Are Credit Card Fees Higher in Spain? What Expats Should Know
When most of us buy property in a foreign country, it’s with the idea of spending some time there. If you’ve just bought property in Spain or are thinking about moving to the country, one of the most important things to think about is your finances (as well as all the delicious food you’ll eat, people you’ll meet and sunshine you’ll enjoy).
The banking system in Spain differs somewhat from other countries and it’s essential you fully understand it to make sure you’re not paying any extra fees. Banking in Spain is often said to be ‘free’ but many people encounter hidden and unexpected costs.
So what’s the deal with credit cards for expats in Spain? Can you get them? Are fees higher? And what do you need to be aware of?
In this article, we’re going to take you through the major points regarding getting and using a credit card in Spain and what you need to look out for.
The Banking System in Spain
There are several banks in Spain from which expats can choose. There are private, state-owned, cooperative, international and several mobile banks in the country which have different benefits depending on your situation.
The system is fully integrated with the international financial market and expats can choose from different types of accounts depending on their needs. Not all types of accounts will be offered to non-residents, so it’s worth bearing this in mind when heading to the bank.
Opening a Bank Account in Spain
The first step to getting a credit card in Spain is opening a bank account. If you’re thinking about buying property in Spain, you’ll have to open a bank account as all transactions relating to the property will need to go through a Spanish account.
The first thing to do when preparing to open a bank account in Spain is to ensure you have all the required documents. You’ll need a valid form of ID, proof of long-term residency (if required) and a NIE (Número de Identidad de Extranjero).
You can then make an appointment in your local branch and they’ll set you up with a bank account. At this point, you need to be aware of the kind of bank account you want and which will be most beneficial for your circumstances (not only what the bank tells you). Ask about any fees, whether it’s possible to get a credit card and what you have to pay for it and how transferring money works. It can often be expensive to transfer funds from other currencies to a Spanish euro account, so it’s worth taking into consideration.
If you’re a non-resident of Spain, meaning you spend fewer than 180 days in the country, don’t have an income there and don’t have a spouse or child residing in Spain, the bank is unlikely to give you a credit card. An exception might be if you’re taking out a mortgage with them. In this case, having a credit card for a minimum length of time could be part of your mortgage conditions.
Is Previous Credit Rating Important in Spain?
Even if you’re a resident of Spain, it may take a little while to get a credit card. You’ll need to prove you have a steady income and, in some cases, that you can pay regular outgoings.
Generally speaking, the good or bad credit score you create in one country, is left in that country. So, even if you have a great credit rating in your home country, that won’t mean much to a Spanish bank. Setting up utilities is a great way to show your score and some other banks may ask for recent statements from your current bank. Increasing your credit score is the best way to get a credit card in Spain.
Potential Credit Card Fees to Be Aware of in Spain
Whatever country you live in, it’s important to check the small print when you take out a credit card. There are a couple of different ways you might be caught off guard, and knowing about them can help you avoid potential financial mistakes in the future.
Annual Fee
Some banks charge a fee just for having a credit card (some even charge for a debit card too). They may also require you to spend a minimum amount monthly or annually or carry out a minimum amount of transactions. These regulations may also only come into effect after the first year.
At the end of the day, it’s important to balance the rewards and benefits of a credit card compared to the possible fees.
These ‘hidden’ fees are why credit cards can feel more expensive in Spain, especially for expats. Many end up paying fees they were unaware of or for the actual card itself.
Foreign Transaction Fees
Another thing that can make credit card fees high in Spain is foreign transaction fees. Transaction fees are there to cover the cost of converting currencies. So, for example, if you use your Spanish credit card for an online payment in a different currency, you’ll be charged extra.
Furthermore, you’re likely to be charged fees for transferring money from a non-euro account to your euro account connected to your credit card. At Bueno, we’ve partnered with Currencies Direct to ensure all our clients get the best exchange rate with no extra transaction fees!
Can You Use a Foreign Credit Card in Spain?
If you’re a non-resident in the country, you’ll probably find it difficult to get a credit card from the bank. But, you can still use your home credit card. You’ll likely incur some fees though, such as foreign transaction fees and fees to withdraw money from an ATM.
You may also be offered a dynamic currency conversion (DCC) which is an optional service. This allows you to be charged in pounds (or another non-euro currency) which makes it easier for you to know exactly how much you’re spending. Be wary, however, as the currency conversion rate and fees can be high.
Do You Need a Credit Card in Spain?
Credit cards are widely accepted in Spain but you don’t actually need one. In fact, they can work out pretty expensive if you’re unaware of the fees and added costs you might be expected to pay.
When you open a bank account with Bueno, not only will we help you manage your property finances and needs, but you’ll also receive a debit card that you can use all over Spain. For just €99 a year, you’ll have an expert work with you to seamlessly transfer your finances and advise on the best way to use your money in Spain. There are no hidden fees and you always get the best exchange rate.
Contact the team at Bueno to open your Spanish IBAN account today and enjoy the benefits of property financials made simple.
Note that this article is general and is shared as information. Property, tax, finance and other legal topics are personal and can vary not only from person to person but between the different regions of Spain. We recommend that you seek professional guidance if you need advice on matters covered in this article.