I’m not hear to knock the Spanish banks, they’re similar to most banks in the US and your school can assist foreign students in opening an account here. However, my husband and I decided to keep things simple and keep our US account, and not open a second account here in Madrid. This is very easy to do with the era of an ATM at every corner here in Madrid, but there are a couple of things you need to consider.
The first obvious thing to think about is will you need to be able to write checks while in Madrid. I know of a couple of students here in Madrid who are able to pay their rent and cellphone bills in cash, or even credit card through a paypal account. Some landlords, however still like to collect rent here the old fashioned way, in person with a check.
A lot of our purchases we have to pay in cash, for instance at any of the municipal mercados or markets. Also, we haven’t been able to purchase metro tickets with our US credit card or ATM card. So, in these instances we hit the ATM or Cajero automatico. You have to be careful of the hidden fees, when using a US ATM card in Madird. In addition to the 2-3 euro fee to use one of Madrid’s ATM, your US bank will charge the Madrid bank a conversion fee that they then pass on to you. The catch is you won’t know what this additional fee is, until you receive your bank statement. (this is still cheaper than the conversion fee they charge you at the airport, though) All the banks like Caja Madrid, Banco Santander, and Caixa have accepted our ATM cards without a problem, and their fees are all very similar. Also another thing to think about is that our account in the states will refund us the 2-3 euro service fee to use the ATM, but not the conversion fees.
We use our US credit card for purchases in stores like Caja Madrid, because 1) we want the airline miles, and 2) they will normally ask you whether you want to charge this in euros or US dollars. So, obviously depending on the exchange rate that day you would choose the appropriate one. There are times when I would have choosen to charge it in euros, because depending on the exchange rate, it all evens out with the conversion fee you pay if you charge it in euros.
So my advice, and also what I’ve heard from others here, is that if you are going to be in Spain for more than year or two, then it might be wise to open a Spanish account. However, if you are like me and don’t need to write checks or set up direct deposit, then having a US bank account here in Madrid isn’t a problem.
For additonal information on banking in Madrid check out Selecting a Bank in Madrid