BANKING IN THE UK

The general feeling in Britain is that most things that originate across the Atlantic usually make it over here at some point. According to the latest figures from the Home Office that includes the 126,000 Americans who come to Britain to live or work in a single year. One of the major considerations for anyone in this position is managing their finances and banking in Britain could certainly be something of a culture shock.

In fact, moving from the US to the UK is considered to be one of the most difficult overseas migrations to make, not least because of the complicated tax laws in both countries. But banking in the UK does not have to be tedious, and there are plenty of account options that will help you feel at home.

You do have some options

Using a bank account you have in another country is possible, but far from ideal. Many banks charge a fee for receiving payments from overseas and in foreign currencies and it can also take longer for the payment to reach your account. You may also run into problems if you need to write a cheque, for instance for the deposit on your accommodation or to pay a utility bill, as the cheques issued by an overseas bank may not be recognised in the UK .Having a bank account is essential for receiving your salary each month, arranging your accommodation and paying for your groceries and meals out.

Checking accounts – known as current accounts in the UK – are generally used for your day-to-day money requirements and to deposit your salary by what is commonly known as a “BACS” transfer. You will be paid a nominal rate of interest and often will have an agreed overdraft limit which will depend on your earnings. This can range from as little as £100 to £500 or even £3,000. If you go overdrawn past your limit without authorisation, you can expect to be hit with a charge – as much as £30.

Some banks will offer you interest on your money paid into any accounts from day one, but not everyone will do this so, you should shop around before you sign up. A lot of banks will also offer you the opportunity to benefit from extra services, such as lifestyle benefits, insurance or protection. If you choose not to benefit from these extra account features then, unlike banking in the US , you can generally find a fee free alternative when banking in Britain.

As the interest rate paid on current accounts in the UK is so low – around 0.1% in many cases, with the basic accounts at most banks – you should look at putting your savings into a higher earning account. If you are happy to use online accounts – “esavers” to US citizens – you will usually get a high rate of interest.

How foreign currency accounts can help

If you are still paid in dollars or need to pay people in America for services or facilities (maybe you have property or family members there), then consider a bank that offers foreign currency accounts domiciled in the UK.

These can enable you to earn interest on foreign currency funds without needing to have them dotted around worldwide. Additionally, if you link these accounts to a debit or cash card, you could withdraw currency without any exchange rate issues. Or you can use the card to make purchases in a country of the same currency, say dollars, for no extra fee. If you travel a lot, this could save you a significant amount of money.

By banking with a global institution, you will often be able to transfer money around the world without incurring extra costs too. However, be aware of any foreign exchange spread. Some banks provide the opportunity for banking offshore, which can have significant tax advantages. If you need tax advice, your bank may be able to arrange that for you.

Take the hassle

out of changing banks

Many people fail to open their bank account in the UK before they leave the US – which is understandable. It may have been a quick decision to move, or a last minute posting from your company. If you do arrive in the UK without a bank account and try to go it alone, you might have to wait a few months before you build up a credit history here, which can complicate matters. You will be able to use your existing bankcard or credit card for some of your spending, but again you could face fees for this as well as currency conversion charges that might not always be in your favour, adding to the inconvenience and expense of running your existing bank account. However, some banks, especially those who are used to dealing with people moving from America to Britain, will be able to help smooth the process.

The best thing to do, especially if you are working for a blue chip company, is to check whether your company has established links with a UK bank. Speak with your human resources department to try and open a bank account as soon as you arrive. As the bank may base its decision on whether to open an account on its experience with the employer, rather than a credit score, it should grease the wheels for you.

Terrorist activities have prompted worldwide tightening of money laundering rules, and the UK is no exception. You should expect a number of hoops to leap through before you can get your account opened. You need to prove who you are and where you live. Then there is standard documentation that most UK banks will accept. The bank you choose will inform you about their specific requirements when opening the account.

To prove your identity, you normally have to provide photographic evidence, such as a passport or driving.

licence, as well as prove your address. At the end of the day, if you have as much documentation as you can provide, opening a UK account should go fairly smoothly.

Unless the bank you choose offers transferable credit history, you are unlikely to be issued with a credit card for your UK bank account straight away. Try to use a credit card from home if you can, or try to get an account with an extended overdraft if things get very tight.

Click here to find out how Citibank can help

Citibank offers a full range of onshore and offshore accounts including US Dollar current and deposit accounts, online realtime money transfers and access to wealth management advice. In addition Citibank has specialist services to assist Americans moving to the UK and would be happy to help in any of your banking requirements.

If you decide that you no longer want to bank with the company that first gave you an account, it should be relatively easy to switch. Almost 1.4m people were expected to switch their current account in the UK in the first six months of this year, according to www.moneyexpert.com.

Under the Banking Code (www.bankingcode.org.uk), UK banks are obliged to switch direct debits and standing orders from one account to another if you decide to move your account. Redirecting these payments is usually the main reason people are lethargic about switching, but there is now no need to be. Your bank can also liaise with your employer directly to ensure your salary is paid into your new account.

Of course, your financial affairs may be more complicated than simply needing an account for savings and day-to-day transactions, and many banks will also provide investment advice. If you need to place your money in funds, some banks can guide you through the web of these facilities, especially the larger organisations.

High net worth clients can also benefit from personal relationship managers with the banks, which enables them to get a higher level of attention. It also means there is a single point of contact at the bank – so you can avoid the call centre nightmare suffered by so many of us.

Planning ahead is always a good idea but there is nothing worse than being told that when it is too late. If you take the time to get your banking right early on when you move to the UK , you will find you have fewer problems over time.

Article published in the Guide for Expatriates, by Citibank (UK)

Citibank targets US Expats

And introduces market-leading dollar savings rate

Customers are also assigned a US Relationship Manager who understands the needs of American citizens living abroad and will offer personal assistance on a wide range of financial matters affecting those relocating to the UK.

Tobias van der Meer, Head of Banking and Investments, Citi UK , said:

{quote1}Citi is uniquely placed to offer these services to Americans because of its global presence, US heritage and experience working with customers on both sides of the Atlantic . We have designed our new international banking proposition with their specific needs in mind and have eliminated account opening hurdles for a smooth process combined with our very best banking and savings accounts available{/quote1

Further information about Citibank International Services can be found at www.citibank.co.uk

SOME QUICK FACTS

The Bank of England is the central bank of the United Kingdom. Sometimes known as the ‘Old Lady' of Threadneedle Street , the Bank was founded in 1694, nationalised on 1st March 1946 and gained independence in 1997. Standing at the centre of the UK 's financial system, the Bank is committed to promoting and maintaining monetary and financial stability as its contribution to a healthy economy.

You can find out more about the Bank of England by visiting the official website

www.bankofengland.co.uk