their rates speak for themselves – and thus they’ll be at the top rated on review websites.
Ultimately, money transfer companies know exactly who they’re competing against. It’s no secret anymore how poor highstreet banks’ exchange rates are. These highly intelligent fintech startups are ferociously out-competing them because not only can they provide a low-cost alternative, they’re even better prepared for accessibility.
The one thing one would hope a multi-billion dollar bank has over a startup is to make it more convenient, but we can’t even say this anymore. Money transfer companies, for the most part, have awesome mobile applications and incredibly efficient infrastructure.
The actual cost of using a Money Transfer Company
Money Transfer Companies often pick either to have an exchange margin or an exchange fee. Some have both, but you can find companies who simplify it into one for your benefit.
For example, TransferWise uses a flat fee amount of 0.5% (for UK customers, it differs depending on residency). Thus, you can forget about margins, you simply know you’re getting the interbank exchange rate, with a 0.5% fee. The above scenario of buying €1000 means that you only incur a £3.59 fee (less than €5 lost).