A beginners guide to Banking in France

A Beginners guide to Banking in France

When you decide to move to France and buy your dream home, one of the first things you’re likely to do is open a bank account. When it comes to banks in France, like in the UK there’s plenty of choice. Credit Agricole, Caisse d’Epargne, CIC and BNP Paribas to name but a few. In most cases the bank you choose will either be based on a personal recommendation or on convenience. In some of the small villages in France you’ll find that there are only one or two banks.

UK Bank in France or French Bank?

Even with fairly French basic language skills there’s no reason why you should feel under pressure to stick with a British bank. So when it comes to making the right choice, like most things in life, it will probably be down to personality. If you walk into your local branch, you might be taken by the smiling face behind the counter, even if you don’t understand every word that’s said to you. And it could well be that the convenience of having your bank on your doorstep far outweighs the disadvantages of having to go to every meeting armed with a dictionary.

Paying for your new French home

When it comes to banking transactions, one of the first things you’re likely to do is make one of the biggest purchases of your life: your new French home. For this, you’ll need to transfer a euro balance into your account so you can pay the Notaire for the new bricks and mortar that will be key to your adventure. Where and how you decide to buy your euros will depend on the value you place on service and the deal of course. If you have a good relationship with your UK bank, it may well be that you’re prepared to swallow the difference on the exchange rate or a slightly higher commission for the peace of mind?

To carry out this transaction, you’ll need a current account. Like in the UK, you’ll get a cheque book and a credit/debit card with your current account, but unlike the UK, free banking is pretty uncommon in France. That said, you shouldn’t be afraid to negotiate with your bank, especially if you’ve got proof in your hand that they’re going to be receiving a sizeable transfer in the near future (in fact this is a perfect time to negotiate yourself some great deals).

Your current account will also be used for paying all your utilities: insurances, gas, electricity and telephone and most likely your day to day expenses while you’re in France. The way this normally works is by setting up what’s called a prélèvement, which is the equivalent of a direct debit in the UK. In order to set up a prélèvement, you will need to ask your bank for a Relevé d’Identité Bancaire, a RIB, which contains all your bank details and, together with your signature enables the utility provider or insurance provider to debit your account within your agreed terms.

Savings in France

Outside of your current account, you’ll probably want to set up some sort of savings account. The best place to start is a Livret A, which is a little bit like an ISA in the sense that the interest is free of tax and cotisations sociales in France. There’s a ceiling on how much you can hold in your Livret A. Thereafter there are various savings account options whereby you can have immediate access to your funds or you can tie your funds up for longer. Generally speaking, although not always the case, the longer you leave your funds untouched, the higher the rate of interest.

One thing to be aware of in France is that even if you don’t earn enough to have to pay tax, you will have to pay cotisations on your interest. The rate of cotisations sociales that are currently paid at source on gross interest is 15.5%. Although cotisations sociales are similar to National Insurance and are applied to all earned and unearned income.

Borrowing in France

If you’re thinking about borrowing you’d do well to get yourself organised while you’re still earning money. If you’re planning to move to France to set up a business or to retire, the possibility of borrowing will become significantly more difficult. While again there are exceptions, the general rule of thumb in France for borrowing is that you can’t borrow to a level whereby the repayments will exceed one third of your net income. It’s for this reason that you should get your borrowing sorted out while you have income and research as much as you can French mortgages, and you'll still need to transfer euros to pay for your deposit.

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