No. Here’s Why Most Expats and Residents In Spain Prefer Neobanks Over Traditional Spanish Bank Accounts.
Anyone banking in Spain will be familiar with the routine: high fees, little to no interest, and a constant push to bundle your account with everything from car insurance to home insurance. For many, it feels less like a service and more like a trap. With the arrival of digital challengers such as N26, Revolut, Bunq, Imagin, Plazo, and Bnext, the cracks in the traditional banking model are becoming increasingly difficult to ignore.
Traditional Spanish banks are expensive, charge high fees, and push bundled products. Digital neobanks like N26, Revolut, Bunq, Imagin, Plazo, and Bnext offer lower fees, transparent pricing, and greater convenience — though you’ll still need a traditional bank for mortgages and credit cards.
The High Price of “Free” Banking
Spanish banks have quietly made it more expensive than ever just to keep your money in an account. The average customer now pays well over €150 a year for a basic current account, and some banks charge even more for simple services like a debit card. These aren’t premium accounts — these are the standard offerings. The cost of simply maintaining a bank account has steadily crept up, outpacing inflation and putting a squeeze on customers who receive little in return.
Interest rates on balances remain negligible, and the uniformity in pricing across the major banks — Sabadell, Santander, BBVA, CaixaBank — has led to questions about whether real competition exists at all. In practice, customers are paying more for less, with little hope of meaningful returns.
Locked In by Bundles and “Extras”
Traditional banks in Spain are notorious for aggressive cross-selling. It’s not enough to have a current account; you’re routinely encouraged — or pressured — into taking out home insurance, car insurance, pension plans, and investment products. These bundles are often presented as ways to reduce your fees or secure better terms, but in reality, they serve to tie you more closely to the bank, making it harder to leave. Many customers end up with products they neither want nor need, simply to avoid even higher charges.
Why Are Banks Reluctant to Change?
With a vast network of branches and a customer base accustomed to inertia, traditional banks have little incentive to lower their fees or improve their offerings. Their strategy has been to double down on cross-selling and complexity, rather than compete on price or service. But this approach is increasingly at odds with what modern customers expect.
The Digital Disruptors: N26, Revolut, Bunq, Imagin, Plazo, Bnext, and the New Wave
Digital-only banks like N26, Revolut, Bunq, Imagin, Plazo, and Bnext have burst onto the scene, offering streamlined, app-based banking with transparent pricing and far fewer fees. Opening a Spanish bank account online is quick and painless — no paperwork, no queues, just a few taps on your phone.
What Makes Neobanks Appealing?
Lower Fees: Neobanks typically do away with account maintenance charges, ATM fees, and the hidden extras that have become standard at traditional banks.
Better Interest: Some digital banks offer higher interest rates on savings, though rates can fluctuate.
Convenience: Manage your money, make international transfers, and even split bills — all from your phone, any time of day.
Transparency: Fees and terms are clearly laid out, and you’re not constantly upsold on unrelated products.
Innovative Features: Real-time notifications, budgeting tools, and even cryptocurrency trading are now part of the package.
Spanish IBANs for Residents: Importantly, N26, Revolut, Bunq, Imagin, Plazo, and Bnext all provide Spanish IBAN accounts for residents. This means you can set up direct debits for electricity, water, internet, and mobile bills — removing a major barrier to switching from a traditional bank.
The Drawbacks: Where Neobanks Still Lag
No Credit Cards or Mortgages (Yet): Most neobanks in Spain only offer debit cards, not credit cards, and do not provide mortgages. This is a significant limitation for anyone looking to finance a home or build a credit history.
Limited Product Range: For now, neobanks focus on core services — current accounts, savings, and payments. If you need complex financial products or in-person advice, you’ll need to look elsewhere.
No Branches: For those who prefer face-to-face service, the digital-only model can feel impersonal.
Automated Tax Payments: While you can now automate payments for utilities and other services thanks to the Spanish IBAN, automating tax payments through these neobanks is generally not possible (at the time of publishing this article). For this, most people still need a traditional bank account.
Mortgages: Still the Domain of Traditional Banks
If you want to buy a home in Spain, you’ll almost certainly need to go through a traditional bank or a specialist mortgage broker. Spanish banks offer a range of mortgages to both residents and non-residents, with residents typically able to borrow up to 80% of a property’s value and non-residents up to 70%. The process is paperwork-heavy, and banks are selective, especially with foreign buyers.
There are a handful of alternative lenders and brokers who can help those who don’t fit the traditional criteria, but these are niche players and often come with higher rates or stricter terms. Neobanks, for the most part, do not offer mortgages — though there are signs that this may change in the future. For now, if you need a mortgage, the old guard still holds the keys.
Is the Tide Turning?
The pressure from neobanks is undeniable. Their rapid growth is forcing traditional banks to rethink their approach, with some smaller players offering competitive interest rates and a more customer-friendly experience. But for the big names, the response has largely been to double down on fees and cross-selling, rather than compete on price or service.
As digital banks expand their offerings — potentially including credit and mortgages in the future—the balance of power may shift. For now, Spanish banking remains a tale of two worlds: the expensive, entangling embrace of the traditional banks, and the agile, customer-first approach of the digital challengers.
Conclusion
Spanish traditional banks remain expensive, offer little in the way of interest, and rely on bundling supplementary products to lock in customers. Neobanks like N26, Revolut, Bunq, Imagin, Plazo, and Bnext are shaking up the market with lower fees, greater transparency, and a focus on user experience. The addition of Spanish IBANs for residents means it’s now possible to automate most regular payments, though tax payments remain a sticking point. Mortgages and certain financial products are still the domain of traditional banks. The future of banking in Spain will likely be shaped by how quickly the old guard adapts, and how far the digital disruptors can expand their reach.