Money Matters in the UK
This page gives you information about banking in the UK and about organising your money while you are here. Click on the following list for more information:
- Opening a Bank Account
- Basic Account
- Current Account
- Student Current Account
- Savings Account
- Special Accounts
- Transferring Money to the UK
- Getting money quickly
- Store cards, loyalty cards
Opening a Bank Account in the UK
Useful Words
Withdraw - take money out of the bank
Deposit - put money into the bank
ATM Machine - bank machine where you can withdraw money
Bank Statement - the letter sent to you by your bank (every month or every 3 months) with a summary of money in and out of your account
Bank Balance - the amount of money in your account
Bank Branch - the main bank may be in Oxford Street in London and all the other banks are called 'branches'
Debit Card - a card which you use to withdraw money from machines and which can also be used in shops, restaurants etc to pay for goods or services
Interest - a small amount of money that your savings earn or the extra money that you have to pay if you borrow money
PIN - Personal Identification Number. This is a number given to you near the time you receive your debit/credit card. The number must be kept secret.
Benefits of having a UK bank account:
- You can withdraw money all over London at any time (ATM machines are open 24 hours)
- You don't pay the exchange rate every time you withdraw money (unlike if you use an account from your own country)
- You will be sent monthly bank statements which you can use as evidence when applying to extend your stay in the UK (for advice on extending your stay go to Current International Students - Immigration Advice for Students in the UK) You should check your bank statements and then store them safely. If you have to ask the bank for evidence of your account, they may charge you a fee and it will take some time to obtain them.
- You can save money if you pay your household bills directly from your bank account
- Employers prefer to pay wages into your account
It can be difficult to open an account in the UK and you may have to go to several banks before you are successful. Each branch of each bank makes an independent decision about whether to accept you as a customer. Unfortunately there is no particular bank that has a better deal for international students.
Documents to Open an Account
When you open an account, the bank will ask for identification. (different banks ask for different details on letters so ask the bank what they require). This usually includes
- your passport
- your letter of acceptance or proof of enrolment
- proof of your UK address, for example a household bill.
If you have moved to the UK very recently, you will not yet have these bills to show.
After you enrol, you should contact your School office for bank letters and all other documentation.
It is a good idea to ask your bank in your own country to send you a statement to your address in the UK. You can use this as evidence of your UK address when opening an account here.
Basic Account
You will receive a bank card which you can use to withdraw cash from machines (ATMs) across the UK. This service is usually free and the machine usually tells you if you will be charged. This kind of account does not provide cheque books or debit cards. Most banks have reciprocal agreements with other banks, and you can use your card in most cash machines in the UK and abroad. If you are a new student, or you are studying on a shorter course (for example a one year Foundation course) you may only be able to open a basic account but after 6 months or more, you can apply to upgrade to, for example, a current account.
Current Account
A current account usually gives you a cheque book and a card that both guarantees your cheques and allows you to withdraw cash from cash machines (ATMs).
Your card is usually also a debit card. You will now need to enter your pin when using your card to purchase goods. When you use your card in a shop, or give the card number when buying goods and services over the telephone, the bank will deduct the amount from your account automatically.
Some current accounts pay you interest as a proportion of your balance.
Student Current Account
This is a special current account, usually only available to UK-based students who have taken a government Student Loan but some bank branches will open a student account for international students. The rules vary from branch to branch, and you should ask other international students if they have found a helpful bank. If you find one, please let us know.
Savings Account
Some students also open a Savings account to use as a second account, or if they are unable to open a current account. You receive interest payments as a proportion of your balance. You will not have a cheque book or cheque guarantee card, but you may receive a card for withdrawing cash from cash machines. Sometimes, if you have had a savings account at a bank for about six months and are continuing to be a customer, they may allow you to convert it to a current account. Building Societies (for example Halifax, Abbey National) or the Post Office usually have better rates of interest than banks if you do wish to save money.
Tax on Savings
If you have money in a savings account which gives you interest, you have to pay 20% tax on the interest. If you don't have a job or you are sure that you will earn less than your tax allowance (c. £6,000) you can claim this tax back. You need to complete form R85 available from your bank or building society. For more information on paying tax in the UK go to Income Tax.Special Accounts
Be careful as some banks may offer you a special account which you have to pay for every month. The names of these accounts often have the words ' Gold' or 'Select'. With some of these accounts, you must maintain a minimum balance of £1,000 and pay a charge every month. Some of these may be useful for you but some accounts are not suitable for international students. If you have opened a special account and are not sure if it is good for you or not, contact Student Services.
Transferring Money to the UK
The easiest and cheapest way to send money to the UK is by electronic transfer of funds into your account from a bank abroad. To do this, the bank abroad will need:- Your bank's name and full address
- Your name as on your bank account
- Your bank account number (usually 8 figures)
- The bank's 6-figure sort code
Money can also be transferred using a banker's draft. This is a document drawn up by the bank in your home country and sent to you by post. You present the banker's draft to your bank in the UK. If someone transfers money to your account they should keep a copy of the paperwork, in case of problems.
You can also receive money by e-mail if you have a Paypal account, and then transfer the funds to your UK bank account in five working days. There is a charge for transferring money into and out of your Paypal account.
Getting Money Quickly
Several companies provide a very quick money transfer service, but usually with a high rate of commission. Western Union operates in most countries. Money is sent to you from a Western Union office, or by credit card over the phone, to be collected at a Western Union agent in London. This service is very quick (10 - 15 minutes). For information, call free 0800 833833. A similar service called Moneygram is run out of Thomas Cook franchises, most Post Offices and some bureaux de changes. Money can be credited to a credit card and withdrawn in the UK. American Express cardholders can have money sent to an American Express office in London.
Store Cards, Loyalty cards
Many shops and department stores have store accounts. A limited credit card is issued, only for use in that store, and other stores with a reciprocal agreement. If you do not pay off your balance every month, the rate of interest can be high. Many supermarkets and large chain stores also issue free loyalty cards. You present the card every time you buy something, and gain points usually for every £1 you spend. These points can be redeemed for goods, or discount vouchers. Cardholders usually also receive a magazine, discount vouchers, etc.
