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BANKING

Ask the expert: What are the best UK banks for Brits in Spain?

An increasing number of British high street banks are closing the accounts of their customers who are living in Spain - so what are the best options if you still need a UK account?

What are the best UK banks for Brits in Spain
Since Brexit, banks need extra licences to operate in EU countries and many of them are just deciding that it’s not worth it. So what are your alternatives if you're a Brit living in Spain? Photo: Adrian Dennis/AFP

The great majority of Brits who live in Spain have a Spanish bank account – but many also have accounts in the UK to receive income in the form of pensions, property rentals or work done in the UK, or to hold savings or pay bills in the UK.

Many UK pension providers will only pay into a UK account, while direct debits including mortgage payments can often only be taken from a UK account.

Having a UK account is therefore vital to many, so we asked Ryan Frost, private client adviser at Harrison Brook, for some advice.

UK high street banks

Most Brits who move to Spain will have an account with a UK high street bank, and in many cases have had the same account for decades. But increasingly British high street banks are telling their customers living in the EU that they will no longer serve them.

The latest bank to do this is Barclays, which has announced that it will close all current and savings accounts of its customers who live in Spain and other EU or EEA countries.

Most other high street banks will not allow you to open a new account without being resident in the UK.

For those who already have an account with a bank other than Barclays, the picture is mixed.

Some banks have already asked customers to close their accounts while others say they have no such plans at present – but account closures is a pattern that has been seen across the EU since Brexit, when British banks began to need separate banking licences for each EU country they operate in.

Ryan said: “Many people have had accounts with, for example, Barclays for 50 or 60 years so are very loyal to their account and used to it, and it’s a surprise to be suddenly told your account is being shut down.

“But since Brexit banks need extra licences to operate in EU countries and many of them are just deciding that it’s not worth it.”

So what are the alternatives?

Expat/international accounts

Many UK high street banks offer ‘expat accounts’ or ‘international accounts’ aimed at UK nationals who live outside the UK.

The major drawback is the cost; many accounts have a minimum deposit level – £20,000 – £40,000 is common – or stipulate a minimum annual income, so they may not be suitable for pensioners, people on a low income or people who just want to use their account for a few basic functions while keeping most of their income/assets in their Spanish account.

Most expat/international accounts also charge a monthly fee and some charge transfer fees on top of that. 

Ryan said: “These are often operated by the bank’s international arm eg HSBC International which is based in Jersey, and they’re really aimed at high-value, working, transient expat types, so they’re not really designed for UK pensioners who are living in Spain, for instance.

“They will give you a UK account number that you can use for pensions, direct debits etc but they often charge high fees.”

What are the best UK banks for Brits in Spain

There’s a tendency to assume that internet-only banks are less secure, which isn’t necessarily the case, but if there are problems it can be harder to get redress. Photo: Mircea/Pixabay

Internet banks 

The last few years has seen a proliferation of new internet banks, which offer online-only services and operate across Europe.

The advantage of these is that you can sign up with a Spanish address and then carry out transactions in the UK or Spain using Pounds sterling or Euro.

Many people use internet bank accounts when they first move to Spain before they set up Spanish accounts, but they’re also increasingly being used to carry out UK transactions as they can offer a UK account number and Sort code – vital for certain types of transactions.

The disadvantage for some people is their lack of a physical presence so in case of a question or a problem contact can only be made by phone or – more usually – via email or chatbot. Most internet banks also do not issue cheque books or accept queues, which can be a problem for some customers.

Ryan said: “Digital banks are generally where we advise our clients to look, for example Wise (formerly the money-transfer service Transferwise, now set up as a bank), Revolut or Starling. 

“These are new challengers on the banking scene and the advantage for Brits living in Spain is that you can set up both a Pounds sterling and a Euro account and you will get both a GB sort code/IBAN – which will allow you to set up direct debits or receive a UK pension – and an EU account number and IBAN, usually through Belgium.

“It means you can use the account for business in the UK, but also transfer money quickly and easily to/from Spain. In fact for UK pensioners this might give them a better deal on exchange rates than receiving a pension into a UK account in pounds and then spending in Euros in Spain.”

There’s a tendency to assume that internet-only banks are less secure, which isn’t necessarily the case, but if there are problems it can be harder to get redress.

Ryan said: “The thing you need to look for is whether the bank has a UK banking licence. Some of them only have an e-money licence – you can still use these accounts but having the UK banking licence means you have the same level of security and fraud prevention as any UK high street bank.”

Spanish banks

Most Brits living in Spain already have a Spanish account for daily life, but can you use this for all your financial affairs?

It depends on your situation, but some UK-based transactions require a UK account.

For example, many UK pension providers will only pay into a UK account and if you have property in the UK you will probably need to set up direct debits for mortgage payments, utilities, council tax etc and most of these can only be done with a UK account.

READ MORE:

Keeping a UK address

Many UK residents in Spain get around the problem by using a ‘care of’ address in the UK in order to retain their British bank account – usually either the address of a property that they own or the home of a relative.

Whether this is allowed or not is a bit of a grey area.

Ryan said: “This is a bit complicated because there’s a big difference between having UK residency and using a UK address such as the address of property you own or a family member’s address.

“If you try to open a new account with a high street they will ask you whether you are a resident in the UK.

“For people with existing accounts it’s technically OK to use a UK address as a contact address, but as banks share more and more information sooner or later they will probably ask you whether you are a UK tax resident, at which point you will have to tell them that you are resident in Spain.”

Ryan Frost is a private client adviser at Harrison Brook, which specialises in offering financial and pensions advice to expats in Spain, France and a number of other countries.

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For members

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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