Banking in the UK

Bank accounts are more difficult to get in the UK than any of my experiences in the US. Even to be added as a joint holder of a long standing account, you’ll need bank references from the US, or wait to have been resident for a few years, but each bank is different.

A chequing account is called a Current account, each bank has several versions of them for different needs, some varying fees, etc., like in the US. It would be advised to bring bank references and past bank statements with you if you can, and as soon as arriving, getting utilities into your name, or having your name added to accounts of spouses. It can be easier to get store credit cards than getting a bank account! It is very important to have a Current account, bill paying is simple, all bills are payable at your bank, and most employers pay by direct deposit. Each bank manager has their own policies, so if you have trouble with one, try another bank if you can. Current accounts come with either Switch/Maestro or Solo ATM cards, the eqivalent of the US check/debit cards, and are accepted at most shops, sometimes with cashback if you need. ATM machines are called cash machines or cash points here.

There are three types of banks, High Street Banks, Building Societies, and Direct Banks. High Street Banks are the main banks, such as Royal Bank of Scotland, HSBC, NatWest, Citibank, and Barclays. Building Societies such as Woolich, Abbey National, and Halifax were created for those who wanted to save in order to buy a house and offer pretty much the same services as the other banks. Direct Banks such as Co-op (Smile.co.uk) and First Direct don’t have branches, but you can bank at First Direct at the Post Office and Co-op bank at their grocery outlets. They are telephone banks which have grown in popularity over the last few years. Citibank is one that has expatriate services, so if you have trouble, you might want to check them out. Safety deposit boxes are also not available at all banks, so if you will require one, ask around.

Tom Holzel, of Oxford, shares: “... times have changed radically in the past few months, and business people making the move should be warned of some of the new potholes in the road to establishing residency the U.K. The most awkward change is a terrific tightening of the banking laws. You cannot open a bank account without having the original copy of your signed lease of the property in which you wish to reside. This law is very strict—an anti-money laundering measure—and has quite an impact because, it is difficult to rent an apartment or house without a bank account to which you can be traced!! Expats are advised to have a sufficient source of funds to pay the equivalent of three-months rent in order to nail down a lease. The best way to handle that is to have your company make the payment, because it is then drawn on a local bank, and it seems more “legal” because it is a company, rather than a suspicious individual. Also, you should, by dint of company pressure on the realtor, actually get the lease without the “required” bank account. However, the landlord will want an automatic rent deduction from your bank account, so he must be mollified until the account is in place. Not getting a bank account quickly, quickly concatenates; you can’t get a credit card, you can’t pay any of the instantly payable taxes (especially the TV tax - which getting caught not having paid will set you back a months wages or more). The electric/gas/oil and telephone companies, the water company will be after you for immediate payment. Fortunately they can all be stalled, but not paying the TV tax is a risk. You can, however, pay these fees with an American credit card if you still have one. (So it is crucial to keep your American MasterCard going when you get over here.) American express will not issue a card until you have resided here for six months!” I must note that it was also pointed out to me by Owain, that “The TV Licence is obtainable from the Post Office and can be paid for in cash in a lump sum. But if you want to pay month-by-month you’ll need a bank account. Many bills can be paid at the PO free of charge. It will state on the payment slip ‘no fee payable at Post Office’ “.

A sample cheque, note the pounds and pence are both written out and ended with “only”. With some cheques, there is no line for the signature, but it still goes there. Any account or other reference numbers are written on the back, or sometimes following the payee name, and generally are not endorsed (signed on back) as was in the US. Pounds and pence are both written out, finishing with “only” or “exactly”. If you are asked that the cheque be “Crossed Account Payee Only”, most cheques these days are preprinted this way, with vertical lines across the face. It only means that an cheque can only be paid into the bank account of the Payee and not cashed.

Credit is another story, strangely, as they don’t use an equivalent of a Social Security number here, part of the information that they use to evaluate your credit applications is your address. I find this grossly unfair, if you’ve just moved into a residence where the last occupant had bad credit, it may affect your ability to aquire credit. You may be unable to get credit cards at one address, and be suddenly able to within days of moving. (Try link to CheckMyFile.)

If you have a bank account, Switch card, it is easy to obtain store credit cards. The major credit cards, however, are usually gotten through the banks with your Current account. If you are denied for whatever reason, the letter that you receive will give you contact iformation for credit reporting agency that contributed to the decision so that you can inquire as to the content of the credit report, as in the US. If you have credit cards in the US, you may want to ask them about the possiblity of transferring to UK. Your bank will be able to help you with further financing questions, be it mortgage or other loans. Be advised that some independent mortgage brokers and financial advice services are not as independent as they claim.