by For those of us who like to spend time outside of Blighty it is important that we have a bank account which is conducive and beneficial to our lifestyle. For the longest time it has been awkward and expensive to spend money abroad whilst a lack of clarity has led to us being stung by hidden and unexpected charges and fees.
Personally I have had pretty much the same bank account for the last 15 years whilst supplementing this with various ‘cash’ and ‘travel’ cards for abroad. I know this certainly isn’t optimal and therefore finding a new bank account that suits me better has been something sitting on my ‘to-do’ list forever. I’ve finally decided to get around to it and I think it makes sense to use it as the topic of my next post as I explore and educate myself.
I am hoping that by the end of this post I will be able to recommend something for both a Nomad as well as somebody who regularly travels and holidays abroad (in this I will be classing a Nomad as someone who is earning money abroad).
Current accounts
The best place for us to start (I believe) is with a typical current account through one of the larger and more established banks commonly used in the UK. Some of the most common are:
- HSBC
- Lloyds
- Santander
- Barclays
- Natwest
- Nationwide
A large percentage of the British population have accounts listed with the banks above and often (if like me) this is because they were set up a number of years ago and left because it’s often easier to do nothing. The majority of these banks will:
- Charge a percentage fee for use of a debit card abroad (for currency conversion)
- Charge a percentage fee to withdraw cash abroad
- Charge a flat fee for use of debit card (often waived in EU)
- Charge a flat fee for cash withdrawal (often on top of percentage)
My current Lloyds account will charge me the following to use it abroad:
- £100 cash withdrawal will incur a 2.99% (£2.99) conversion fee and a £1.50 fee for the privilege of withdrawing money from an ATM
- £100 debit card transaction will incur a 2.99% (£2.99) conversion fee and a £0.50 fee.
- My Lloyds credit card is pretty much identical – apart from a 2.95% conversation fee… so save 4p for every £100. Just don’t withdraw cash accidentally and incur an additional 5% fee.
Some of the above banks will have versions of their current accounts which charge 0 foreign transaction fees but these are ‘premium’ accounts which come with monthly charges for the additional benefits they provide. This is not inherently a bad thing as they may also offer other benefits you require.
For £20 a month with Natwest the following benefits can be yours:
- Mobile phone insurance
- Car breakdown cover
- Family travel insurance cover
- Rewards points (can be redeemed for goods and services)
- Additional overdraft use
- Fee free debit card use
All of the above can be useful depending on your situation but usually unless you make use of the majority of the benefits there are cheaper ways to achieve the same thing. For the rest of this post we will be focusing on specific options and accounts that make life abroad easiest.
Starling Bank
Established in 2014 Starling Bank is an app/online bank with no physical locations. It was formed to give customers what they really want whilst getting rid of the fluff. Since opening its current account in 2016 it has won the ‘best British bank’ award for the last 4 years.
Positives
- No account fees
- Free cash withdrawals abroad (£300 a day max)
- No foreign transaction fees
- International money transfers – 0.4% transaction fee + small delivery fee (see negatives)
- Quick and simple to set up – within 5 minutes of downloading the app (ID required)
- Everything managed within the app
- Overview of spending insights and habits that show how and where you spend (also categorised)
- Real time balances and spending notifications
- Freeze cards from within app (if lost or stolen)
- Disable, restrict or block payments – Disable contactless or prevent yourself spending in areas (like gambling)
- Paperless documents – great for a nomads and the environment
- Login via desktop (as well as app) – in case of lost phone
- Additional ‘connected’ card – for yourself (emergency) or a trusted person (can’t be used to withdraw cash or gamble) with a £200 limit
- Regulated and insured by Financial Conduct Authority (like all trusted banks)
- Ability to setup free business account
- Ability to setup a free euro account – For those who send, hold and receive Euros regularly. One account can have both pounds and Euros.
- Deposit checks up to £500 by phone
Negatives
- ‘Small delivery fee’ for international transfers – 30p for slower local network payment or £5.50 for Swift transfer.
- No physical locations
- Earn 0.05% on balances up to £85,000
- Maximum of £5,000 cash paid into a personal account yearly
- Overdraft rate of 15% – 35% depending on your credit rating
- No switching/new customer bonus
Other Features
- Able to set goals for savings
- Round-up feature – rounds spending up to the nearest pound and the difference is ‘saved’ for your goal (holiday, car etc.)
- Send payments securely to other Starling customers
- Easily settle payments with ‘settle-up’ link
Overall the Starling bank offers a huge number of features that harmonize exceedingly well with a nomad or travelling lifestyle. Having no abroad fees (apart from 0.4% conversion rate + small fee) is extremely powerful and being able to open a business account will appeal to those who make a living as they travel.
Wise
Similarly to the above Starling Bank, Wise (formally TransferWise) is an online only bank account. Again they are relatively new to the scene (2010) and formed to help tackle and reduce international/abroad fees for customers. Technically Wise is not a bank account and although it feels like you are sending money to an abroad account the money never leaves the country. It works in this way:
Pay local currency into Wise’s local account –> Wise account overseas (in the country of the recipients bank) then transfers local currency to the recipient minus a very small fee.
Positives
- No account fees
- No foreign transaction fees
- International money transfers – 0.369% transaction fee
- Quick and simple to set up – within 10 minutes of downloading the app (ID required)
- Everything managed within the app
- Open and transparent about their charges
- Hold up to 50 different currencies inside one account
- Converter on home page to calculate cost to you for transfer
- Uses mid-market exchange rate (many other use above market rate and add their own fees)
- Business account option which can integrate with accounting software Xero
- Freeze and unfreeze cards in the app
- Get paid like a local by clients
- Easy to manage businesses like rental properties through the app (with local currencies etc.)
- Budget within app
- Set goals for savings within app
- Paperless documents
- Login online if lose phone
Negatives
- Withdraw money free twice a month up to only a total of £200. Over £200 a charge of 1.75% and a 50p fee each time.
- Unable to deposit by cash or cheque
- £5 one off fee for debit card
- Can take time to transfer money abroad
- Not covered by FSCS – but money is safeguarded by Wise keeping it in accounts separate to the ones used to run the business. Money is mostly held in cash or bond accounts with other banks (regulated by FCA).
- No option for overdraft or loan
- No interest earned
- £200 a day limit at ATM
Overall Wise is a fantastic and feature rich account which is best used for those living abroad and taking advantage of the unique benefits such as multiple currencies within one account. It has a couple of limitations from not being a bank so if this is your only account then you could have a few constraints
Monzo
Monzo again is a online only bank account and realistically these are the type of accounts that shine for a nomad so it is no real surprise to see them leading the way. Monzo quickly gained popularity due to the ease in which it can be used abroad and it has become so much more than the cash card it started as.
Positives
- No account fees
- No foreign transaction fees
- International money transfers – 0.369% (set by Wise)
- Regulated and insured by Financial Conduct Authority
- Paperless documents
- Quick and simple to set-up
- All managed within app
- Overview of spending insights and habits that show how and where you spend (also categorised)
- Real time balances and spending notifications
- Freeze/unfreeze card in the app
- Login online to ‘stripped back’ version of account if lose phone
- Option of business account
- Option of Monzo Premium or Plus Account for £15 or £5 a month respectively with the following benefits:
Negatives
- ATM withdrawals – £250 in UK & EEA and £200 everywhere else every 30 days (then 3% charge)
- No physical locations
- Unable to deposit by cash or cheque
- No interest earned on balance
- Overdraft rate if 19% – 39% depending on credit rating
Overall a Monzo account is packed full of features and benefits. I like having the option of being able to upgrade to a premium account and think it could potentially be worth it if you are someone who is likely to take advantage of all of the benefits. My biggest disappointment with Monzo is the restrictions on withdrawing cash and feel like this could be an issue if it was your sole account.
My Takeaway
Best bank account for a person living in the UK but travels often:
Personally I feel that after researching various bank accounts (and giving my thoughts on the above three) I feel that a Starling account is the best suited. At the moment I am the person in the above category and what set this account apart from the one offered by Wise and Monzo is:
Free unlimited cash withdrawals around the world
Huge number of features
These really are key features for myself as I like to spend time in areas like SE Asia where it is not always easy to pay by card and cash is still often king. All three accounts have great features but Starling ticks all of my personal boxes.
The idea of a premium Monzo account is attractive but I am not someone who will take advantage of all the features (don’t have an expensive phone and often travel for extended periods which are not covered by the travel insurance)
Best Account for a UK Nomad
As someone living and working as a nomad a Wise account really begins to shine and I feel this account offers benefits that the others cannot match. My only concern is the ATM spending limit and therefore I think the ideal method is:
Use a Wise account as your default account but supplement it with either a Starling or Monzo premium account (depending on your use of premium benefits).
This is a combination that allows for the best of both worlds and you can access all available features. As well as this you get the security of two different cards in case one is lost of stolen.
Also if you live outside of the UK you can be no longer classed as a tax resident and therefore if these banks see too many foreign transactions they may question your tax residency and potentially freeze your account. Better to have more than one bank and vary which you use.
Points to be aware of:
All three of the banks listed above are designed to be used online and online only. They all offer no (or very limited) physical presence or interactions. Due to this if the below apply to you then these accounts may not be best suited:
- Often need to deposit cash
- Often need to deposit cheques
- Have limited trust of online banking
- Need to take out a loan
- Regularly use an overdraft
- Want to earn the highest interest on your savings
Personally none of the above are issues for myself and because of this I am now waiting for my Starling card to arrive in the post. For those of you who need features these banks do not offer but you travel a lot then you best option is:
Open one of the above accounts but use it to supplement your original account by using it only on holidays and whilst travelling.
Hopefully this blog post will help you choose your next and most suitable bank account and you wont need to spend as much time as I have…
