Banking in France

Shitty Shitty Banks Banks

If you are used to Nordic, or even British, banking service, then you may be sadly disappointed with the quality of customer service and facilities and prices in French banks.

Let me start with a simple example: A French bank customer asked his Crédit Agricole branch to pay an amount by domestic wire transfer. The bank confirmed to him by e-mail on the 11 December 2006. No payment was executed. Three reminders were e-mailed to the bank between Christmas and New Year. They did not answer. Finally, some days after New Year, they woke up and confirmed that the transfer had been done - after the client had asked them to cancel it, because he had in the meantime ordered a home banking transfer by Internet from another account.

The payment was credited on the 8th of January, or 18 banking days after they confirmed they would execute the bank transfer. As you can see from this example, taking holidays, eating and drinking is very important in France. Business and clients can wait. Of course, if you owed the bank money, they would obviously have applied their most severe sanctions already after a few days.

Applying a bit of fresh air to the dusty French banking market, in 2009, the Dutch bank ING started proposing a free current account to French bank customers. It includes a free Mastercard Gold and many other free services that nearly all French banks charge for. Fortuneo also launched a free current account with free Mastercard. The following comments about fees do not apply to ING. Beware that some of ING's incident fees may be higher than in French banks.

When it comes to fees, many French banks charge you a fee to access their limited and old-fashioned home banking service, whereas it is typically free in the UK and the Nordic countries. International debit and credit cards, and even the national payment card carte bleue, are very expensive compared with other countries, costing about €40 a year and upwards for the most basic national payment card, where they are either free or cost very little in other countries. Watch out for their list of other fees, such as account closure fees meant to discourage you from moving to another French bank.

The so-called customer advisors in French banks have targets for how many additional services they must sell, so they try to make you buy more expensive services than what you need. You cannot count on getting exact information, as they will try to pretend that you can only obtain certain services, such as an authorised overdraft facility, by subscribing to a pack of bundled services, whereas it is quite clear from regulation that it must be possible to buy each service separately. Their next argument will be that the bundled pack is cheaper than buying each service separately. That may or may not be true, but most bank customers don't use all the included services. For many, it would have been cheaper to pay just the services they use. Do your arithmetics before signing up for a pack in a French bank.

The French banks' direct debit system is particularly arcane and expensive. Since the November 1st, 2009, under EU law and French law, it must be free to withdraw authorisation for an amount to be debited by direct debit or revoke a direct authorisation, unless you ask later than the end of the day preceding the scheduled debit. However, some banks continue to bill these services illegally. A rejected direct debit (for lack of funds for example) will be charged from €10 and upwards by a French bank. To withdraw (temporarily) or revoke (permanently) a direct debit authorisation, you need to write a letter to your bank (you can suspend online with ING Direct). You cannot easily access a list of current direct debit authorisations (you can access it online with ING Direct).

Do I need cheques? Yes! The French are still major cheque consumers. Because of the fee structure for card payments in shops, many shops still refuse to take cards for payments below €15. You can only pay such small amounts in cash or by cheque. There is no electronic bill payment system in France. Given that a cheque is much more costly for the bank to process than a card payment, it is fairly ridiculous that they encourage cheque use like that, but so it is. The good news is that cheques are free in almost all French banks. Many shops have printers to fill in the cheque for you, so you only have to verify and sign it.

Savings Accounts

If you have excess cash you don't need in the immediate future, you need to find out if it can earn you any interest in the meantime.

Tax Free Savings Accounts in France

The following account types are subject to specific regulation, notably complete exoneration of tax and social charges. Interest is paid gross with no deduction. Interest from these accounts should not be declared on your French tax return.

Please beware that rates and maximum balance regularly change. Consult your bank for the latest figures.

Livret A

• Deposit and withdraw as much or as little as and when you want.
• Maximum one Livret A account per person.
• Maximum deposit: €22,950, not including credited interest.
• Interest rate: 1.75% from 1st February 2013, down to 1.25% on 1st August 2013, frequently adjusted to inflation and current politics.
• Interest is calculated on the minimum balance through each half month.
• Livret A on Wikipedia.

Potential disadvantages of the Livret A

• The Livret d'épargne populaire and the Livret jeune pay higher interest. Use them first if you have the option.
• As anything regulated by government, regulations may change with little or no notice. Until 2009, the law said that in case of force majeure, withdrawals could be limited to 2% of the maximum deposit per half month by decree. In the worst case, that would have meant that you could only withdraw 2% of €22,950, or €459 twice per month, and that it could take up to 25 months to access all your money if you had used the maximum deposit. The Wikipedia article has not been updated in this aspect.

Livret bleu

Almost identical to the Livret A but issued by the Crédit Mutuel. Technically, the Livret bleu is not tax free, but it is the Caisse des Dépôts that deduct social charges and tax so that the net interest paid is identical to a Livret A interest.

Livret d'épargne populaire (LEP)

• The LEP works in principle as a Livret A for people with low income.
• Available only to households paying no or little income tax. The present limit based on income tax paid in 2011 is €769 (impôt total avant imputations).
• You must present your original tax return to your bank every year to justify your right to maintain a LEP.
• Deposit and withdraw as much or as little as and when you want.
• Maximum one account per person, and maximum two accounts per household.
• Maximum deposit: €7,700, not including credited interest.
• Interest rate: 2.25% from 1st February 2013, down to 1.75% from 1st August 2013, frequently adjusted to inflation and current politics.
• Interest is calculated on the minimum balance through each half month.
• LEP on Wikipedia.

Livret de développement durable (LDD)

• Deposit and withdraw as much or as little as and when you want.
• Maximum one account per person, and maximum two accounts per household.
• Maximum deposit: €12,000, not including credited interest.
• Interest rate: same as the Livret A.
• Interest is calculated on the minimum balance through each half month.
• LDD on Wikipedia.

Livret jeune

• Available only for people between 12 and 25 years old. The account can be maintained until the 31 December in the year the account holder turns 25.
• Deposit and withdraw as much or as little as and when you want.
• Maximum one account per person.
• Maximum deposit: €1,600, not including credited interest.
• The interest rate is based on the Livret A interest rate. Each bank adds a supplement that varies from one bank to the next. The interest presently varies between 2.5% and 4% from one bank to another. There is a comparison on Francetransactions.com. The Livret jeune is thus more interesting than any of the other tax free savings account types.
• Interest is calculated on the minimum balance through each half month.
• Livret jeune on Wikipedia.

Other Savings Accounts in France

Banks in France propose all sorts of savings accounts, but only the account types mentioned above are tax free.

Taxation is explained on the page French Taxes.

Not many, if any, taxable savings accounts can compete with the tax free account types. When comparing, beware that banks mention the gross interest rate, and that it is up to you to calculate how much net interest you can obtain, depending on your tax situation. The lower your marginal income tax rate, the more these savings accounts are competitive.

Banks typically offer a competitive interest rate for the first three months only, following which the interest rate falls to very little. These accounts are only interesting of you are disciplined enough not to forget to move your money as soon as the promotional interest period ends.

Savings Accounts Outside France

Contrary to popular perception, it is not illegal to have foreign accounts. What is illegal is not to declare that you hold foreign accounts and how much interest they have paid on your tax return, since you are taxable on worldwide income if you are resident in France.

Taxation is explained on the page French Taxes. It is the same as taxation of French accounts.

Given the low interest rates presently available, it will be difficult to find better interest rates abroad than what you can obtain on the tax free French savings account types.

So why even bother considering a foreign savings account, in popular terms an offshore account, which in principle is any account outside the jurisdiction where you are resident?

If you want to hide money from the authorities, you will find that certain countries offer banking secrecy. However, more and more countries have signed agreements with the EU to the effect that they will deduct tax from the account and pay it to the country where you are resident. This tax could be higher than what you would have to pay if you declared the account, and it is still illegal not to declare the account and the interest paid. If found out, you could face severe penalties as well as criminal prosecution. Even if you think no information will be passed to the French authorities, they could track purchases made on foreign credit and charge cards. Most EU member states will pass information between them, either systematically or on demand.

Even if you have no intention of committing tax evasion, you may still want to open foreign accounts for a number of reasons:

Reason 1: You may not trust the political and financial stability of France and French banks. As I mentioned for the Livret A above, the French government could until 2009 decree withdrawal limits preventing you from accessing your money freely. Although that part of the law has been scrapped, nothing prevents the parliament from quickly introducing similar measures or other capital controls again if France's economy declines further. Neither the euro crisis nor the French economy crisis have been solved in any way, and both are declining because there is political unwillingness to do what is necessary. When things get worse, governments have a nasty tendency to grab money where it is. If your money is placed the wrong place at the wrong time, tough luck for you. Once government has decreed restrictions, there is nothing you can do. Don't believe that if you belong to a low-income group, they will leave you alone. They have already demonstrated in other contexts that they will raid rich and poor alike.

Reason 2: You may not trust the euro. I certainly don't. It is an artificial currency that has been created with no solid foundation such as a single financial government. Bernard Connolly already explained the problems in his book The Rotten Heart of Europe in 1995. As a result, he was sacked from his job as head of the European Commission's currency unit. Today, the crisis he predicted almost 20 years ago is obvious. To make the euro work, a full political and fiscal union would be needed, but whereas that was indeed the hidden intention with the euro, there is no political will in national governments to take this step. On the other hand, there is no political will to do the only sensible thing and abolish the euro either. Since the only two possible long term solutions are being opposed, the euro keeps humping along, supported by crutches of one multi-billion bailout after another, but sooner or later, someone or something will call the bluff, and the whole edifice could collapse. The whole scenario of passing all the billions around increasingly looks like a hungry snake eating its tail. Where this would leave euro savings accounts, nobody knows. Many competent economists have estimated that the southern economies, France included, need massive devaluations to make their economies competitive again. If the euro should break up one day, a possible scenario is that all bank accounts in France be converted from euro to new francs at a 1:1 rate by decree, and that the new franc is devalued perhaps 20%. Another is that it is decreed at the euro zone level that all euro accounts anywhere in the euro zone be converted to the new national currency of the country where the account holders are resident at a 1:1 rate; such a solution would catch for example Greek residents having moved their euros to Germany. It is unpredictable, and nobody is going to warn you before it's too late. In most historical examples of currency union breakups, the breakup has been announced by surprise to prevent people from hoarding money in strong currencies, according to this submission to the Wolfson Economics Prize 2012 about a euro breakup. You could open foreign currency accounts in France, but you could just as well do that in a foreign bank to remove yourself from any political risks in France. There is a nasty precedent in Argentina that converted all US dollar accounts to Argentine Mickey Mouse money at a 1:1 rate, then froze them for ten years.

Reason 3: A few months after I wrote these recommendations, it was announced on Saturday, 16 March 2013 that all bank account holders in Cyprus would have up to 10% taken from their accounts to pay for the bailout of Cyprus. 6.75% will be taken from accounts with a balance up to €100,000, while 9.9% will be taken from all other accounts. Monday, 18 March 2013 is a bank holiday in Cyprus, and amounts corresponding to this money grab will have been frozen before the banks reopen the day after. This theft is called a tax, but it essentially means that the EU's depositor guarantee schemes that should cover deposits up to €100,000 per person per bank aren't worth the paper they are written on. Following the announcement of this act of governmentally organised crime, The European Commissioner Olli Rehn said that this would never happen again, but if someone is stupid enough to believe him, he or she deserves to get his/her money confiscated. This contemptuous act made my prediction in Reason 1 come true: "Don't believe that if you belong to a low-income group, they will leave you alone." Everybody having a bank account in Cyprus will be concerned, rich and poor. What this means is that the EU has officially said that the euro cannot be trusted. So the solution is not to keep any money of importance in euro or in the euro zone. Better, don't keep any money of importance in euro, the EU or branches of EU banks outside the EU at all. The euro and the EU have become toxic, and as with other toxic matters, the less you get in touch with them, the better for your health.

Reason 4: All accounts in France are at the easy disposal of the French authorities and bailiffs. They have the power to freeze your accounts and grab your assets at the stroke of a pen, in many cases without the need for a court order. They shoot first and ask questions later. You may think that you are doing everything by the book, and that you have nothing to fear, but what if they make a mistake and freeze your accounts while you have to prove your innocence, perhaps through a trial that could drag out for several years? These things do happen. What if you are self-employed, and the market suddenly changes, and you find yourself loaded with debt? It is irrelevant whether or not your account is of the tax free type. Opening an account in another EU member state gives you a bit more distance to the French authorities, but under the EU's judicial cooperation, uncontested claims from one member state can now be directly executed in another without the need for a court decision in that other country. Denmark is the only member state that has an opt-out from the judicial cooperation. Hence, it is much more complicated to freeze an account in Denmark, and legal action at the Danish courts would be required first, just as it would be the case in any other non-EU country. You may think this is paranoid, but I have seen the complete assets of a bank account frozen by the tax authorities because of an unpaid tax of €100. They don't just freeze the €100, they freeze the entire account, whether there is €100 or €100,000 on it. The taxpayer had simply not received the tax demand because of the hurricane Katrina, as he lived in New Orleans at the time. Another problem could come from the RSI authority that collects social contributions from the self-employed. Nobody denies that the RSI is a complete shambles that makes a large number of mistakes because their computer systems are inadequate. If they suddenly think you owe them €5,000 while you are certain you don't, nothing prevents them from getting your account frozen. One or more foreign accounts at least give you a backup to function while they sort out their chaos.

So, where do you place your money if you want to keep them at an arm's length of the French authorities, not to hide them but as a preventive measure? I'm not an offshore savings specialist. There are many resources on the Internet, and I don't intend to repeat them here. Escapeartist.com would be a good place to start.

The British channel islands and other British territories may well be outside the EU, but they have signed the above mentioned agreements with the EU about withholding tax. They offer various currencies, but interest rates are highest in pound sterling, and you need to consider the exchange rate risk and the cost of currency exchange. The 3% that most British banks grab up front in hidden currency commission can wipe out two years' interest.

Panama has the reputation of being the best banking location in south America. They offer high-interest US dollar accounts. However, the country has no government deposit guarantee, and the dollar exchange rate may or may not be favourable when you need access to your money.

As I mentioned, Denmark is outside the EU's judicial cooperation, and Danish banks always credit gross interest. If you are not resident in Denmark, and you have accounts in Denmark, Danish tax law makes you neither fully nor partially taxable in Denmark; they are not interested in you from a fiscal point of view. It is up to you to declare the interest in your country of residence. Denmark is one of the safest countries in which to bank, and they are covered by the European depositor guarantee of €100,000 per person per bank. Online banking facilities are advanced and often free of charge, and for some banks also available in English. Nearly all bank staff can deal with you in English, and you don't need to be physically present to open an account. The Danish krone is presently pegged to the euro, but Denmark has a permanent euro opt-out, and the Danish government can unilaterally decide to unpeg the krone from the euro, for example in the case of a dissolution of the euro. In that case, it is likely that Denmark will aim to peg the krone to whatever becomes the currency of Germany, an important trading partner. As other Scandinavian countries, Denmark has a healthier economy and is less affected by the financial crisis than the euro zone as a whole, a situation that has made some investors consider the Danish krone a safe haven.

Greenland is part of the Kingdom of Denmark, but it now has its own local government and jurisdiction. Greenland is not a part of the EU and thus not affected by EU law. However, Greenland is covered by the same depositor guarantee as the rest of Denmark, and their banking system is supervised by mainland Denmark and technically integrated with the Danish banking system. They use the Danish krone as currency. As with mainland Danish tax law, Greenlandish tax law does not make a non-resident account holder taxable in Greenland in any way, and interest is credited gross.

Denmark is mostly known as a high-tax country, but together with Greenland, it may also be one of the most overlooked offshore banking destinations, particularly for depositors who don't feel comfortable with exotic destinations. Just don't try to hide money there, as banks are obliged to report balances and interest paid to the government every year. According to offshore banking experts, there is a way around that, but I do not encourage tax evasion.

Comparison of savings interest rates in Denmark
Ranking of Danish banks by stability of the banks (ten largest banks in bold face)

To conclude about savings, under normal and stable conditions, half of this chapter would not have been necessary, but the euro zone is in turmoil, so not taking some precautions may end up costing you dearly in the worst case. Euro zone leaders simply don't know where they are going; they have no long term vision. All they do is firefighting from day to day.

French Banking Disputes

If a bank's internal customer service has not resolved a problem, you can complain to the ombudsman (médiateur) appointed by the bank.

Banque de France: list of médiateurs (pdf, new window).

Autorité de Contrôle Prudentiel. Authority charged with supervising French banks and insurance companies, including mutuelles. Contrary to the médiateurs, this authority doesn't intervene in individual consumer complaints. Postal address: Autorité de contrôle prudentiel, 61 rue Taitbout, 75436 Paris cedex 09.

Aacab. Association d'Aide Contre les Abus Bancaires. Association to help against abuse committed by banks.

Afub. Association Française des Usagers des Banques - association for bank users.

In the case of another European country being involved, you may also be able to find useful contact information on the European (but their list is not complete)
Financial Dispute Resolution Network FIN-NET

See also the section Consumer Information and Help.

Banks in France

List of cheapest French banks in Le Figaro (22 March 2011).

Comparer banques. Compare online banks, credit cards etc.

RIB to IBAN/BIC converter. If you are given a French account number in the classic national RIB format, this site will generate the IBAN and BIC for you.

Online Banks in France

ING Direct. Dutch bank operating in France. Current account with no fees for current transactions including free Mastercard. High interest from time to time on savings accounts.

Banque Accord. Low-cost bank. Owner of Oney (formerly Egg France). Auchan group. Crédit Agricole. Also known as CA. Owner of LCL. If your IQ is higher than that of a country bumpkin, chances are you'll know more about banking than they do. Staff and management in at least some of their branches are utterly clueless and make up their own rules as they go. I sometimes wondered who they slept with to get their jobs, as they can't possibly have been hired based on their skills. If you tell them what the law says, they are offended, and you'll get the arrogant-ignorant-disdain-petty-minded treatment the French have developed to perfection. Their online banking is some 20 years behind what you'll find in civilised countries. Barclays Bank France. British bank. BNP Paribas. Bank. Caisse d'Épargne. Bank. Caixa Bank France. Spanish bank. Banque Chaix. Regional bank for Provence. 100% owned by CCF, again part of the British HSBC group. CIC Banque Scalbert Dupont. Crédit Industriel et Commercial. Citibank France. American bank. Banque Courtois. Crédit du Nord group. Créatis. Local bank for the Nord département. Fortis Banque. Good for small businesses. HSBC. British HSBC group. Banque Kolb. Crédit du Nord group. Banque Laydernier. Crédit du Nord group. LCL. New name for Le Crédit Lyonnais to try to make people forget the scandal they were involved in. Purchased by Crédit Agricole in 2003. Crédit Maritime. Bank for the French coastal regions. Crédit Mutuel. Bank. Crédit du Nord. Bank. Banque Nuger. Crédit du Nord group. Oney. Formerly Egg France, sold to Banque Accord and renamed. Free credit cards. Auchan group. Banque Populaire. They have a reputation for being good for small businesses, but in practice, they don't seem to be very interested in new customers. Banque Postale. The French government bank formerly known as La Poste before it became a bank in January 2006. Lowest fees if compared with traditional French banks, online banks excluded, but as many other French banks, they have only scant respect for banking law. Examples: illegal fee for stopping direct debit, D+1 deadline for euro wire transfers in the EU not respected, French banking law's usury rules violated. Don't trust their financial advice, or you may become the victim of misselling. Banque Rhône-Alpes. Crédit du Nord group. Société Générale. Bank. Sofinco. Bank. Subsidiary of Crédit Agricole. Banque Tarneaud. Crédit du Nord group. Banque Transatlantique. Quickly opens accounts for foreigners.

French Credit/Charge Cards

Foreign Mastercard and Visa are usually accepted the same places where the French can use their national payment system carte bleue, often abbreviated to CB. All major shops and petrol / gas stations accept cards. Diners Card, American Express and foreign cash are not generally accepted. The French carte bleue is a chip card that needs a pin code instead of a signature as a security measure. The new chip cards from other countries generally work either by pin code or by signature. Older chip cards or cards without a chip must have their magnetic strip swiped. Most shop assistants outside tourist zones are not aware of this, and if you tell them, they don't even know that their card reader has a magnetic card reader. It's for you to tell them: C'est une carte étrangère sans puce; merci de lire la piste magnétique avec le lecteur que vous voyez à côté de votre lecteur à puce. If they still don't get it, ask for the manager: Je voudrais parler avec le responsable. When they figure out how to read the magnetic strip, the next problem is that the French centralised credit card validation computer network often has problems communicating with foreign clearing systems. When it fails, the shop won't accept your card, even by swiping it manually, and you may have to leave the shop without your goods if you have no other way to pay. They will show no mercy, even for last-minute shopping on a New Year's evening. They like tourists' money, but without the money, they couldn't care less.

There is a reverse problem in touristy regions where staff did know that they had to swipe the magnetic strip on foreign cards: even when a foreign card has a chip, some still want to swipe the magnetic strip instead of reading the chip. That won't work if the chip is compatible with the French system. You then have to tell them: cette carte a une puce; merci de lire la puce et non pas la piste magnétique.

There is a further complication: the wireless card readers only seem to work with French credit cards. If it's a foreign card, the reader is likely to instruct the shopkeeper to place it on its base, since it will have to call for authorisation.

For large amounts, the banks may impose a limit for the amount at shop level that is lower than your card limit. Sometimes, it may work to split one large amount into several smaller amounts. French credit cards usually have a rolling 30-day spending limit that your foreign card doesn't have. Don't expect to get any help from the shop's card centre, as they don't know a thing about foreign cards and foreign payment limits and they cannot understand that foreign cards don't have a 30-day limit like the French cards or maybe no limit at all.

There are a few places and web sites that only accept cards issued in France. Examples: automatic service stations, La Poste's Colissimo online service, Sony Entertainment Network (yes it's true, a multinational corporation will only accept French cards), the SIM+ mobile phone network, and the odd, sulky shop.

Prepaid Visa or Mastercard

Prepaid Visa and Mastercard are becoming more widespread. Apart from the fees, you need to be aware of a few things.

There are various ways of crediting money to these cards. The simplest is a straightforward online bank transfer that is often free. But not all cards accept this. For example, you can only recharge La Banque Postale's prepaid Visa card by direct debit on demand and from another charge or credit card. The problem with the direct debit on demand is that it takes 10 to 12 calendar days, a ludicrous amount of time for moving money in 2012.

As I mentioned in the preceding chapter, a few places and web sites will only accept French cards. Hence, you cannot use a Skrill/Moneybookers or Net+ card to fill up your car at an automatic pump, recharge your Sony Entertainment Network account, or pay for a Colissimo packet online (and obtain the 5% online reduction), etc.

You could combine a French card with slow direct debit or card charging only with a more flexible but foreign card like Net+. The French card is necessary a few places. To charge the cards, use online bank transfer to Net+, then instantly charge the French card from the Net+ Mastercard.

Compare-cartes-bancaires-rechargeables.fr. Compare site helping to identify the best prepaid card for you. It also tells you which cards are not French.

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