Expatriate holders of local bank accounts in Cyprus have found themselves up to 10% worse off this weekend following the decision to tax bank deposits as part of the EU’s bailout of the Cypriot banking system. The question on everyone’s mind is will this be the ‘one-off’ that it’s being touted as or can further raids on hard earned cash be expected in the future?
Furthermore, expatriates in other countries are also concerned for the money they have in local bank accounts should countries like Spain, Portugal or Greece decide to follow suit.
So, as an expatriate or simply someone with a holiday property in a foreign country, what advice should you take to safeguard your money?
It’s very convenient to have a bank account in the town where your property is located which you can fund by regular transfer from your UK account. You can have a cash card on the account, a debit card to use in local shops and the ability to set up standing orders and direct debits for payments for utility bills and mortgage payments but the convenience soon disappears when your account is raided by unscrupulous governments.
The alternative is to find out if there is a branch of your UK bank in the country and open a currency account there. Whilst the situation is still unclear, it’s felt that customers of Lloyds and Barclays Bank branches in Cyprus are probably safe from the current bank levy.
You can also open a currency account with your bank in the UK and have the usual facilities on it including cash cards. It does get more difficult to set up direct debits and standing orders and you may find you incur charges for interbank transfers.
If you simply use your UK current account there are benefits and disadvantages. You are likely to incur a small charge on every transaction you make and a bigger one if you withdraw cash but in return you are likely to get a better exchange rate as the bank groups all transactions together for conversion.
For day to day cash you could use an international money card issued by Visa or Mastercard, pre-loaded with cash or do like many locals are now doing, keeping their cash in boxes under the mattress or floorboards! The chances of being robbed are probably less likely than by the government!