Information on exchange rates and currency transfers

There are many stories you may hear about bank charges in Spain, obtaining the best exchange rate and transferring money so I've written this post to give you the basics on transferring money quickly and efficiently and at the best exchange rates.

Exchange Rates - There are several ways to convert money and transfer it over to Tenerife. The most common would be to use a bank or building society or a specialist foreign exchange broker. In general the banks will rely on your naivety to the process which is why they don’t offer particularly good exchange rates, typically anything from 2-4% from the interbank market. This isn’t however true of all banks and there are a couple that offer very competitive rates but not always the best. The best option is to use a foreign exchange broker as they can be as competitive as they like to obtain your business meaning if you play it right you can achieve the best exchange rate.

Receiving Charges – Most Spanish banks typically charge a receiving fee for incoming amounts of Euros. They do it simply because they can get away with it and it’s an excellent way of them making additional revenue. The best way to avoid the receiving fee is to pay the charges at source i.e in the UK which works out a lot cheaper with your UK bank. A reputable fx broker will cover your charges for you but do remember to ask them if they do and don’t just assume they will as you may get a nasty surprise when your funds turn up short in your Spanish account.

Transferring money – This should typically be a same day transfer or next day transfer, nearly all fx brokers use a swift payment system which once they have your Sterling they should credit the Euros into the destination account within 24 hours. On average most banks take between 3-5 days to make the transfer because of their procedures and also the fact that they are holding onto your funds for a few more days getting the benefit of the interest while you are not.

Achieving the best rate – There are many ways to do this and one of the easiest ways is timing. From experience a lot of people transferring funds overseas leave it until the last minute. You may still achieve the best rate for the day from your broker but not necessarily the best rate for the past few weeks or month. Give yourself plenty of time and as soon as you have your funds available speak to your fx broker and get them to watch the rate for you and inform you when the market moves in your favour, that’s just one of the things that they are there for. The obvious advantage is you have a better chance of achieving the best rate if you utilise the time you have properly. Unfortunately you don’t always have the time and sometimes when your funds become available you only have a short amount of time to make the transfer, some brokers will give you a better rate than your bank but it’s not necessarily the best rate that is out there. A good idea can be to use two or three brokers and get them to quote against each other to give you the best rate. The downside is you can do a lot of chasing backwards and forwards and it can become time consuming. The easiest way is to use the internet on sites like www.oanda.com and www.bloomberg.com were you can get information on the current exchange rates. Always remember you won’t be able to achieve the levels shown on these sites as they generally show interbank prices but you should only come up slightly below these figures. If you quote is up to a cent or over from these rates then you’re definitely not getting the best deal.

Charges – You shouldn’t receive any charges whatsoever when using a broker. The rate should be commission free and if you are transferring amounts of £5000 or over you shouldn’t pay a fee to wire the money. If you transfer below the £5000 mark the average transfer cost is £10-£15 pounds from an fx broker but that should be your only charge.

I hope this is useful to some of you. If you want to check how good the rate you are getting is then please feel free to reply to this post and I’ll let you know what the best rate available is and what you should be getting for your money. Also the same applies if you have any other questions regarding this subject that I haven’t covered.