Living in Portugal with the weaker pound

By DAVID KERNS [email protected]

Head of Private Clients for Moneycorp, one of the UK’s leading foreign exchange and international money transfer providers.

The key consideration for people living in Portugal and transferring their savings and/or pension from the UK is the exchange rate.

In the current downturn, the value of incomes for pensioners and émigrés living in Portugal is down almost 20 per cent compared to two years ago.

With the Pound continuing to lurk in the current climate, it’s more important than ever to protect your spending power. The following tips can really help bolster your bank account and squeeze the most out of your sterling.

Plan ahead

Don’t leave your overseas payments until the last minute, as you will have to accept the currency rate at the time of transfer. Currency markets are constantly fluctuating and making your transaction at the right time can make a big difference to the amount of money you end up with.

For example, if you were sending £50,000 to Portugal on the dates specified below, you would have received:

– November 17 2009: €56,525

– November 30 2009: €54,640

That’s a difference of €1,885 in under two weeks!

To benefit from these fluctuations, you can use a currency specialist to book a ‘forward contract’, which allows you to fix an exchange rate for up to two years ahead. Forward contracts can be used to lock into favourable rates, or simply to protect you against adverse currency movements.

Automate your regular payments

Living in another country means that you might need to send money from the UK on a regular basis for mortgage payments or pension transfers. To avoid extra costs, a Regular Payment Plan would enable you to take advantage of better rates as well as automating transfers via Direct Debit.  

There are a range of different plans out there that can be tailored to suit your needs, allowing you to fix the sterling amount sent or the foreign currency amount received – or both. Plus, you can pick from a range of payment frequencies (ranging from weekly to annual).

Shop around

Look for the best deal, as you would for your car insurance. Don’t assume that your high street bank will offer you the best deal. Currency specialists will save you money by offering you better rates of exchange and lower transfer fees. Savings of two per cent and more on exchange rates and £10 to £20 per transfer on fees are very realistic.

Don’t get stung by overseas bank charges

Be aware that overseas banks can often charge handling fees just for receiving your money. This can amount to one per cent of the value of your transfer and soon adds up if you are making payments on a regular basis.

To summarise

Get the basics right and you can reduce the impact that exchange rate fluctuations can have on your finances in Portugal. Always plan ahead; consolidate your payments and look to automate your regular transactions wherever possible; and identify the overseas bank charges you might have to pay.

Remember to shop around to obtain favourable rates of exchange and avoid expensive transfer fees. These simple steps should help you to make the most of your sterling and help you plan ahead with more peace of mind.

Using an international money transfer specialist like Moneycorp to take care of all your payments to and from Portugal can help. Our experts make the process quick, easy and highly cost-effective.

Contact Moneycorp in Portugal on 800 863 328 or in the UK on +44 (0)20 7589 3000 or visit their website