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Millions of people in the UK send money to Spain every year – to purchase property, for example, for the maintenance of a holiday home, to support business interests or simply to send cash to family and friends.
But with high charges and often poor exchange rates for currency conversion from pound Sterling to euros, it pays to find the most cost-effective way to transfer your funds. Our guide looks at the different options to help you with your decision about the best way to send money to Spain.
Is the pound strong against the euro?
In recent years the pound has been fairly stable in value against the euro, with £1 worth around 1.1 to 1.2 euros in the currency markets. Sterling’s 10-year high against the euro was in 2015 when £1 was worth about 1.4 euros.
When the pound is strong against the euro this is good for tourists and holidaymakers in Europe as their spending money goes much further when buying currency. But conversely when £1 falls closer to being worth just one euro it is more expensive for Brits to visit Europe (their hard-earned pounds buy less euros) and when sending money to the continent.
What are the different options for sending money to Spain?
There are a range of options when it comes to sending money to Spain. Each will have certain pros and cons attached. The method that’s right for you will depend on your own circumstances and the nature of your specific money transfer, for example how much you want to send to Spain and how quickly you need to get the money there. The main options include:
High street bank
Sending money to Spain using your UK bank account is quick, easy and convenient, as well as safe, and you’ll usually be able to complete the transaction online. But the major disadvantage is the cost. You’re unlikely to get the most competitive exchange rates from your bank and you’ll also pay fees on top. Most banks will impose a maximum limit on the amount you can send internationally per day, although this is likely to be a fairly high limit.
Multi-currency bank account
A multi-currency or international bank account offered by a UK bank, such as Barclays, HSBC and Santander, might suit those who need to regularly send euros to Spain, because they have a second home or a business there, for example. British ex-pats living in Spain. who have investments and pensions paid in the UK, may also prefer a multi-currency account.
With this type of account you can transfer funds (and often very large amounts) safely and set up recurring payments in euros. But many accounts of this type are targeted at high net worth individuals so they may have minimum income criteria, for example. These accounts often charge a monthly or annual fee, with extra fees on top for currency exchange so always read the terms and conditions to check it is the best option for you.
Digital money transfer
Digital and app-based financial providers, such as Revolut and Wise, can offer a lower cost way to send money to Spain. They will typically offer more competitive exchange rates and lower fees than a traditional bank or high street bank, for example.
These challenger providers target the mass market and can be cost effective for day to day currency transactions as well as larger transfers. It means they’re also useful for holidaymakers as they offer a quick, convenient and low cost way to transfer currency and spend overseas.
Revolut and Wise both offer instant, fee-free transfers, up to certain limits, using the ‘real’ or mid-market rate. Revolut has monthly subscription accounts that offer even better deals for money transfer as well as other travel perks. But as neither Revolut or Wise have a banking licence in the UK your money isn’t protected under the Financial Services Compensation Scheme.
Starling Bank is another challenger provider who offers competitive international money transfer. It charges a flat rate 0.4% on currency transfers, plus a delivery fee. You can pay an extra £5.50 for ‘priority’ SWIFT delivery.
Currency brokers
Specialist currency brokers (sometimes called FX brokers) offer competitive exchange rates and fees – these are likely to be better than your high street bank. Typically online or app-based FX brokers enable you to send small or large sums quickly to Spain. Some companies will have a maximum limit on transfers.
There are lots of currency brokers to choose from so do your research and ensure you use a reliable, FCA authorised company with competitive currency rates and low charges. If a broker is authorised by the regulator then client money is required to be ringfenced from the finances of the business, which means it is protected should the firm go bust.
Most online brokers will give you a quote for your specific transfer on their website so you can compare the costs and rates with other companies before going ahead. While a company might advertise ‘no fees’ or ‘no commission’, they could be clawing back those costs through a less competitive currency exchange rate.
Among the FCA authorised FX brokers are HiFX, Moneycorp, TorFX, IG, Capital.com, City Index and Pepperstone, for example. To use an online broker you’ll have to register and set up a payment option, typically a credit or debit card, to make your payment.
High street money transfer service
Convenient and a popular way to send cash, particularly if you don’t have a UK bank account, high street services such as Moneygram and Western Union have some advantages but they are not a cheap way to send money to Spain.
They work well if the sender or recipient does not have a bank account to receive the funds, as they can simply collect the cash from a designated outlet in Spain. Both Moneygram and Western Union has a large network of physical premises or places across Spain where money can be collected in person.
However, fees for Western Union or Moneygram can be high, exchange rates uncompetitive, and maximum cash transfer limits low.
Paypal
PayPal is a convenient option if both you and the recipient in Spain have PayPal accounts. But generally PayPal is an expensive way to send money abroad as, unfortunately, the foreign conversion fees tend to be among the highest on the market.
How long will it take for my money to clear?
This depends on which currency transfer service you use. Bank, digital transfers and currency broker services can usually get currency to its intended recipient the same day, although the fees and charges can sometimes be high for quick transfers.
How much money can I send to Spain?
Many banks and currency transfer services will have a maximum daily or per transaction limit. If you need to transfer a large sum, check with different providers to see what might best fit your needs, remembering to take into account the safety and security of the transaction. There is also likely to be extra checks and ID requirements if you’re planning to send a large sum.
Similarly there can be less choice of options if you only want to send a small amount of currency, such as a 20 euros to a young family member in Spain, for example. The charges can also be disproportionately high for small transactions, so again shop around to see which method is most cost effective.
Is my money safe?
While the big UK banks that are fully regulated by the Financial Conduct Authority will give customers protection under the Financial Services Compensation Scheme (up to £85,000 per person per banking institution), other currency providers may not offer FSCS protection.
Many currency exchange companies will offer their own money safety net scheme, but it may not be as generous or robust as the FSCS. It is up to individuals to decide what level of financial protection they’re comfortable with.
FCA authorised FX broker firms are obliged to keep clients’ money separate from the company’s own funds – this will protect you if the firm goes bust. But if a company is just on the FCA register (and not authorised or regulated), then customers’ cash could theoretically be lost if the company went into administration.
Can I lock in an exchange rate ahead of the transfer?
Yes, this is possible with a forward contract. If you feel the current exchange rate is strong you can plan ahead by locking it in, effectively fixing the exchange rate in the forward contract, but you’ll make the currency transfer at a future date.
This can give some certainty over a large payment, for example, such as buying a property. By using a forward contract you can fix the property price based on the exchange rate at the time you have your offer accepted. This could save you a lot of money if the value of the pound weakens against the euro before the transaction goes through.
There is the risk that the pound will strengthen in value so it is a gamble, but the forward contract can give peace of mind against a worsening exchange rate.
