Guide to French retail banking

A basic guide to the French retail banking system for expats living in France, including the main high-street banks, how to open an account and use cheques, bank cards and overdrafts

Written by Kate McNally

In essence, the French retail banking structure is similar to that in the Uk, so it’s not as if anyone looking to set up a bank account across the Channel will find themselves walking into a cultural or financial minefield. As in any country, you need to get a feel for the main players, the standard products and services on offer, in order to make the choice that’s right for you. Here is a basic guide to the French banking system.

1. CHOOSING A BANK

This depends very much on what you want from your bank. If you want basic services at a low cost, then La Banque Postale – the banking arm of the national La Poste postal service – keeps it simple and keeps charges minimal. As it operates primarily through existing post offices, this means that it is also likely there is a branch near where you live.

If, on the other hand, you require a more comprehensive offer, including mortgage loan, credit cards, overdraft facilities and a range of insurances, then you would possibly be better served by one of the more established larger banks such as Crédit Agricole or Société Générale. Ask about the various account ‘packages’ they have, known as soclesor bouquets, but be sure to check both the annual and occasional charges.

Similarly, factors such as geographical proximity, customer service, and even ethical values can come into play. If you want a good deal of hand-holding with your finances (which could be advisable in France, if you don’t have a personal accountant, as the detail can get complicated), choose a local bank near where you live or work. Alternatively, if you are one of those who prefer to be your own bank manager, then there’s always the option of the better-known online banks in France, such as INGdirect or Monabanq.

2. OPENING AN ACCOUNT

Happily, this is a relatively easy affair for anyone resident in France. Generally you will be asked for proof of identity, proof of residence (a utility bill for example), and a salary slip or tax return. Then it’s simply a question of a few forms and signatures, and hey presto, your account is up and running in a few days.

It is also possible for non-residents to set up a non-resident French bank account. However, you may not enjoy the full gamut of banking services on offer, such as an overdraft or loan facility, for example.

As in the UK, joint bank accounts are available – either requiring joint signatures for payments, as indicated by the account holder, with names written as ‘M Brun et Mme Brun’, or giving individual rights, in which case the names are written as ‘M Brun ou Mme Brun’. the latter offers greater flexibility, but a word of warning – it also means one or other party can independently clear the account and close it, so be sure your banking pal is trustworthy!

3. BANK CARD

France was the first country in Europe to adopt the now almost ubiquitous chip-and-PIN bank card, and there are very few bank account holders who don’t have a bank debit card. There is also the hybrid debit-credit card for those with a credit banking option, which allows you to select either the debit or credit transaction option when you place your card in a card payment terminal.

And the country is maintaining its place in the vanguard of the financial world (technologically speaking if nothing else) with the adoption of another payment innovation. While it was the first to embrace the PIN, France is also among the first to dispose of it, at least for card payments of less than €20. The carte CB sans contact (contactless card) is designed to facilitate the payment of smaller everyday purchases and operates by bringing the card within distance of the terminal for the ‘sans contact’ chip signal to connect. A beep, similar to that made by a barcode scanner, indicates the transaction has been carried out. Perfect for those with regular short-term memory loss or too many PIN numbers!

4. CHEQUE BOOK

Unlike some other European countries, France has not yet done away with the good old cheque, although retail outlets do have the right to stop accepting cheques as long as this decision is clearly displayed to customers.

There are, however, a few distinct and important differences in the use of cheques in France as opposed to in the Uk. Firstly, it is not lawful to write a post-dated or open-dated cheque. You can informally arrange with a recipient that payment is made in instalments using several cheques that you ask to be paid in at a later date, but bear in mind that if you hand over a post-dated cheque, they are legally entitled to submit the cheque to their bank and it will be immediately valid. Generally, if you have agreed to pay in instalments, it is more prudent to send each cheque separately on the agreed dates. it’s also important to note that a cheque remains valid for one year and a week after the date it is written.

Secondly, it is not possible to stop a cheque except in cases of theft or fraud. the knock-on effect of this is that you are legally bound to honour any cheque, and should there be insufficient funds in your account, you are in for serious trouble, including legal action and potential blacklisting by the central Banque de France. In many cases, this can be avoided if it’s a question of unfortunate account management and you have a good relationship with your bank, but take care not to accumulate large outgoings unwittingly. If you foresee a problem, contact your bank immediately before the cheque is presented – they may be able to organise a facilité de caisse (interim authorised overdraft).

Another difference with French cheques is how you fill them out. You need to fill in where you are (i.e. which town in France) when writing a cheque, but the biggest cause of British expats ripping it up and starting again is the inverted positions of the recipient and amount-in-words lines, compared with a UK bank cheque. Whole forests must have been wasted with this slip of the pen!

5. ONLINE BANKING

Online banking is as widespread in France as elsewhere, and most people below a certain age use it regularly. You can follow movement in your account, carry out payments, transfers (virements), and set up direct debits (prélèvements automatiques) and standing orders (virements permanents).

You can still receive a hard copy monthly statement, but check if it’s free. Statements should clearly indicate any charges incurred during the month, as well as annual fees.

6. OVERDRAFT

If you require a long-standing overdraft facility, speak to your bank about setting up a découvert autorisé. The bank will decide with you the overdraft level allowed depending on your income and financial situation. check with them the monthly or annual percentage rate charge for the facility. And be careful not to exceed the overdraft limit or you’ll find yourself paying hefty extra charges, known as contraventions, which are generally incurred per transaction using unauthorised funds. Banks aren’t permitted to take over and above a set amount in charges per month, around €80, but it’s best avoided.

If you find you do need a temporary overdraft for a short-term cash-flow problem, ask for a facilité de caisse which usually has a lower percentage rate charge.

7. LOANS

As in the UK, if you find yourself regularly overdrawn, it is probably better to ask for a loan as it often works out a cheaper option in the long run. The bank will take into account all income and outgoings when calculating if a loan is possible and how much they are prepared to lend. French society in general is less plugged into the credit lifestyle than in Britain, and the banks don’t promote or grant personal loans with the same ease as their UK counterparts. That said, most banks will try to accommodate a customer’s request if they see a genuine need and minimum repayment risk.

8. SAVINGS ACCOUNTS

A savings account in France is generally known as a compteor livret d’épargne, and there is an array to choose from.

The most popular is the government’s tax-free Livret A, the equivalent of the UK ISA. The interest rate is 1% and you can currently save up to a maximum of €22,950 in this account and pay no tax on the accrued interest. Also popular is the tax-free Livret LDD (livret de développement durable) – 1% interest rate and a ceiling of €12,000 – and the LEP (livret d’épargne populaire), which is open to lower income earners at a 1.5% interest rate on savings up to €7,000, and is again tax-exempt.

A regular instant access savings account is known as Livret B, and long-term savings accounts are called comptes à terme, although often banks give these accounts a catchier name to help differentiate various offers. These accounts are not exempt from tax charges on interest, and you will need to look closely at the advantages and disadvantages of each according to your saving needs.