# Currency up's n down's!



## Muddy (Jan 14, 2010)

Hi all
One thing that's abvious to me is the huge swings in currency and how this could effect my move to Spain!!!

I think it's around 9p less than it was a couple of months back at the moment so this has reduced my spending power by a considerable amount!

My worry on this aspect alone is putting a deposit on my new home in Spain and then currency dropping and maybe a blip in the housing market. We all know how the news makes a big deal about a price drop but you don't always hear the same about when it move up a little!

I can't afford to keep my place here anyway, so I'm thinking of selling here in UK, renting in Spain, looking and then buy once I find an area and home I like!

It's a risk I know, more so as I don't want to buy a place close to a city so this might make a resale difficult, prolonged and the possibility of loosing money in the short term if I had to sell up.

Your thoughts please?

Oh yeah...
Can someone tell me what restrictions there are for transferring money from my house sale to a Spanish bank!!?

What I'm thinking about. If I sell & then rent in Spain and my cash is sitting in a UK bank while I'm looking to buy my new place.
Can I move my cash back and forward a limited number of times or am I going to get taxed on the currency fluctuations if I do this more than once etc!!!?
*I'm assuming you can only move it once without incurring penalties??*

What I was thinking over the weekend is, if I was sitting in my rented apartment in Spain while looking for my new place and I can see the pound doing what it has been doing for some time now, could I move my cash back and forwards a few times. I REALLY don't want to do this as I think its high risk, but when you see how much its dropped and can move around it is a worry. :juggle:

My level head says once I sell move the cash once the £ goes up to around its highest in the last year and transfer it, job done. Then I know how much I can spend and also know how much I'll have left over for rainy day money etc...! + I wont have to worry about £ dropping once cash has been moved!

Thanx for reading and any advice on the above most welcome..


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## Beachcomber (May 10, 2009)

Moving it backwards and forwards from the UK to Spain is going to cost you money. Why not open a euro account with the same UK bank where you have your sterling? Move the funds to the euro account when sterling rises and back to the sterling account when it weakens.

Transfers between your own accounts cost nothing and you can do it online. Obviously you have to get the timing right but you can make serious money using this method.


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## Muddy (Jan 14, 2010)

Beachcomber said:


> Moving it backwards and forwards from the UK to Spain is going to cost you money. Why not open a euro account with the same UK bank where you have your sterling? Move the funds to the euro account when sterling rises and back to the sterling account when it weakens.
> 
> Transfers between your own accounts cost nothing and you can do it online. Obviously you have to get the timing right but you can make serious money using this method.


Hi and thanx for the reply Beachcomber.
Yeah that sounds a good idea. But problem is if I sell then there is no point me renting in UK, so I would be renting in Spain and looking to buy in Spain. I believe I can't have a UK bank account if I no longer have a UK address! Perhaps I can use a family member for a short while as an address?


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## Alcalaina (Aug 6, 2010)

Muddy said:


> Hi all
> My level head says once I sell move the cash _once the £ goes up to around its highest in the last year _and transfer it, job done. Then I know how much I can spend and also know how much I'll have left over for rainy day money etc...! + I wont have to worry about £ dropping once cash has been moved!
> 
> Thanx for reading and any advice on the above most welcome..


The problem with waiting for it to go up again is that it might carry on going down! This time last year it was about £1 = 1€.

I would bite the bullet and transfer half your cash to euros as soon you sell your house, and leave half as sterling. That way you're sort of covered whichever way it goes.

We did that in 2008 when the rate was 1.28 and everyone said I was mad because the interest rate on euro savings was so much lower then. But I'm mighty glad I did!


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## xicoalc (Apr 20, 2010)

Muddy said:


> Hi and thanx for the reply Beachcomber.
> Yeah that sounds a good idea. But problem is if I sell then there is no point me renting in UK, so I would be renting in Spain and looking to buy in Spain. I believe I can't have a UK bank account if I no longer have a UK address! Perhaps I can use a family member for a short while as an address?


Talk to your bank in the UK. I see no reason why you can't use your spanish address. When i moved out to Spain I told my banks and credit card companies. Not only did they allow me to change the address but they all allowed me to keep my facilities (credit cards) too.

When i returned to the UK for a trip I wanted to open a specific product in a UK bank who I had not dealt with before. This was more complexed. The girl (who I shall refer to as Vikki (pollard) because it's kind of fitting) didn't know her proverbial from her elbow (i think she was on one of those govornment schemes where they MAKE you get a job or threaten to stop your benefits) and it was a typical "computer says no" situation, something to do with the computer not recognising my post code (spanish)
!!! :frusty: In the end I had to get the manager who had to call someone important (presumably the cleaner who is bound to know more than him) before as if my magic the computer then said yes. :clap2: (made me realise how much I love my spanish bank where the manager really is the manager, rather than a jumped up glorified kid barely out of nappies who just happens to have a certificate from a bank manager course!)

Moral of the story is open any UK accounts you want before you leave the UK (while you still have a UK address), and then when you move to spain there should be no problems (mine even send statements to spain).

Good luck!


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## aykalam (Apr 12, 2010)

Muddy said:


> Hi and thanx for the reply Beachcomber.
> Yeah that sounds a good idea. But problem is if I sell then there is no point me renting in UK, so I would be renting in Spain and looking to buy in Spain. I believe I can't have a UK bank account if I no longer have a UK address! Perhaps I can use a family member for a short while as an address?


Hi Muddy,

Not sure which UK bank would refuse to keep an account for you if you move abroad, normally they just require that you provide them with your new address, no matter if this is abroad, they can still send correspondence including statements to your address overseas, specially if this is within EU. 

Also, if you are not resident in UK you qualify to receive gross interest on your savings i.e. you will not need to pay tax on that interest. Please note this is not automatic and you need to contact your UK bank to apply for non-resident status.


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## JBODEN (Jul 10, 2009)

Beachcomber said:


> Obviously you have to get the timing right but you can make serious money using this method.


Currency brokers do it for a living and they don't always get it right. On the *retail *market the 'spread' between the buy & sell rate is about 4% so playing the market could be risky.


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## 90199 (Mar 21, 2010)

aykalam said:


> Hi Muddy,
> 
> 
> 
> Also, if you are not resident in UK you qualify to receive gross interest on your savings i.e. you will not need to pay tax on that interest. Please note this is not automatic and you need to contact your UK bank to apply for non-resident status.


Quite true, but on your tax return you will have to declare the interest paid and depending on your income you may still have to pay tax,

Hepa


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## Alcalaina (Aug 6, 2010)

Muddy said:


> . I believe I can't have a UK bank account if I no longer have a UK address! Perhaps I can use a family member for a short while as an address?


Unless they've changed the rules recently, you certainly can! I have a Halifax and a Lloyds TSB account in the UK, both registered to my address in Spain. I just downloaded a change of address form and handed it in at the branch.

However, I believe you can't open a _new_ account once you've moved.


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## Beachcomber (May 10, 2009)

Alcalaina said:


> ...However, I believe you can't open a _new_ account once you've moved.


That's also my understanding, at least on the mainland, but you can open an offshore account with a British bank based either in the Channel Islands or the Isle of Man.

Barclays Wealth


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## xicoalc (Apr 20, 2010)

OR of course, if you prefer you can open a sterling account with your spanish bank as well as a Euro one!


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## Alcalaina (Aug 6, 2010)

steve_in_spain said:


> OR of course, if you prefer you can open a sterling account with your spanish bank as well as a Euro one!


Not sure why you would want to do that though - Spanish banks are notorious for high bank charges, are they not?

Even Halifax Hispania, which claims to be free, charges 25€ a year for "administration" even though I do all the administration myself online!


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## xicoalc (Apr 20, 2010)

Alcalaina said:


> Not sure why you would want to do that though - Spanish banks are notorious for high bank charges, are they not?
> 
> Even Halifax Hispania, which claims to be free, charges 25€ a year for "administration" even though I do all the administration myself online!


Depends who you bank with and how you haggle! If you are non resident then yes they all charge high fees. Once resident it is different. My bank charge me for my card (15 euros but its valid 3 years i think) but nothing else. I am not sure about charges for changing money from your sterling to euro account - not done this myself.

Mine do charge a fee to handle any sterling checks that I want to pay into the euro account (because they have to send them to the Uk to be cleared), but other than that no fees.

I would have thought even the UK banks charge to exchange currency, they certianly make a charge to me every time I do an international chaps transfer.


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## mrypg9 (Apr 26, 2008)

Alcalaina said:


> Not sure why you would want to do that though - Spanish banks are notorious for high bank charges, are they not?
> 
> Even Halifax Hispania, which claims to be free, charges 25€ a year for "administration" even though I do all the administration myself online!


I pay almost four times that for the 'privilege' of paying money into my offshore account. Nothing else happens with that account. It sits there.
Yet I get charged.....


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## Alcalaina (Aug 6, 2010)

steve_in_spain said:


> Depends who you bank with and how you haggle! If you are non resident then yes they all charge high fees. Once resident it is different. My bank charge me for my card (15 euros but its valid 3 years i think) but nothing else. I am not sure about charges for changing money from your sterling to euro account - not done this myself.
> 
> Mine do charge a fee to handle any sterling checks that I want to pay into the euro account (because they have to send them to the Uk to be cleared), but other than that no fees.
> 
> I would have thought even the UK banks charge to exchange currency, they certianly make a charge to me every time I do an international chaps transfer.


If you have a Halifax account in the UK and a Halifax Hispania one in Spain, transfers are free. Now that they have been taken over by Lloyds, I think the same applies to Lloyds TSB accounts.


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## gus-lopez (Jan 4, 2010)

We just changed our address on the Uk accounts & cards, to here in Spain. Everythings sent here & an additional benefit is if any of our cards are used in the Uk or we purchase online from the UK , they won't authorise them until they've rung us & we confirm we're using them !


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## Muddy (Jan 14, 2010)

Thanx everyone for all the useful info. 
I was clearly mistaken about not being able to have a UK account when in Spain. I do remember someone telling they had to cancel there credit cards and someone else must have told me they couldn't open a UK account once in Spain so I assume that's where that mix-up was. Obviously the guy was mistaken about cancelling his credit cards lol

So I'll be opening a new account here in the UK for sure, and following advice here  opening a euro account also. Then I can (maybe) move funds from one account to other while I'm looking and renting in Spain.
I also like the idea of splitting half my funds between sterling and euro so I can protect what I have.
This is my main concern. I don't want to end up being caught out in a scenario where I've put down a deposit and then sterling falls etc. So as soon as I put a deposit down I must then make sure I can't lose any wonga due to currency fluctuations etc.

I didn't really want to do things this way (i.e. Sell house before finding a place) but I do remember a couple losing their first deposit they put down on a place because it took longer than they thought to sell their house in the UK.
Don't think it's actually that hard to sell a place now, from what I see they tend to sell in about 6 weeks near me but who knows that might change. Not because lack of peeps wanting to buy, but more so for banks still wanting large deposits etc.

Great advice, thanx again everyone :clap2:


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## mrypg9 (Apr 26, 2008)

Muddy said:


> Thanx everyone for all the useful info.
> I was clearly mistaken about not being able to have a UK account when in Spain. I do remember someone telling they had to cancel there credit cards and someone else must have told me they couldn't open a UK account once in Spain so I assume that's where that mix-up was. Obviously the guy was mistaken about cancelling his credit cards lol
> 
> So I'll be opening a new account here in the UK for sure, and following advice here  opening a euro account also. Then I can (maybe) move funds from one account to other while I'm looking and renting in Spain.
> ...


 
Why not just open a sterling and a euro account with a UK offshore bank? 
Offshore banks will issue debit and credit cards in all the currencies you hold.
You can of course have an overseas address and keep your UK credit card - I hold two.
The advantage of having an offshore account to keep the bulk of your funds is that the Spanish tax authorities etc. can't get at them if you enter into a dispute.
I keep enough in my Solbank account for a year's needs but no more.
Just in case


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## Beachcomber (May 10, 2009)

mrypg9 said:


> The advantage of having an offshore account to keep the bulk of your funds is that the Spanish tax authorities etc. can't get at them if you enter into a dispute.


The one disadvantage, though, is that in order to prevent the Spanish authorities from knowing about it you have to agree to a withholding tax, in accordance with the European Savings Directive, on the interest which is paid collectively but anonymously to the Spanish tax office. This tax is currently 20% but is set to rise to 35% during 2011.

Admittedly 35% of the current puny interest rate is not very much but once the Bank of England let's go of the elastic and interest rates shoot through the roof the amounts deducted will make you cry every time you get a bank statement.


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## Alcalaina (Aug 6, 2010)

Beachcomber said:


> The one disadvantage, though, is that in order to prevent the Spanish authorities from knowing about it you have to agree to a withholding tax, in accordance with the European Savings Directive, on the interest which is paid collectively but anonymously to the Spanish tax office. This tax is currently 20% but is set to rise to 35% during 2011.
> 
> Admittedly 35% of the current puny interest rate is not very much but once the Bank of England let's go of the elastic and interest rates shoot through the roof the amounts deducted will make you cry every time you get a bank statement.


You can instruct them not to withhold the tax, and then declare the interest income as part of your earnings in Spain. We did this, and because our total earnings including the interest from the offshore account are below the threshold, we don't pay anything.

Do you really think interest rates will go up again some time soon? That would be nice!


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## Alcalaina (Aug 6, 2010)

Beachcomber said:


> The one disadvantage, though, is that *in order to prevent the Spanish authorities from knowing about it *....


Why would you want to do this ?!?


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## Beachcomber (May 10, 2009)

Presumably for the reason given here:



mrypg9 said:


> The advantage of having an offshore account to keep the bulk of your funds is that the Spanish tax authorities etc. can't get at them if you enter into a dispute.


Plus that fact that in the not impossible event that the Spanish government lifts the suspension on the payment of patrimonio it would put me way over the threshold for having to declare it as such.



Alcalaina said:


> Do you really think interest rates will go up again some time soon? That would be nice!


It certainly would but it maybe more in hope than expectation. The relationship manager from my offshore bank says no but I suspect that may be becasue she wants me to take out some investments that would tie up my money for up to five years and, no doubt, earn her some commission.


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## mrypg9 (Apr 26, 2008)

Alcalaina said:


> You can instruct them not to withhold the tax, and then declare the interest income as part of your earnings in Spain. We did this, and because our total earnings including the interest from the offshore account are below the threshold, we don't pay anything.
> 
> Do you really think interest rates will go up again some time soon? That would be nice!


We've done more or less the same as you. but have to pay tax. OH has funds with a private UK bank who deal with all that kind of thing and is talking with them about HMRC as I post.. I've been spending my way through my hard-earned dosh...soon there won't be much left to worry about I had a fixation with German sports cabrios....(note past tense).
My son and dil each earn more in a month than some people in a year so I am DEFINITELY not thinking about leaving them anything.
I have threatened to turn up on their leafy Surrey doorstep if I am destitute....


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## mrypg9 (Apr 26, 2008)

£/euro now £1 ==1.14 euros....
The financial market report we get sent each morning talks of 'negative sentiment' weighing down the £.
Now....could this be fears of the looming double-dip recession?
The economic strategy of this Coalition Government is to boost business by low interest rates and boost exports with weak sterling rates.
We are gripped in the vice...our pips are squeaking.....


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## mrypg9 (Apr 26, 2008)

Beachcomber said:


> It certainly would but it maybe more in hope than expectation. The relationship manager from my offshore bank says no but I suspect that may be becasue she wants me to take out some investments that would tie up my money for up to five years and, no doubt, earn her some commission.


Ditto.
OH has succumbed and made an investment. I've not done so in the hope that rates will increase over five years.
There is a strong possibility that current economic policies will lead to inflation....which is what the BoE is terrified of.
Inflation =higher interest rates.
Lucky for some.


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## Muddy (Jan 14, 2010)

mrypg9 said:


> Why not just open a sterling and a euro account with a UK offshore bank?
> Offshore banks will issue debit and credit cards in all the currencies you hold.
> You can of course have an overseas address and keep your UK credit card - I hold two.
> The advantage of having an offshore account to keep the bulk of your funds is that the Spanish tax authorities etc. can't get at them if you enter into a dispute.
> ...


Thanx mrypg9
I haven't researched my banking options yet, does it show lol 
One thing I just read is that Offshore accounts are not included in the UK's compensation rules. So does this mean your first 50k is ok only from what I read!?
Also thinking back I remember that if two banks are basically owned by one company etc or linked then even if you split funds between them the compensation would only cover one account/bank etc!

In any event this is unlikely to be a problem or a worry for me in the long term as once I've got my new place I'll be more or less skint probably, well at least not worrying about the interest on my puny savings 

I like the idea about savings interest not being taxed. I bet there are loads of people out there that are not aware they are paying tax on their savings and they shouldn't be and will never get it back. So best left for declaring on your tax form and earn some extra interest in the mean time, be that very small!


Beachcomber
Is that correct, 35%?
How the hell can they justify a 15% increase!!

gus-lopez
Don't you find that very restrictive when shopping online! What happens if it's like 2am in the morning, are they on the case 24/7 ?

I hope the pound recovers, it really should be better than it is IMO looking back at the Greece and now now just across the pond. But the city bods at the moment favour their shares and gold. I personally think it would be better for the UK if the pound was stronger, it was much stronger for many years and it didn't do us much harm, so don't break what works I say.


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## mrypg9 (Apr 26, 2008)

Muddy said:


> Thanx mrypg9
> 
> 
> 
> ...



Well, many economists would disagree with you. Overvaluation of the pound (Nigel Lawson's fixation with linking to the Deutschmark) got us kicked out of the EMS. It didn't help our manufacturing sector either...
A strong £ is the last thing the current Government wants to see as their economic strategy places great reliance on boosting exports.
What is good for emigrants isn't good for those who stay at home, alas


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## Beachcomber (May 10, 2009)

Muddy said:


> ...
> Beachcomber
> Is that correct, 35%?
> How the hell can they justify a 15% increase!!


I'm afraid so. See notes 5 and 7 here:

EU Savings Directive

and if your account is held in the Isle of Man the facility to opt for retention rather than disclosure is being withdrawn.

I am considering changing my accounts to HSBC Bermuda as it falls outside of the ESD but I have not yet investigated the full implications of doing so.


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