Banking facilities in France
Even though the Internet has taken over many areas of our everyday lives, including finance, there is still a need to physically open new bank accounts and agree new banking arrangements when you move to a new country. There are various reasons why you need a local bank account which we will cover in due course and there are various aspects of the system which you need to be aware of and understand.
Choosing the right account for you
For those looking to move to France and open a new bank account, you are likely to focus on the potential language problems, differences between the French system and your home country system while possibly ignoring the basic rules of banking, i.e. what kind of account is best for you!
The chances are that you will need a current account, deposit account and potentially you may need access to an overdraft facility although this may be difficult to arrange in the early stages of your banking relationship. There are however other options to consider which include:-
Non-resident bank accounts
If you are either living in France full-time, but have yet to receive confirmation of full residency, or you have a second home in the country then you will need a non-resident bank account. However, while these accounts are basically the same as current accounts there may well be various restrictions regarding the amount of money that you could transfer in and out of the account at any one time. It is also highly unlikely they will be able to obtain an overdraft facility with a non-resident bank account although this may well vary from bank to bank.
Even though there is no specific requirement for you to be present when opening a bank account, it can pay to make contact with your local bank when in France as soon as possible to try and build up a relationship and understand how the system works. For those not able to be physically present when opening a French bank account of the non-resident variety, the Internet offers a very useful alternative with Euro accounts becoming more and more popular.
French current account
A French current account is to all intents and purposes exactly the same as a UK current account and is required to cover utility bills and other everyday expenses which you would incur when living in France. As in the vast majority of banking systems around the world, a current account is usually free to set up although your bank may well try to sell you various packages which may lead to monthly charges or specific fees for extra services. It is up to you whether you actually require any of these services or additions to the standard French current account.
French deposit account
If you have funds available which you will not require in the short to medium term it may be worthwhile looking towards a French deposit account where you can earn interest on your funds. As with the UK banking system, a French deposit account is held separately from the current account although it is easy enough to transfer funds between the two as and when required.
Opening a French bank account
As you would expect, various paperwork is required if you are looking to open any type of bank account in France with the following documentation essential:-
The details of your current bank
Your signature, as witnessed by a solicitor
Copy of your passport
Documentary evidence of your residency status in France
As long as you have the relevant information and documentation to hand, it is simply a case of filling out the standard bank application form and depositing funds into your new account. However, there are other factors to consider with regards to your banking arrangements.
Joint accounts in France
There are two specific joint bank accounts available in France which relate to how the accounts are set up and who needs to sign cheques, documentation, etc. If you setup a joint bank account where both parties need to sign to release funds and one of the holders died there may well be problems with regards to access to funds until a will has been confirmed, and proven, or the relevant court action has been taken.
The more popular option between joint parties is a joint bank account whereby only one party has to sign to release funds. Not only can you save valuable time in many circumstances but it also ensures that the account would not be frozen in the event that one of the parties passed away. Different couples will feel comfortable with the different variations of joint accounts in France and ultimately it will be down to personal circumstances.
Banking hours in France
As in the UK, standard bank opening hours are from 9 AM until 5:30 PM Monday to Friday although some of the larger banks in the larger cities may well open in the evenings and possibly at weekends. If you are living in the countryside or one of the smaller towns in France there is every chance that your local bank may close for lunch therefore you will need to time your visits accordingly.
Bank charges in France
In what seems to be a consensus move across Europe, January 2008 saw the introduction of a new law in France which means that every bank in the country has to make customers aware of any charges they have incurred over the year, something which will be listed on their annual statement. When setting up a bank account you must also be given a list of individual tariffs which the bank could charge in certain circumstances and updates must be relayed to customers as and when changes occur.
The bank charging structure is slightly different in France to that of places such as the UK and you can expect to be charged for use of debit card, a cheque-book, statements, standing orders, foreign currency transactions and any overdraft facilities you may have in place. There may well be other charges specific to certain banks and certain situations therefore you must ensure you are fully aware of your bank’s charging structure before signing up.
Other factors to consider with a French bank account
As we touched on above, many people will focus on the difference in language and banking systems when moving to a foreign land when ultimately you also need to appreciate the more basic aspects of personal banking, which include:-
Interest rates
It may not be common knowledge but until recently it was actually illegal to pay interest on deposit accounts in France. However, due in the main to pressure from the EU, businesses and consumers, there are now interest-bearing accounts available in France although they are fairly immature and you are unlikely to obtain a rate anywhere near the likes of the UK.
Withdrawals and transfers
Even though many people who move to France will take their belongings and maintain their main banking operations in the country, you may well have obligations and investments overseas which you need to finance and monitor. On that basis, before signing up for any French bank account you need to be aware of potential charges for withdrawals and transfers, both to French accounts and international bank accounts.
If you’re making regular withdrawals or receiving regular transfers, and there are charges incurred, this could well add up over the weeks, months and years therefore you need to ensure your banking arrangements reflect your banking needs. Again, do not automatically assume that the French banking system is the same as the one in your former home land.
Local, telephone and online access
The onset of the Internet has changed the world of banking forever and it is now possible to set up a bank account anywhere in the world at the touch of a button. While obviously it will depend upon your personal circumstances, you need to know whether your bank offers local, telephone and/or online access. Many people in France and around the world prefer to do their banking from the comfort of their own home and more and more people are demanding and using online banking facilities.
However, there will always be a group of customers who prefer to visit their local bank or make use of telephone banking facilities in the country. Again, you need to ensure that your banking arrangements reflect your individual needs because ultimately you need access to your funds 24 hours a day seven days a week.
Language issues in France
Even though the vast majority of those who move to France will have a basic or better than basic grasp of the French language, there is a need to ensure there are no misunderstandings with regards to your banking facilities. The massive influx of expats into France has created something of a lucrative subsector in the banking industry for those previously living in English speaking countries.
There are specific banking companies who operate solely for expats in the region, which can help to reduce the chance of any potential misunderstandings, and there are also many French banks that employ English speaking assistance or operate English-speaking telephone banking services. There is no doubt that the English-speaking expat in France is well catered for although you may well have to investigate further to find the best bank for you.
Everyday expenses in France
As we touched on above, the vast majority of French energy and utility companies will demand that payment is received by the direct debit system, with funds held in a French bank account. As a consequence it is essential that you have French banking facilities in place as soon as you land, or possibly before you arrive in the country, because this will make life very much simpler for you in the long term. When you take a step back and look at the overall picture it does make sense to ensure that local energy company customers have local bank accounts in order to ensure they are who they say they are.
Credit facilities in France
Aside from the basic current account and deposit account you may also require credit cards, overdrafts and other financial services during your stay in France. As we touched on above, those holding non-resident accounts are unlikely to be able to obtain an overdraft immediately and with some banks they may never be able to have an overdraft facility if they are non-resident.
The French financial system is fairly well-developed and while it is often dominated by a small number of enormous banking institutions, there is still significant competition in the industry. However, as in any other country around the world you need to pick the best credit card for you, the best overdraft facility and the best loan terms. The basics are very much the same as in the UK and other major countries around the world and it is imperative that you read the small print and are fully aware of what you’re signing up for.
The euro in France
The euro is becoming more and more important in France as the integration of the European Union continues. While countries such as the UK continue to lag behind their European counterparts in embracing the euro, it is playing a major role in the vast majority of European countries and that role is set to become more and more important. The ability to transfer between European countries in one currency and therefore eliminate any potential currency risk is as sensible as it is potentially cost-effective. For those from countries such as the UK, embracing the euro with regards to their own personal finances could be difficult if they hold money in another currency and have not researched the situation.
Conclusion
The French banking system appears to be fairly simple to understand and it should be one of your first ports of call before landing in France or upon entry to the country. Even though many people may still prefer to maintain their former homeland banking facilities, possibly via the Internet, it is essential that you arrange a local banking facility as soon as possible. Aside from the fact that the utility companies will demand local banking facilities for payment of their bills, it makes sense in the short, medium and longer term to have funds readily available 24 hours a day seven days a week.
Whether the French banking system and financial sector is as competitive and as well-developed as that in the UK is debatable but ultimately all of the services you would expect in other European countries are available, although the level of charging may differ. As with any agreement you sign, it is essential that you read the small print and know exactly what you are letting yourself in for.
If you plan ahead, do your research and have the relevant documentation in place it should be very simple to set up local banking facilities. However, planning, planning and more planning is the key to the future and you must do your research before you land!
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A few other things about banks in France that might be useful to know.
Overdrafts : DONT except by prior arrangement. Its technically fraud and treated as such and even when you have one by arrangement then you will be expected to clear it quickly. They can and will lock your account until you comply.
Unpaid Bills : This is a nasty one. My work takes me away a great deal, several months sometimes. In my earlier (and financially sloppy) days I would take the ‘they can wait’ attitude. Well a creditor can simple go to the local justices and have the money taken out of your account. If the money is not there, then the account gets locked until there is. When there is enough, its theirs first. It can be difficult when you get back, fill up with petrol and find your card does not work.
Sounds harsh? Well, do remember that the same attitude to credit also exists so generally people have much less debt over here. The recession has hit but not nearly so hard where credit is easy. Ive not seen anything like the kind of hardship that people in the UK seem to be getting.
You can pay most of your bills automatically here as well. The equivalent of a direct debit in the UK.
When coming to France I felt the banks were unhelpful but coming from the UK, where they seem to throw money at you with little regard to your ability to pay, it is better. It all works for much better money management.