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LIFE IN SPAIN

Is Spain going cashless?

Card payments are on the rise in Spain, but many Spaniards still use cash in their day-to-day life. Scandinavian countries are heading in the digital direction, but could Spain ever go cashless?

Is Spain going cashless?
Photo: Pixabay.

¿Con tarjeta? is something you asked a lot in Spanish shops and bars, and according to recent statistics, it’s on the up.

Card payments increased by 23.56 percent in Spain during the second quarter of 2022, according to data from the Bank of Spain.

Card payment transactions have been steadily rising in Spain since the start of COVID-19 pandemic because physical money – especially coins – were considered unsanitary.

This is part of the reason why both the rise in the number of card transactions (23.56 percent) and in the amount paid for on card (25.05 percent) have reached record highs.

The number of cards in circulation has also risen by 1.44 percent to 87.9 million, meaning there are almost double the amount of bank cards than there are people in Spain.

In perhaps what might allude to the current cost of living crisis, credit cards have increased by 7.1 percent, and debit cards fallen by 2.95 percent. 

Cash withdrawals also increased by 2.37 percent in the second quarter, with 170.8 million ATM withdrawals across Spain.

Still, that figure is far lower than the pre-pandemic figure, when a staggering 900 million cash withdrawal operations were registered in 2019.

Despite the underlying trend towards digital payment, experts believe the shock of inflation and cost of living crisis could cause a short-term uptick in cash payments in Spain as a means of controlling spending.

According to Helena Tejero, a Director from Banco de España, using cash is “a good way to keep the money that comes out of the wallet at bay” and it could become more common as Spaniards tighten their belts in the face of inflation.

READ ALSO: How Spain’s cost of living increase is worse than in France and Germany

Cash only

Card payments may be on the rise, but for many Spaniards cash is still a daily part of their lives.

According to Banco de España, 64 percent of purchases in Spain are paid for in cash.

Around 1 million people in Spain are, according to a Study of Consumer Payment Attitudes in the EuroZone, living in “financial exclusion” where they can only access cash.

This is most common in rural Spain where many villages and hamlets.

The number of ATMs in Spain has also been falling since 2008. According to the Banco de España, there are now 58.4 percent fewer cash points than in 2008, although Spain is still the country with the second highest proportion of ATMs per person in the EuroZone, with 58 cash points for every 100,000 inhabitants.

READ ALSO: Spanish banks’ ATMs are disappearing or being replaced

Cashless future?

Though card payments are rising in Spain, it is still a long way off countries such as Sweden and Norway, which are all but cash-free societies.

READ ALSO: Reader’s story: How I adapted to Sweden’s cashless society

In Sweden card payments (whether its card or mobile phone) make up more than 90 percent of all transactions in the Scandinavian countries. Next-door in Norway, just 3 percent of purchases are made with cash.

Financial experts point to some of the benefits of transitioning to a cashless society, including a reduction in crime as there is physically less money to steal, but also the creation of a more robust and far-reaching digital paper trail, which makes financial crimes such as money laundering more difficult.

On the other hand, many people feel moving away from cash comes with its downsides. For many bank cards and online banking is a steep technological learning curve, it leaves you with no other option in the case of technical issues and, as the Banco de España suggested, for some people the lack of physical cash can make controlling spending more difficult. 

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MONEY

What’s the maximum amount you should have in a current bank account in Spain?

Most people in Spain only have one bank account and use it for all different purposes, but what happens when you manage to save up a bit? Here's the official advice on Spanish savings accounts.

What’s the maximum amount you should have in a current bank account in Spain?

Our bank accounts are used for many day-to-day activities such as paying bills, receiving paychecks and buying groceries, but is there a maximum amount of money you should have in your account at one time? And what should you do if you go over this amount?

While there isn’t an official maximum amount that you should have in your current account, the Organisation of Users and Consumers (OCU) advises that your current account only be used for certain amounts and everything over that should be put into different accounts.

According to the OCU, in your main bank account, where you receive your salary, pension or other significant payments, you should have a maximum of three months of your salary.

So for example, if you earn the minimum wage of €1,000 per month in Spain, then the maximum you should have in your current account is €3,000.

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

They advise that you don’t want to go too much under this amount either because you want to make sure you have accessible cash to use when you need it, as well as for possible emergencies. They also suggest checking your account balance regularly to make sure you don’t go into the red and don’t incur extra bank fees.

But equally, you don’t want to have too much in your account and keep all your savings in one place for security reasons.

Savings accounts

The OCU recommends opening a savings account or cuenta ahorro for any amounts greater than three times your salary, rather than keeping it all together in your current account.

Most banks have various types of savings accounts with different interest rates and different fixed terms where you’ll have to keep your money in for a certain amount of time.

For money you’ll need in the short term, but not right away, the OCU suggests putting it into a fixed-rate savings account (cuenta ahorro plazo fijo) for 12 months, but warn that if you need the money before the year is out then you may have to pay fines take it out.

For money that you know you won’t need in the short term, the OCU advises putting it into a long-term investment or a fixed-rate savings account for longer than one year. “For amounts that you don’t plan on touching in the next five or ten years, it’s advisable to make a little profit on it, however, keep in mind there may be seasons in which you suffer some losses too”, they said.

Savings over €100,000

For anyone that has savings over €100,000 in any type of account, it’s important to distribute the amount over various accounts warn the OCU.

This is because during an economic collapse or bank failure, you will not be covered by the EU Deposit Guarantee Fund, which is only able to guarantee the repayment of your money up to €100,000.

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