This article is relevant for anyone interested in banking while living abroad.
The BBC is reporting that many UK nationals living in the EU have been told to close their British bank accounts by the end of the year. The call seems to have come from Lloyds, while Barclays has informed many Barclaycard holders that it is time for them to move on. The issues I have heard that people will face are not being able to receive UK income, including pensions, and the inability to make payments. Many also have regular standing order and direct debit payments.
There are a range of options that people can look at these include:
- Opening a specific ex-pat account. These often operate with an exorbitant fee from British territories, not the UK mainland.
- Opening a GBP account with your local bank alongside your EUR or other currency one. However, these rarely support all aspects such as low-cost incoming payments, direct debits or standing orders. They can also be expensive.
- Alternative financial providers (what I will talk about here).
Alternative providers such as TransferWise and Revolut offer the ability to send and receive payments to/from a pseudo bank account. They also offer free or very low cost currency conversions. Both also come with a debit card and offer free ATM withdrawals across the world, up to a certain amount.
Neither Revolut nor TransferWise are banks. Therefore, your money is not directly protected via them. Instead, they hold their client funds in authorised banks. This means providing those banks remain solvent, your money should be safe. However, as they may hold the accounts in a different jurisdiction, the level of protection may vary depending on the currency being held.
Revolut
Revolut offer “virtual” accounts into which you can send and receive GBP and certain other currencies. This means you can hold balances in several currencies without charge. Direct debits and standing orders are available for GBP transactions. You can convert the equivalent of up to €1,000 per month free Monday to Friday, outside of these hours, and the limit you will pay a fee of up to 2%. If you wish to convert more than €1,000 or withdraw larger amounts you either will have to pay each time or join one of their paid plans. They permit one free bank transfer per month, thereafter it is 50c each. Direct debits are free. Depending on where you live, you will receive a Master or Visa card. With this card you will be able to withdraw up to the equivalent of £200 per month in all currencies, exceed this limit and you will be charged 2%. Again, if you join one of their paid for plans, the maximum free amount per month is increased.
Revolut offers a range of other services besides basic banking, such as the ability to buy and sell shares, commodities and take out travel insurance. Fees for these vary from free to a few percent.
This is a pre-paid account with no credit facilities, while you can deposit funds via other credit or debit cards you need to check if your own provider there will charge you a fee. Revolut charges a fee if the top-up card is not from your country of residence. However, standard incoming bank transfers to your account should normally be free.
Revolut comes with a nice little app, in fact you can’t do anything on their website. This also supports splitting bills between other friends who are also on Revolut and information on your spending categories.
Transferwise
TransferWise offers a simpler service. Like Revolut, you can send and receive funds and hold balances in multiple currencies via “virtual” bank accounts. They support direct debits, free and work with no issues. Sending money always incurs a fee which has a fixed component and if it involves a conversion, a currency fee. In my experience, this seems to average around 0.5%, although can seem higher for smaller transactions. There are no fancy stock trading markets, plans or split bill options. However, you can use their services via their app or website. They offer free ATM withdrawals up to a limit of £200 per month, above this amount you will pay 2%. TransferWise offer a range of transfer options, ranging from a standard one which can be a few days up to fast transfers for an additional fee. TransferWise do not offer standing orders.
My Experiences
I have been using TransferWise for years; I have used the basic currency exchange, direct debits and multi-currency features. Their service has been flawless. I took out their card and account as I was already using their transfer service.
I only started using Revolut in 2020, mainly as they were offering at that point up to €6,000 in free transfers per month. They reduced that limit to €1,000 per month. If your needs are under this per month (like mine) and you need standing orders they may well be the way to go.
While you can hold money in multiple currencies, often with a bank account number attached. It is worth noting that if you spend money, or undertake a transaction (e.g. direct debit) in a currency that you don’t have sufficient funds in, then a conversion fee will apply (subject to any limits). This may seem like a pain, but in reality it means you only need to convert funds when you need to, rather than worrying about remembering to do so when required.
Summary
In some ways neither of these services a replacement for a full bank account in the UK. However, they offer most of the basic banking services that you should require. Also, if you are likely to send or receive funds and need bank accounts in many currencies, then arguably they are better and cheaper than traditional banks. The free withdrawal limit in any currency may also be better value than using UK bank cards when abroad.
Setting up and using the accounts with both providers is quick and simple. They will be asked for some ID for verification, but again this is a fast process.
Reviews of both companies are positive. However, they have a reputation of locking accounts if transactions look suspicious. Therefore, I would test the water with them first and not use them for your house sale money or anything similar. They are however probably perfectly ok for incoming salary and pension payments, etc. They both offer separate business accounts if that is what you need.
To help the decision process, here are some key points to look for:
- What basic banking services do I need: standing orders, direct debits, etc.
- How much do I plan to convert per month between currencies?
- Do I want an extra debit card?
- Do I need lots of fancy services like trading in stocks?
If standing orders are vital to you, then Revolut is the only way to go. Although, you can repeat payments made on TransferWise manually if you like (but this will incur a transfer fee).
As some UK banks have given customers brief notice to get their funds out of the UK, these two providers offer a quick way to get a UK bank account into which you can deposit your funds.
For more information, in particular to check out their respective fees and services, please visit their websites:
I do not make money if you click on either link above.
