See how to open a bank account in the UK, currency exchange rates and ways to pay bills. This section also has information about the different types of insurance.
There is little practical difference between banks and building societies, with both offering current accounts, savings accounts and investments. The main difference is that banks operate for their shareholders, whilst building societies are mutual institutions, meaning that people with an account are effectively members and have a right to vote on issues affecting the society.
There are several types of bank account available, but the two main types are the basic bank account and the current account.
Basic Bank account
You can find out more about different types of bank accounts, at Money Advice Service. Most bank accounts are free but many banks offer additional services such as insurance packages, for which you will have to pay a monthly fee. Think carefully about whether these are useful for you, and good value for money, before you commit to a monthly charge for your bank account.
When choosing a bank account you should think about whether you will use your bank card abroad or make many transactions in other currencies; some banks charge for this but others do not. There is also a variation in the amount that banks charge for international money transfers. If you plan to send money abroad regularly you may be better off using a reputable foreign exchange broker rather than sending it through your bank.
In the past few years it has become more complicated to open a bank account in the UK, owing to the tight laws designed to prevent money laundering or terrorist activity. You will only be able to open a bank account close to where you live or work, not in a third region. Most banks require proof of identity and proof of your UK address (often two different proofs of address), and for certain accounts you may also need proof of income.
Proof of identity. The best option for this is your passport, although some banks may also accept an ID card or driving license, as long as it includes a photograph.
Proof of UK address. You should try to arrange your accommodation before coming to the UK, and get some official documentation sent to you there. Ask your employer if they can sort out some accommodation for you, even if it is only temporary.
Examples of proof of address:
Proof of income. Ask your UK employer for an official letter or contract showing your UK address and the dates and terms of your employment, including how much income you will receive. If you cannot obtain proof of income, you should still be able to open a basic bank account, but may not be entitled to credit facilities, such as an overdraft or credit/debit cards.
Remember that banks and building societies have different policies on opening bank accounts and therefore if one bank will not let you open an account this does not mean that you cannot get one: you just may have to look around a bit more. Try asking other international researchers what they did, or talk to your personnel department. The British Bankers’ Association produces a leaflet ‘Opening a bank account if you are new or returning to the UK’ which you can access online.
Special Accounts. Some banks offer special accounts for foreigners coming to the UK, which can be opened either before you arrive in the UK, or up to four months after you arrive. Unlike regular bank accounts, you will have to pay a subscription charge to open this account, but they often include additional services such as discount offers.
Opening hours are decided by the individual banks and may differ considerably from branch to branch. Banks are usually open 9am - 5pm weekdays, although some in Scotland close for an hour at lunchtime. Some banks are open all day on Saturday and a few are now open on Sundays for limited hours. Cash may be drawn from machines (ATMs). Many branches also have 24-hour banking lobbies where a range of services can be obtained through machines. Visitors from overseas should check with their own bank whether they will be able to gain access to these facilities.
If you receive a grant in Euros that is paid through your institution (e.g. a Marie Curie Fellowship), you should check the terms of your agreement regarding exchange rates. Policy for this differs between institutions; some agree a fixed amount in pounds sterling throughout the duration of your contract (here the institution absorbs any fluctuations in exchange rates); others pay the current sterling equivalent each month, meaning that your monthly income could fluctuate depending on exchange rates.
You can check current conversion rates on the XE.com Currency Converter.
Credit cards with the Visa, MasterCard or American Express symbol will be widely accepted in the UK. It is advisable to tell your credit card company that you will be in the UK, as they may block transactions being made outside your normal area. If you have any other credit cards, it is advisable to check in advance with your bank or credit card company.
Scotland and Northern Ireland's banks issue their own notes. These can be used elsewhere in the UK, but shops are sometimes reluctant to accept them. If you have any trouble getting them accepted ask a bank to swap them for Bank of England notes. This can be done free of charge.
Cheques can be used as an alternative way of payment, and are useful for sending payment through the post. Some shops now refuse to accept cheques but if you do want to pay by cheque in a shop you will probably be asked to show a cheque guarantee card, which should have been issued with your chequebook. Make sure that you have enough money in your account to cover any cheques that you write; otherwise you may have to pay a fine and will get a bad credit rating, which can make things difficult for you in the future.
When writing a cheque, on the top left hand line (after ‘Pay:’) you should write the person/business to which the payment should be made. On the lines below you write out the amount to be paid in words, and this amount should also be written in figures in the box on the right. Finally you should fill in the date (day/month/year) and sign the cheque. When paying bills it is advisable to write your reference number or account number on the back of the cheque.
A Standing Order is an instruction you give to your bank to pay a set amount, usually each month, to a particular person or supplier. The amount can only be changed by you.
A Direct Debit is an instruction to your bank to allow a supplier have money from your bank account to settle your bills. Normally the amount can be changed by the supplier so long as they give you ten working days notice of the amount so that you can cancel the direct debit if you are not happy.
You can cancel direct debits and standing orders by writing to your bank. If there is not enough money in your account to pay a standing order or direct debit, the bank does not have to pay it and you may be charged a fee.
There are many types of insurance available in the UK, but the ones which you are most likely to need are:
Money Advice Service has more information on insurance, including life insurance, critical illness cover, and income protection