Your primary focus will have been finding and securing a suitable property, and although you have sufficient funds earmarked for the transaction, it's possible to overlook one of the most important parts of the procedure – opening a French bank account! Without a bank account in place, you will be unable to conclude your purchase, and for all the reasons stated below, this is key. There are no legal restrictions to non-residents opening bank accounts in France, and since many banks are now either completely on-line, or run internet sites concurrently with their high street presence, you can easily start this process before you move abroad.
Likewise, although you can of course just transfer the money for the deposit and balance of your purchase directly with your bank, it can be much more financially advantageous to use a currency broker, and you can possibly save yourself hundreds – even thousands – of euros by researching and organising this in advance.
FRENCH BANKS AND BANKING
If you are looking to start a new life in France or buy a second home then opening a French bank account is an important first step, making everyday life just that little bit easier. In this guide to French banks and banking we will look at:
- The benefits of a French bank account
- Opening a Bank Account
- Managing Your Account
- French Bank Cards
- French Cheques
- Savings Accounts
- Transfer money to France
- French Bank Loans
- French Mortgages
What are the benefits of having a French bank account?
There are many, but here are our top four benefits for a bank account in France:-
- Practical and cost effective: A bank account will give you access to a range of French banking services – and it will cost you less. This includes services such as cash withdrawals, direct debits, access to a cheque book and the ability to apply for a credit card. By opening a French bank account you can buy products and services in Euros rather than paying currency transaction fees on your UK bank cards.
- Currency transfers: Transferring money between international bank accounts (e.g. France & UK) is the safest and most secure way of exchanging. Any bank or financial institution you use for this purpose should have a high credit rating to protect and secure your money – generally the rating should be A+. Ask them if in doubt.
- Fund your property purchase in France: A French bank account will enable you to borrow money by taking out a mortgage on a property and making the necessary repayments.
- Insure your French property – and more: When you proceed with a property purchase in France you will need to have home insurance in place. Because banks offer a wide range of financial services when you open a bank account, including insurance, this can be a useful option without the need to contact other providers. and not ????
How to open a bank account in France
Once you have decided to open a bank account in France the process is generally easy and straightforward. You need to choose whether to open up an individual or a joint bank account. Make sure you have all of the necessary supporting documentation to complete the application.
Typical supporting documentation for opening a bank account in France will include proof of identity and address, evidence of income and bank statements. Banks may also require you to make an initial deposit into your new French bank account.
Because French banks have online account facilities, in many cases it is not necessary to travel to France to visit a branch to open your account. The minimum age requirement to open a bank account is 18 years and you may need to provide evidence as to why you wish to open up a French bank account; e.g. you are looking to buy property or travel regularly to the country.
If you prefer to speak and communicate in English, there are banks in France which offer this service. So don't worry if your French is limited or you are concerned about dealing with queries about your account in another language.
If you are applying for your bank account online the process should be quick and simple: after completing your bank application online you will receive confirmation and it is likely you will need to print, sign and return the documents to the bank. Voilà! With your new French bank account, your new dream in France is one step closer….
Managing Your French Bank Account
Understanding how French bank accounts work is important to enable you to manage your bank account in France smoothly, whilst minimising fees and other costs. Banks in France offer a good range of online facilities making it easy to keep on top of your finances without the need to visit a local branch. However, France does have a good branch network in cities, towns and larger villages.
Types of French bank accounts
- Current account (Compte courant). Available as an individual or joint account, ideal for managing your money in France on a daily basis. You will receive a bank card and a cheque book
- Savings account (Livret). Bank accounts providing easy access to your money including transferring to and from your current account. Livret A accounts are tax-free savings for French residents.
- Long-term Savings accounts (Compte à Terme or Compte d'Epargne Logement). There are two main types of accounts available which help with French property purchases. They are useful for helping family members fund a property purchase through a subsidised mortgage in France.
Keeping track of your bank balance
Check your bank balance regularly by logging onto your online account or using a cash machine in France if you are in the region where your account is actually held. It is also wise to look through your bank statements at least monthly. Access your bank account online or print off a copy at your local branch if you live in France. This will allow you to keep track of any spending particularly if you have some major bills or items of expenditure to pay – and avoid going overdrawn. In France, you need permission to go overdrawn. Failure to do so could result in you incurring additional fees and any cheques you have issued not being paid.
French banks charge a monthly fee for bank accounts to cover the cost of services including bank cards.
Open a separate savings account
It is a good idea to open a separate savings bank account in France. This helps to keep your savings separate from your current account and allows you to build up a fund to pay for holidays, household items – or simply give you peace of mind. If you run a small business in France, for example as a micro-entrepreneur, you must open a separate account for any business related transactions.
Paying your bills and everyday expenditure
Your French bank account allows you to set-up direct debits (called prélèvements in French) to pay utility bills and other items of expenditure, transfer money and make other online payments.
There are fewer ATMs in France compared to the UK although most towns and villages will have one. There is currently no cash back system in shops in France, so it pays to plan ahead for any cash withdrawals.
Paying money into your account
Bank branches in France do not have cashiers like the UK. Often there will be a receptionist as well as ATMs that are used to pay in cheques and cash notes only (coins are deposited at reception). Please note that banks will not change coins; there are coin change machines at major supermarkets. Remember to sign any cheques with the signature on the back.
In France cheques are used more frequently than in the UK, for example in supermarkets and other shops. Order a new cheque book (carnet de chèque or chéquier) online, by post or in branch. It is illegal to write out a cheque when you do not have the funds in your account. Do not postdate a cheque.
In French an overdraft is called a découvert. Banks in France are generally stricter on unauthorised overdrafts compared to countries such as the UK. Speak to your bank before you go overdrawn and explain your financial situation. They have an obligation to explain any fees charged and if the overdraft is required on an ongoing basis, discuss how you can manage this.
RIB stands for Relevé d'Identité Bancaire and provides all of your French bank account details: your unique bank account number, your name, address of bank and other code information. You will be asked for your RIB by a utility supplier, for example if you want to set up a direct debit. You can print these off from your online account or your bank will supply them free of charge.
Losing your card
If you lose your card (carte bancaire) or it is stolen report it immediately to your bank. Don't worry – as in other countries, bank account customers in France are reimbursed for any unauthorised transactions (an excess of €50 applies). Never disclose your PIN or card security details to anyone.
Getting in contact
After opening your bank account in France, an online secure mailbox enables you to communicate with your account manager and branch including sending any documents.
Most French banks offer other financial services and facilities in addition to your bank card and cheque book. These services include insurance (use your online account also to monitor or report any insurance claims) and facilities to help you manage a portfolio of investments, for example stocks and shares.
Using a French Bank Card
French banking can seem very different to Britons and other nationalities, and bank cards are a perfect example. In the UK credit cards and cards which defer repayment are used widely; less so in France. Generally in France the majority of people have debit cards which deduct the money from their bank account immediately or within a few days as the norm.
Types of bank card
French bank cards are generally Carte Bancaire (CB) allowing customers to make online or shop purchases, withdraw cash or use in other countries as a Visa or MasterCard, in the same manner as a UK debit card. There are essentially two main categories of bank card: débit or crédit.
When you use a card which is marked débit the money is taken from your account straight away. Alternatively with a card crédit the expenditure on any transactions is only deducted on a set date to allow the customer to budget more easily.
In addition to the débit and crédit there are also bank cards for professional or business use (commercial) and prepaid (prépayées).
Cash transactions with a bank card in France
Bank cards are of course widely used for cash withdrawals from ATMs and these are mostly free in France, even if the machine you use is not operated by your bank.
Unlike the UK, you cannot withdraw cash at the supermarket till in France, although many shops have ATMs either in store or close by.
Smart cards and contactless bank cards in France
France was the first European country to use the chip and pin system for bank cards. Contactless cards (sans contact) have a limit of €30 and are common in shops, cafés and restaurants.
What are the limits for using a bank card?
Although you may have sufficient funds in your French bank account, there are limits on how much money you can withdraw or spend using your bank card over a specific time.
French banks apply a limit to cash withdrawals over 7 rolling days and payments over the calendar month. Typically an international debit bank card (Visa/MasterCard) will allow standard access of 450€ cash per 7 days and 2300€ per month in payments from your bank account.
Bank card fees in France
Annual fees apply to French debit cards in general. However, many bank cards give access to other services such as basic travel insurance or full travel insurance as well as extended warranties for purchases made by yourself and your family.
Check online and compare the different bank card fees as well as the services provided.
Do you need to use a bank card to guarantee cheques in France?
In France there are strong regulations on the use of cheques (i.e. you cannot issue a cheque without having the funds in your bank account) meaning that bank cards are not necessary to guarantee cheques like in the UK.
Using a UK bank card in France
You can use your UK bank cards in France but be aware that you will pay a currency conversion and a transaction fee. If you are a frequent visitor to France or planning to purchase property in the country it is worth opening a French bank account as it will save you money.
Travellers' cheques and prepaid cards
Using travellers' cheques and prepaid currency cards are a more secure option than cash, as they offer some protection if they are lost or stolen. Travellers' cheques require a counter signature to be valid; keep a record of the serial numbers in case the cheques are lost or stolen.
Using a prepaid card is also useful abroad as it is not linked to your bank account should it be lost or stolen. You load money onto the card and use the card for purchases as normal. Card providers may be able to block prepaid currency cards if they are reported as lost or stolen and some cards also require a PIN for additional security.
However, these methods can be less cost effective than purchasing foreign currency. Commission may be charged when purchasing or cashing in travellers' cheques. A range of additional fees may also be applied to prepaid currency cards, such as card application fees, renewal or replacement fees, withdrawal fees, top up charges and fees for inactivity.
How and when to use cheques in France
Cheques are still widely used in France with more bank cheques issued than in most other European countries. Many people, particularly the elderly, prefer to use a cheque as it helps with budgeting and keeping track of transactions.
Using bank cheques in daily life
In France cheques are the preferred method for paying artisans for their work and for many customers, the weekly grocery bill in supermarkets. Cheques are similarly useful for buying tickets for the local Comité de fête, paying for the visit to the doctor and more besides. So although the number of French bank cheques issued is in decline, bank cheques still remain popular.
If you receive a bank cheque as payment, sign your name on the reverse of the cheque and write the number of the account before paying it in to your bank account.
Legality of bank cheques in France
It is important to note that bouncing a bank cheque in France is a serious offence and may result in you being blacklisted from having a bank account for up to 5 years (referred to as interdit bancaire). It is illegal to write a French bank cheque for an amount which exceeds the balance of your bank account. Bear in mind that French banks will clear a cheque very quickly – generally within around 24 hours. Be aware that cheques are classified as cash according to French law.
Avoid postdating a cheque as once they have been issued they could be presented to a bank immediately.
French bank cheques are valid for a period of 12 months and 8 days.
There is no system of using a bank card for guaranteeing cheques in France.
Writing a bank cheque
The layout of a French bank cheque is slightly different to a UK cheque. Each cheque requires the following to be legally valid:-
- The amount of the cheque (written in words)
- The payee – individual or company – to whom you are making the payment
- The amount of the cheque (written in numbers)
- The location where the cheque is written (e.g. the village/town where you live if written at home or the town where the shop/business is located)
- The date
- Your signature
And of course this all has to be written in French.
Transferring money using international payments
Why use a currency exchange service for international payments?
If you are planning to buy a property in France or travel regularly to the country you will need to transfer money from your UK bank account into Euros for your day-to-day requirements. Buying your new home in France, making payments for work to be completed, meeting monthly mortgage repayments and other bills are all examples of when you will need to arrange for a money transfer from sterling into Euros. Transferring money for cash withdrawals and payments for smaller items is similarly useful and reduces the cost of daily living in France as you will not pay currency exchange fees for individual purchases.
It therefore makes sense to consider the cheapest, most effective and secure way of transferring money between your bank accounts and making payments.
Choosing a provider to transfer your money
Transferring your money is possible using a bank or foreign exchange currency provider, either online, via an app or by telephone. A provider will require you to open an account which will give you the ability to transfer money, normally online 24 hours a day, 7 days a week. Before opening an account to enable you to send your money and make payments, documentation such as passports and details of your bank account are required for compliance with money laundering and tax avoidance legislation.
Whether you choose to transfer money to the value of £50 or £300,000, it is crucial to check that your preferred financial services provider is regulated by the UK Financial Conduct Authority and credited rated. This is important because once you transfer your money to the company your money will be guaranteed by the UK government agency, the Financial Conduct Authority, up to a specific sum. Finally, ensure that any website is secure (you can check this by seeing whether they use a "https" address) before transferring any money.
Types of money transfer
The exchange rate between sterling and other foreign currencies changes by the minute, so if you are planning to make payments of a significant amount, it makes sense to think ahead and discuss your requirements with a currency specialist. They will know how a particular currency is performing in the markets and be able to advise you on the best strategy to follow – making the most of your money and securing the best exchange rate.
Currency exchange options include:-
- Spot contract: if you have access to your money now and you want to convert it straight
- Forward contract: secure an exchange rate for up to two years, so you do not have to fluctuations
- Market order: advise your provider of the specific exchange rate you are looking to achieve. Your currency will automatically be bought when your desired rate is available
What are the minimum and maximum payments that can be transferred?
The minimum and maximum payments you can make in transferring money will depend upon the foreign exchange provider. Normally payments will vary ranging from £50 (minimum) to £300,000 (maximum).
How much does it cost?
There are two types of fee charges that are made for a foreign exchange transaction: a transaction fee (i.e. £5) and a currency conversion fee (calculated at the time of the money transfer). Each foreign exchange provider will purchase currency at a given exchange rate on the markets and sell to the customer at a lower rate, therefore providing them with a profit margin.
The exchange rates can vary between foreign currency providers so it is worth shopping around for the best exchange rate for your money and if there is a transaction fee; remember to factor this in to the overall cost.
How does the money exchange system work?
Firstly, decide how much money you wish to transfer as a payment and which currency you need to exchange it into.
Secondly, who will be the recipient of the payment? You can transfer the money to your own account or make a payment to another individual or company.
Thirdly, make the payment. Generally you should be able to make payments using a credit card, debit card or electronic transfer (BACS/CHAPS) from your bank.
Finally, once approved, the currency exchange provider will transfer your money and you will receive confirmation of this. Remember to check that these funds have been received; this will normally take between 1- 2 days.
French Bank Loans
Why take out a loan in France?
Borrowing money with a loan to buy a new car, take out a mortgage or purchase another expensive item is a necessity at times. If you live in France as a French resident and have a bank account you may be able to borrow with a loan or a mortgage. For more specific advice on French bank loans including borrowing money using a mortgage, consult your bank or financial adviser. They can help you to secure the best rate for a French loan or a mortgage.
Types of bank loans available in France
Loans are available from French banks or financial institutions and are either unsecured or secured against a property just like the UK and other countries.
An unsecured loan has a higher rate of interest and terms will vary from 1 month to 10 years. This type of loan is often used to purchase a car or undertake home improvements; they can either be for a set term or as a 'revolving' credit facility. Revolving credit facilities are useful for people who need to borrow money on a regular basis, repaying a sum monthly and paying interest on the outstanding sum.
Secured mortgage loans for property purchase or major renovations in France offer a more competitive rate of interest with terms generally up to 25 years.
Eligibility for a French bank loan
Unless you are a permanent French resident and can prove that you have a regular and stable source of income, it can be difficult to borrow money with a loan from a bank or financial institution – either secured or unsecured.
In France banks usually adopt a more cautious approach to lending money compared to the UK, even though the system is similar. Generally, the interest rate charged on a loan is lower than the UK but the interest rate may vary depending on individual clients and the perceived degree of risk.
Applying for a French bank loan
To apply for a loan you will need to supply proof of income as well as other documentation such as tax returns. This will prove your residency in France and enable the lender to assess your ability to repay a loan.
Like the UK, French banks and financial institutions use a system of credit scoring to assess risk and determine whether the loan is approved as well as the interest rate that will be offered.
Finding the best rate for a French bank loan
It pays to compare the different loans available, the minimum and maximum loan amounts, the term and the interest rate payable. The easiest way to find the best rate for a loan is online or by consulting with a financial advisor.
Taking out insurance for a French bank loan
Most French banks or financial institutions will ask you to take out insurance (assurance) when you take out a loan. This will protect you (and them) in the event you are unable to make a repayment (or for example miss a monthly repayment) against your loan.
Repaying your French bank loan
Loan repayments are made monthly by direct debit from your bank account. Check to ensure that there are no fees for early repayments of your loan when agreeing the term.
If you need to borrow money for a property purchase, a renovation project or a maybe a new build construction, mortgages are available in France to residents and non-residents. You may also wish to re-mortgage your property to secure better rates, borrow more money (e.g. for repairs/home improvements) or change the term of your loan.
Types of mortgages available include capital repayment (fixed or variable rate), interest only and bridging loans. Important note – Buy to Let mortgages are less popular than in the UK and most lenders will not take into consideration the future rental income when assessing any loan applications.
Interest rates are generally very competitive – it pays to shop around for the deal that is right for you.
To apply for a French mortgage you must supply proof of income, tax returns and/or audited accounts (for self-employed) and documentation. Your preferred lender will advise what is required.
Most mortgages will include an arrangement fee, a valuation survey and notary fees (the price of which is fixed by French law).
There are several ways a loan can be secured or guaranteed and you can save money depending on your requirements, so it is worth asking what your options are.
Life insurance cover is obligatory for mortgage loans and lenders will ask for evidence of buildings and contents insurance cover. Borrowers will need to ensure that they have access to a French bank account when applying for a mortgage.
For further information regarding tax issues, equity release schemes and other forms of French mortgages speak to your bank or a specialist mortgage advisor.
French Savings Bank Accounts
If you wish to open a savings bank account in France, there are a number of different types available with banks depending upon your financial situation and where you live permanently (i.e. the UK or France).
What types of savings bank accounts are available?
The following types of savings bank accounts are available in France:-
- Instant Access accounts (Livret A)
- Young Person's Savings accounts (Livret Jeune)
- Regular Savings Plans (Plan Epargne Logement – PEL)
- Livret de Développement Durable (LDD)
- Ordinary Share accounts with low risk funds
- Tax Efficient Investments (Assurance Vie)
- Savings accounts for those on a low income (Livret d'Epargne Populaire – LEP)
Eligibility for these French savings bank accounts depends upon where you live (i.e. in France or abroad), your appetite for risk, the amount of money you have available to save or invest in an account, the access you require (e.g. if you require easy access to your account in France or if it is a long-term savings plan) and your level of income.
Instant Access account: Some of these are tax free and available to all, regardless of age, nationality or tax residency. Each member of your family can have a Livret A (one account only). It can be opened at birth and maintained throughout life. This account is available to both French residents and non-residents.
Young Person's Savings accounts: The Livret Jeune is an excellent introduction to savings and banking for young people between the ages of 12 – 25 years who live in France, putting money into an account as and when they can. This account is only available to young people who are resident in France.
Regular Savings Plans (PEL): The Plan Epargne Logement deposit account is a regulated savings account. For example money can be used towards the finance of a property purchase with the possibility of obtaining a mortgage loan with a subsidised interest rate.
Livret de Développement Durable (LDD) is a savings account which is useful for people who already hold a Livret A account. Funds are for national projects across France. You must be a resident of France to open this type of account.
Ordinary Share accounts with low risk funds: for tax residents in France and non-residents. There are bank accounts which allow you to buy and sell shares on the French stock market and internationally and monitor their performance. All your stock market investments are managed in one place including shares, bonds and mutual funds (SICAV and FCP).
Assurance Vie: Like a life insurance policy in the UK but with some differences, the French Assurance Vie also acts as a will. Crucially – and this is a key benefit – you have considerable flexibility with an Assurance Vie as you can cease premium payments, withdraw or add funds whenever you choose, withdraw all the funds or convert the capital into a life-time annuity. Funds are generally either shares or bonds. Funds are treated as being outside of your estate, to named beneficiaries, so it is a good way of planning your inheritance if you are permanently resident in France.
Savings accounts for those on a low income (Livret d'Epargne Populaire – LEP): If you pay very little or no income tax in France, you may be eligible for this type of savings bank account. This account is useful for covering unexpected expenses or to carry out a project.
What are the interest rates payable to a bank savings account?
The interest rate payable is set annually by the French Government and depends upon the type of savings account. At the time of writing, the Livret A instant access accounts – available from all banks – will credit your account with a rate 0.75%*. For further details you should approach your bank in France.
What are the maximum and minimum amounts that can be deposited in an account?
This will vary depending upon the type of savings account, ranging from €1,700 for the Livret Jeune to €22,950 for Livret A. The minimum is €10.
Do I pay tax on the interest in a savings bank account?
Any interest earned from savings accounts is exempt from French income tax or social charges
Article brought to you by Credit Agricole Britline. CA Britline is a part of the French bank Credit Agricole Normandie. An online branch with a difference: all of their team are English speaking and can understand and help you with all your banking needs in France.
They offer useful information and bespoke services online at www.britline.com*24/7 or you can call their friendly team to discuss your requirements on 0033(2)31 556789* Monday to Friday.