The high cost of a banker’s draft
When you’re buying or selling, a property in Spain and your lawyer suggests using a banker’s draft, or ‘cheque bancario’ to make a large payment, are you aware of the cost of this almost outmoded method of transferring money?
Payment by bank cheque has fallen by 52 percent since 2008 says Iberpay (Sociedad Española de Sistemas de Pago), and according to the European Union it has completely disappeared in fifteen member countries. However, the banker’s draft is still a method that was used 44 million times in Spain during 2017. It won’t be long until all banks in Spain are forced to stop this method of payment and join the pioneering countries that have disposed of the bank cheque. They include The Netherlands, Sweden, Denmark and a number of countries in Eastern Europe, such as Estonia, Lithuania and Bulgaria. Other EU countries still using banker’s drafts include France, Cyprus and Malta with a use of 10%, 15% and 17% respectively though these figures are still considerably lower than Spain’s, where the system remains relatively well-entrenched because it is so lucrative for the banks.
The cost issue
One of the issues buyers and sellers face in Spain is high transfer costs. Your lawyer may suggest getting a banker’s draft from a particular bank without indicating that it is one of the most expensive ones around.
Bank cheque commissions are usually calculated by applying a percentage to the nominal value of the document along with a minimum figure that must be charged in case the application of the percentage doesn’t meet the minimum amount. In the case of BancoSantander that minimum is €40. The average commission charged by the banks on the value of a bank cheque is 0,45%, with an average minimum cost of €12,61.
Why banker’s drafts are outmoded
Apart from the high cost, the main reason for the decline in banker’s draft use is that it is an inconvenient payment method. First, you have to go to the bank in person, which may be a very real inconvenience if you’re in another country. Second, there are faster, more efficient methods that can effect the transfer in a matter of minutes. Additionally, there is an element of risk with a banker’s draft: if there are any errors in the paperwork, a bank may refuse to accept it, and you have to start all over again.
If you are asked to use a banker’s draft as a method of payment, be sure to inquire about the exact cost and if it is an inconvenient method for you to use. In fact, it will usually be to your advantage to push for the use of a more up to date and secure payment method.
By Adam Neale | Property News | July 18th, 2018