Guide on Opening a Bank Account in London
Before moving to London, check with your bank in your home country to find out if they have an agreement with the UK. If they do, your bank manager can write you an letter of introduction which will make it much smoother to open an account. When researching various banks and before opening an account, make sure that the institution will offer you overdraft protection and look at their credit card policy. Some banks may not allow their international customers to benefit from these services.
Beside the UK’s major banks there are a large number of international banks in London: Bank of America, Bank of Ireland, BNP Parisbas and many more. Do check them out, you may find it easier to opening an account with a bank that already exists in your home country.
Banks require proof of address to open a bank account. Utility bills are the best to bring, but note that many banks will not accept a bill from an Internet provider. Bank bureaucrats can be picky so make sure you’ve checked the details from your chosen bank’s site before arriving to open an account. Also have your passport available. Most major banks do not require you to make an appointment to open an account but it might be a good idea to call anyway, as many London banks become busy at certain times. If your chosen bank accepts appointments, make one to avoid a long wait. Visit the information desk when you arrive to open your new account. You can generally open a bank account with a deposit of £1 to activate the account. Opening an account in your nation of residence makes a lot of sense. Your employer might request you do so to deposit your monthly salary directly into your account.
Types of Accounts
Checking
Pay bills via check or direct debit and gain easy access to funds at any time with a checking account. Interest rates aren’t high so open a savings account in addition to a checking account if you carry a higher balance. Transfers between accounts can be made online.
Offshore
Accounts in Sterling, Euro and USD make it easy to do the usual transactions such as withdrawal, deposit and transfer between your accounts. There are conditions to open an offshore account, for more information, check the major banks such as Abbey National, Natwest, RBS, Barclays Bank, and Citibank.
The following have a dedicated page on their webpages:
- HSBC: http://www.expat.hsbc.com
- Lloyds TSB: http://international.lloydsbank.com
Savings Accounts – ISA
The ISA (Individual Savings Account) is a tax-free savings account with variable interest rates and easy access to cash. There is an annual allowance for the ISA. Typically, you can invest up to £11,520 in a single tax year (April 6 to April 5), more if you are over 50. There are two types of ISAs – cash ISA and stocks and shares ISA. You can invest up to £5,760 in your cash ISA and the rest in a stocks and shares ISA. Once you have deposited the total allowance you can withdraw funds at any time but you cannot re-deposit funds after you have utilized your allowance. Go to http://www.moneysupermarket.com to compare ISA rates.
Regular Savings
These accounts are not tax-free but they allow you to deposit any amount at any time. Rates are generally lower than ISA rates. Access funds online. For up-to-date news about savings consult: http://www.guardian.co.uk/money/savings or http://www.telegraph.co.uk/finance/personalfinance/
Internet-Only Accounts
Most banks offer accounts that can only be accessed online. Different banks offer different Internet-Only types. ‘Online Saver’ from Santander (http://www.santander.co.uk), for example, is one type of account which allows you to save at a higher variable rate than a ‘normal’ savings account. Restrictions may apply. Check http://www.moneysupermarket.com to find the most suitable online account.
Investments
There is a huge range of investment opportunities in the UK so it’s best to speak to a qualified financial advisor about your options. All major banks have advisors on-site but take note that they favour their own company’s products and are likely only permitted to invest in these options. Independent financial advisors are costlier but can provide a wider range of options. Word-of-mouth is the best way to find a good advisor. Make sure your chosen advisor has earned the Certificate in Financial Planning. The Institute of Financial Planning (http://www.financialplanning.org.uk) lists advisors in the UK who have obtained the Certificate in Financial Planning.
