Currency Exchange and Solutions for Expats
Posted by The Expatriator
Information on exchanging currency from sterling and dollars to euros for expatriates living in Spain.
ATM Machines: This is the best way to get dollars from a foreign bank account to euros, as long as your bank doesn’t charge a ‘conversion fee’ for international use, and the ATM doesn’t charge a transaction fee. (ATMs from cajas tend to be less likely to charge a transaction fee than bank ATMs). With ATM machines, there is currently no spread between buy and sell rate. My bank in Canada charges $5 for each foreign withdrawal however.
Bank transfer: This is the best way if you need more money than an ATM machine can manage. See Banking.
Personal checks: In our experience, Spanish banks charge a minimum commission of .5% to transfer money via a foreign check, and it could take a few weeks. (Before you deposit the check, make a copy of it and the deposit form.)
Traveler’s checks: With a big spread between the buy and sell rate, this isn’t as good as ATM’s.
Credit cards: with travel insurance, purchasing insurance, no transaction fees and reasonable exchange rates, credit cards can be very effective for most purchases. You will have to show the cashier your passport or Spanish photo ID (if you have one) in order to use them.
Note: Since 1999, some banks began charging fees of 1% - 3% for use of a credit card on overseas transactions. Read your monthly statements!
Last updated 07 11 2007
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ROBI said:
Because many people may only have experience on changing a few hundred pounds to holiday money it is important that they understand things are different when they are changing 1,000s for buying houses or regularly transferring money (ie for pensions) There is a Commercial Exchange Rate which is a higher value - talk to your UK bank or check the web for currency exchange services - this could save you 1,000s
Overseas house hunters and pensioners often overlook the cost of sending money abroad. For each transaction, High Street banks can charge commission of 2% and transfer fees ranging from £20 to £40.
The foreign bank may also deduct 0.5% when it receives the funds. And if you need to make regular payments to cover a mortgage or to receive your pension, the bank may give you the tourist rate, which is 2% to 3% worse than the commercial rate.
So a monthly transfer of £800 could cost you up to £72 each time including fees, according to broker Foreign Currency Direct (FCD).
ROBI said:
currency xchange contd..
Specialist foreign exchange brokers such as FCD and HiFX do not charge commission and transfer fees. Moneycorp has transfer fees ranging from £4 for regular payments to £15 for lump sums. It also covers any charges the receiving bank makes.
The exchange rate is equally as important as the charges. According to HiFX, if you were buying €150,000 on the last Friday of August 2006, you would pay £4,932.22 more at NatWest compared with using its exchange rate. Specialist brokers also let you fix the rate for up to two years.
As always it pays to do research.