Will Brexit Affect My Finances? Safest Bank Accounts
Are you worried about what will happen to your finances after the Brexit transition period ends? It’s a fair concern and you are not alone. Nothing is likely to change for the time being as the UK and EU begin their year-long negotiations. In the meantime, let’s take a look at what could change and what are the safest bank accounts.
How could Brexit impact my finances?
There is a long road ahead of us before we get total clarity on any changes to the financial services industry post-transition. However, that doesn’t mean you can’t plan ahead and be prepared.
The good news is, for now, nothing will change. That gives everyone a little breathing room to make any necessary changes for the future.
We will look at how you could be affected depending on whether you are a British citizen living in the UK or living in the EU.
British citizens living in the UK
As we mentioned, you will see no changes until the 31st of December 2020. Even after this period, you shouldn’t see any changes in how you do banking in the UK.
1. Will you be able to withdraw cash in the EU?
The short answer is yes. Most banks typically charge an overseas transaction or withdrawal fee. However, there are some banks that don’t charge a fee whilst using your account in the EU. Whether this amount changes will be down to individual banks and financial institutions. Your bank should communicate any changes to you in advance, as they currently do.
2. Will there be changes to the exchange rates after the transition period?
There are an enormous amount of factors that determine any exchange rate between two currencies. This is no exception with the GBP/EUR exchange rate which has fluctuated in the past before Brexit was even a factor. Your purchasing power when you travel to the EU will continue to depend on this. However, you can find the current exchange rate online anytime you want the most up-to-date figures.
British citizens living in the EU
There has been some concern raised by the community of British citizens living in the EU. The good news is, governments from the various EU nations and the UK have agreed they want the minimal amount of disruption for these citizens. With cooperation like that, it’s highly likely that most will be able to continue banking as they currently do.
1. Will UK citizens living in the EU be able to keep their UK bank accounts open?
You will not lose your rights to keep your UK bank account open. However, banks generally require you to use your bank account a certain number of times per year in order to keep it active. This is the current state of play and you can expect this to continue. Always check with your individual bank or provider to find out specific restrictions and guidelines.
2. Will you still be able to transfer any money from your UK bank account to your EU one?
Yes, you will still be able to transfer money freely from the UK to the EU. As per now, there may be transaction or service fees applicable, depending on who you bank with. Always check any fees you will be charged before making such a transaction.
What are the safest bank accounts to hold?
There are certain financial service providers that may be based or authorised outside of the UK. If you’re not sure where yours is based, you can look up the Financial Services Register.
Whether your provider is based in the UK or in the EU, there are strict regulations that these organisations must adhere to.
If your provider is based in the EU and you hold your UK bank account with them, you may see some changes in the event of a no-deal situation. For example, your protection scheme may end up transferring to a scheme run in the EU country. Some changes could also occur with a deal, depending on what is agreed.
If you are concerned about any possible changes, you should talk to your provider.
Brexit: Bank of England update
On the subject of Brexit, Bank of England has also confirmed that nothing will change for now.
The Temporary Permissions Regime allows financial services firms to effectively use a ‘passport’ to continue performing their business activities unchanged throughout the European Economic Area (EEA). This will stay in place until the end of the transition period.
What happens next?
There will be a lot of speculation until a deal is agreed between the UK and the EU. This is only natural because financial services firms cannot make concrete plans until such time. Here are the possible outcomes:
- As soon as the UK and the EU agree on a deal (assuming they do), you can expect to receive information on any changes to your banking from your financial institution. There will also be updates on numerous government and regulator sites.
- If the UK and the EU don’t agree on a deal by 30th of June 2020, there could be an extension to the transition period past 31st of December 2020.
- If the UK and the EU do not agree on a deal by 30th of June 2020 and there is not an extension period planned, there could be more visible changes post-transition. This is because there’s a possibility that ‘default’ trade rules could apply after 31st of December 2020.
As soon as there is any progress in the Brexit talks or significant impacts to report we will provide an update.
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