Understanding the Spanish bank system

Last updated on May 30th, 2024 at 12:27 pm.

Whether you have a non-resident or a resident bank account in Spain, you will notice that there are differences between your Spanish bank and the banking system you’ve been used to. Understanding the Spanish bank system is essential for making informed decisions. In this article we outline some of the main features that you can expect and learn a little about the alternatives.

Banks are the same everywhere, aren’t they? Of course the principles are the same but you’re wrong in thinking that your Spanish bank is going to provide exactly the same service and terms and conditions as your bank back home. Of course, it depends on which country you came from. But there are some features and ways of working that could take you by surprise if you weren’t prepared for them.

Resident and non-resident

To hold a resident bank account you will need to show that you have the correct documents to show that you reside in Spain.

You can also hold a bank account even if you do not live here. For a non-resident account, you will have to provide a proof of income, an NIE number and your passport. These documents will need to be re-presented to the bank upon their request, usually once every two years.

Of course, depending on your residency status you can expect to receive a different type of service and account.

Spanish bank system: Credit cards

You can generally request either a debit card or credit card from your Spanish bank. As expected, Debit card payments go through straight away, while Credit cards delay payment until the end of the month. This allows you to either pay it off whole without accruing interest or with interest if paid off over time.

The maximum you can spend on a credit card and the payback arrangements may be more limited than you might be used to. This prevents you from building up a large credit card debt which can be seen as an advantage. It is still useful as a payment option and at least you won’t be paying out huge amounts of interest over years.

Spanish bank system: Embargoes

This is an unusual concept for many foreigners who consider that their bank account is their own private affair that cannot be touched. In most cases this is true, unless you owe money to the Spanish Authorities. If friendlier requests for overdue taxes, unattended fines or outstanding speeding tickets are ignored, you may find the authorities freezing and then collecting the amount owed directly from your account.

Spanish bank system: Charges

Do not expect free banking from the high street banks in Spain. There is usually a standing maintenance fee on the account, annual card fees as well as charges on certain transactions, especially those performed “in office” as opposed to online.

If you are regularly receiving money from another country, you might want to consider transferring funds through specialist exchange companies such as Currencies Direct. These exchange companies can help circumvent the banks charges when sending and receiving funds between different currencies.

Branching out

There are many other services that the banks in Spain will try to sell you. One of the leading pitches is that of insurance. If you already have an existing insurer, be careful and check what the bank is offering. It should have the same terms and conditions as the insurance you already have. They can be very persuasive and very hard to get out of if you ever wish to try another insurer.

You may also be able to rent or lease cars, take out a pension plan and arrange a loan or mortgage – depending on your circumstances. Just be careful that what you sign up for is what you understand it to be. Banks have been found guilty in the past for not making all the terms and conditions clear to their customers. Most of this practice has been corrected but as a foreigner you can be vulnerable and should check out the offer first and make comparisons.

Neo banks

Neo banks are becoming increasingly popular. These banks do not have physical branches delivering customer services. All business is done digitally and popular examples include Wise and Revolut. These banks are quick and easy to join and usually offer their services for less than the high street banks.

However, there are disadvantages too. There are actions that you can take with a traditional Spanish bank that won’t be possible with a neo bank. Depending on who you choose, your IBAN account number may not be a Spanish one. Also, as there are no ATMs specific to your bank – if you are able to withdraw cash it is likely you will pay more for this service. However, the feeling of being more ‘in charge’ of your bank account and reduced fees makes them an attractive option.

Lines of communication. It is fair to say that all banks – whether Neo or not – have become more distant to us. With less branches and more online use we can find ourselves feeling out of touch. However, most banks will offer a degree of personal service. You should have a contact person that you can message if you have a problem. Do keep your bank informed if there is an emerging issue. In most cases, they will provide advice and may be able to offer some solutions.