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Five traps to avoid when transferring money to and from the UK

Navigating international finances can be complicated, no matter how seasoned you are at transferring funds overseas. Knowing the common pitfalls of sending money abroad can save you a lot of trouble (and hopefully some money too).

Five traps to avoid when transferring money to and from the UK
Photo: tbtb/Depositphotos

The changeable market keeps most expats on their toes with exchange rates, fees and timings. Whether you’re sending money to friends or family in far-flung places or repatriating money back to the UK, you should know the most common mistakes people make when transferring money internationally.

That’s why we’ve collaborated with international payments specialist Hargreaves Lansdown to help you avoid falling into these traps.

Stop losing money on international transfer fees with Hargreaves Lansdown

1. Forgetting to check the exchange rates

Whether you’re a small business or an individual, chances are you’ve used your bank to make international currency exchanges and transfers. After all, this is the most obvious option. But it’s also often the most expensive option as you could be paying well above the odds.

Even the smallest change in the exchange rate offered by your provider could cost you hundreds of pounds (possibly thousands). So it’s important to shop around for the best rate.

Save as much money as possible by looking at currency specialists, such as Hargreaves Lansdown, as the exchange rates they offer are often better than the banks’. This is especially beneficial when transferring large amounts of currency for more expensive purchases such as property.

2. Paying transfer fees

Although still a common practice, it is unnecessary to fork out extra for high bank transfer fees. Incurring a flat fee can sting if you’re sending relatively small sums across country borders. Some currency specialists offer individuals or small businesses regular payment plans for recurring payments which help to keep costs down.

There are providers, like Hargreaves Lansdown’s currency service, that offer low or no transfer fees. This can save you up to £30 on each and every transaction, which really adds up if you are making multiple transfers or paying invoices. 

3. Making insecure payments

Not all currency specialists are created equal, some are more secure than others. Make sure you’re protected financially from the moment the money leaves your account to when it reaches its destination account.

The terminology can confuse the most clued-up of people but there is a huge difference between whether a firm is authorised or registered with the Financial Conduct Authority (FCA).

Hargreaves Lansdown’s Currency Service is an FCA-authorised service, which in practice means they are legally bound to keep your money transfers separate from their company funds and provide financial safeguards proving their stability.

Whilst registered firms may choose to safeguard your money, they aren’t required to do so. And they don’t have to provide the FCA with as much detail about their business, so the regulator can’t check on their financial health.

4. Leaving it until the last minute

Don’t leave yourself at the mercy of the exchange rate on the day you transfer. If time allows, savvy savers should plan their transfer as far ahead as possible. This gives you more flexibility as you’ll have the option to fix an exchange rate for the future, or target a specific rate. 

If you’re fixing an exchange rate you’ll have the peace of mind to know what a future purchase will cost you, regardless of whether rates move up or down. Targeting a specific rate will enable you to make the most of improvements to rates, but doesn’t offer protection if rates move against you. Both of these options are only available if you plan ahead.

Bypass bad exchange rates with Hargreaves Lansdown

5. Not keeping up to date on the latest news

You wouldn’t expect to be well-versed in current events without consuming the news. The same goes for your finances. Without monitoring the latest market developments it leaves you vulnerable to making the wrong decisions in the fast-moving world of finance.

Stay on top of trends and currency movements and how to best position yourself to take advantage of the highs and avoid the lows. Hargreaves Lansdown offers a free weekly report on their website and via email, making sure you get the most from your payments. Please note, their service does not provide personal advice, but can provide information for you to decide what’s right for you. If you’re unsure please seek advice.

Download your free guide to international currency transfers here.

This article was produced by The Local Creative Studio and sponsored by Hargreaves Lansdown July 2018

The Hargreaves Lansdown Currency Service is a trading name of Hargreaves Lansdown Asset Management Ltd. One College Square South, Anchor Road, Bristol. BS1 5HL, authorised and regulated by the Financial Conduct Authority as a Payment Institution under the Payment Services Regulations 2017, see www.fca.org.uk. FCA Register number 115248. Registered in England and Wales. Registration number: 1896481.

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MONEY

Rising inflation in Spain: Six cost-cutting ways to fight it

With everything from food to electricity becoming more expensive, people in Spain will spend on average €1,100 more on daily costs in 2022 than the previous year. Here are some top tips for tightening your belt as inflation bites.

Rising inflation in Spain: Six cost-cutting ways to fight it

Rising inflation is a problem affecting economies the world over. Economists and politicians are proposing ways to slow inflation, to cut taxes, and to soften the impact on consumers.

In Spain, things are no different.

In late July, Spain’s National Statistics Institute (INE) reported that the Consumer Price Index (CPI) – the index used to measure inflation – rose by 10.8 percent in July, up from 10.2 percent in June and the fastest rate since September 1984, a 38 year high.

READ ALSO: Spain’s July inflation rate reaches new 38-year high

The prices of anything and everything from fruit and eggs to olive oil and petrol have jumped up, and the increases have been particularly pronounced in fuel and utility costs due to the double-pronged pressures of inflation combined with global fuel prices rising as a byproduct of Russia’s invasion of Ukraine.

Electricity costs have been reaching historic highs over the past year, with prices on Wednesday, July 20th, 124 percent higher than the same time in 2021, according to recent data from OMIE, operator of the Iberian energy market.

According to a survey by Sigma Dos, 43 percent of Spaniards have been forced to cancel, shorten, or change their holiday plans for the months of July and August.

And then, on top of all that, the European Central Bank (ECB) announced last week that it is raising interest rates at the end of July, in order to try and slow inflation, which will have a direct impact on consumers paying back loans and mortgages.

READ ALSO: How will rising interest rates affect my life in Spain?

According to the Family Budget Survey (EPF) conducted by the INE, the average Spanish family’s spending on food has increased by €620 year-on-year.

All in all, the perfect storm of pressures of family budgets has hit hard in Spain.

That in mind, The Local has put together a list of tips to help you fight inflation and save some money in Spain this summer.

1. Natural light

Spain is well known as one of the sunniest countries on the planet. Not only does its roughly 15 hours of light a day make it hot during the summer, but it also means there’s an abundance of natural light.

With electricity bills through the roof, an easy way to save on energy is to keep the lights off during the day and take advantage of the light by keeping curtains and blinds open.

It’s worth remembering, of course, that many properties in Spain are built to withstand the scorching summer temperatures, and, as a result, may have rooms that are dark and gloomy in order to keep the temperature down.

Though that’s good for the heat, it’s not ideal for energy savings.

If that’s the case, and you really need to put the lights on during the day, consider switching to LED bulbs, since they can save as much as 80 percent on the bill compared to traditional bulbs, and they last much longer – years longer, in some cases.

2. Regulate the aircon 

Keeping the curtains and blinds open may be good for saving on electricity bills, but what about the heat?

With Spain in the midst of record-breaking summer heatwaves, during the hottest months Spaniards are dependent on their fans and air-conditioner units.

Regulating your use of air-con can help you save on bills. The ideal temperature should be between 24C and 26C and remember that for each degrees you drop the temperature, the energy output goes up by around 8 percent.

READ ALSO: Ceiling fan vs air con in Spain: Which offers the better price-coolness ratio

At night, many Spaniards opt to open the windows and keep the room ventilated as opposed to falling asleep with the aircon or fan on and racking up the bill.

READ ALSO: Spain to cut electricity tax by half to ease inflation pain

3. Shop around

An age old saving trick: shop around. 

Food prices in Spain have jumped over the course of 2022.

According to INE figures, in June the prices of 46 household products were more expensive and above the overall CPI rate of 10.2 percent.

These include eggs (23.9 percent more expensive); butter (23.1 percent); whole milk (21.1 percent); fresh fruit (19.3 percent); baby food (16.7 percent), poultry meat (14.1 percent), bread (13.9 percent); beef (13.1 percent) and or cheese (10.5 percent).

Being more creative with your shopping can help save on prices.

Fruit and veg shops (fruterías) are often far cheaper per kilo than the chain supermarkets, as are discount shops like Lidl and other local supermarkets. Consider going to the butcher (la carnicería) to save on meat.

Before going shopping, look online and compare prices between the different supermarkets. Make a list, and consider going for the supermarket’s line of own-brand products as opposed to more expensive brands.

As a famous British supermarket chain always reminds us – every little helps

4. Loyalty cards

That in mind, another way to soften the impact of inflation is to take advantage of promotional offers and loyalty cards. Spanish supermarkets often have 2×1 or 3×2 promotions, discounts, and savings when buying in bulk – particularly on dairy and poultry products. 

Consider getting loyalty cards at your local supermarket to make savings, and even at clothing stores, hairdressers and restaurants if they offer them. Loyalty cards not only offer discounts; you can often accrue a free service or product – shopping delivery, haircut, meal – by giving them repeat business.

5. Washing machine – know the peak and off-peak hours

With electricity bills historically high, Spain suffering heatwaves throughout the summer, and all this talk of fans and air-conditioning and keeping rooms ventilated, knowing the peak and off-peak electricity tariffs in Spain is an essential way to make savings and help right inflation.

The washing machine is well known as an appliance that uses a lot of electricity and takes a long time. With bills skyrocketing, and the price of electricity on the wholesale market exceeding €200 per megawatt hour (MWh), rising to €300/MWh during peak hours of the day, many Spaniards have taken to using their washing machines at times of the day that offer the cheaper tariffs.

READ ALSO: Inflation hack: what time should I use the washing machine in Spain?

From Monday to Friday, the cheapest time to use the washing machine is during the flat and off-peak slots. It may not be ideal, but by putting the washing machine on during the night, from 00:00 to 8:00 (off-peak), or in the morning, from 8:00 to 10:00 (flat), the kWh price can be significantly lower than during peak hour.

Similarly, another good time to use the washing machine, and perhaps the most convenient without being too costly, is after lunch from 2:00 p.m. to 6:00 p.m during another flat-rate session.

Fortunately, weekends and holidays correspond uninterruptedly with the off-peak time slot and there is, as a result, very little variation in prices depending on the time of day you use the machine, so you can wash your clothes at the weekend with worrying about racking up a huge bill.

Peak and off-peak times: 

Horas punta – peak hours (most expensive): 10-14:00h and 18-22:00h on weekdays.

Horas valle – off-peak (cheapest): 00-8:00h on weekdays; 24h on weekends and national holidays.

Horas llana flat rate (intermediate tariff): From 8-10h14-18h and 22-24h on weekdays.

6. Electronic devices

Although the pandemic jump started the working from home trend (teletrabajo in Spanish) and has many advantages, in the context of record-high inflation and utilities bills, it also has its negatives, like increased bills because you’re continuously using electrical devices such as computers.

If you work from home, consider using LCD screens – which save, on average, up to 37 percent more energy than normal screens – and try not to leave devices on standby.

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