Setting up banking is one of the most critical steps for expats moving to the United Kingdom. Your bank account is not just for spending money — it is the foundation for employment, housing, credit history, taxes, and everyday life.

For many expats, UK banking is modern and efficient once established, but the entry barriers can feel frustrating, confusing, and even contradictory at first. This article explains the system in depth, including what banks expect from expats, how to navigate common obstacles, and how to build a strong financial footing in the UK.

1. Understanding the UK Banking System

UK retail banking is highly digitised and designed around current accounts. A current account is the standard everyday bank account used for:

• salary payments

• rent and bills

• debit card spending

• direct debits and standing orders

Unlike in many countries, chequing and savings are separate products. Most people hold at least one current account and one or more savings accounts.

Cash plays a minimal role in daily life. Contactless card payments and mobile wallets are accepted almost everywhere, including public transport, pubs, and small shops. Many expats are surprised to find they can live comfortably in the UK without ever withdrawing cash.

2. Why Banking Is Difficult for New Expats

The main challenge for expats is not eligibility — it is verification.

UK banks are legally required to comply with strict anti-money laundering (AML) and know-your-customer (KYC) rules. As a result, they usually require:

• proof of identity

• proof of immigration status

• proof of a UK address

This creates a classic expat dilemma:

You need a UK address to open a bank account,
but you often need a bank account to secure housing.

Traditional banks apply these rules rigidly, while digital banks interpret them more flexibly.

3. Digital Banks: The Most Practical Starting Point

For most expats, digital banks are the easiest and fastest entry into UK banking.

Why Digital Banks Work Well for Expats

Digital banks typically:

• allow account opening via smartphone

• verify identity digitally

• accept temporary addresses

• issue debit cards quickly

Popular options include Monzo, Starling Bank, and Revolut.

These banks provide fully functional UK current accounts, including:

• UK sort code and account number

• salary payments

• bill payments

• international transfers (often at better rates)

For many expats, a digital bank becomes their primary account, not just a temporary solution.

4. Traditional High-Street Banks: When and Why to Use Them

Once you have a stable address and immigration status, you may choose to open an account with a traditional bank such as HSBC, Barclays, Lloyds Bank, or NatWest.

These banks offer:

• in-branch support

• broader credit products

• international banking services

• stronger mortgage options later on

However, onboarding is slower and more document-heavy. App quality varies, and customer service can feel less responsive than with digital banks.

Many expats keep both:

• a digital bank for daily spending

• a traditional bank for long-term financial needs

5. Getting Paid: How Salaries and Payments Work

UK salaries are paid by bank transfer, usually monthly.

Your employer will ask for:

• your sort code (six digits)

• your account number (eight digits)

Unlike much of Europe, IBANs are not used for domestic payments. Direct debits are common for rent, utilities, phone contracts, and subscriptions, making a UK bank account essential for daily life.

6. Credit History: Starting From Zero

One of the biggest financial shocks for expats is that credit history does not transfer.

No matter how strong your credit was abroad, in the UK you begin with:

• no credit score

• no borrowing history

• limited financial trust

This affects:

• credit cards

• mobile phone contracts

• car finance

• mortgages

How to Build UK Credit

Credit history builds slowly but predictably:

• maintain a UK current account

• pay bills on time

• use a basic or starter credit card

• avoid overdrafts initially

It typically takes 6–12 months to establish a usable credit profile.

7. Fees, Overdrafts, and Financial Etiquette

UK banking is often cheaper than expats expect:

• basic accounts usually have no monthly fee

• domestic transfers are free

• cash withdrawals are free at most ATMs

However, overdrafts work differently. They are easy to access but expensive if misused. Many expats accidentally slip into overdraft without realising fees apply daily.

Digital banks are particularly transparent, showing balances and fees in real time — one reason expats often prefer them.

8. International Transfers and Multi-Currency Needs

Most expats need to move money internationally.

While banks offer international transfers, they are often expensive and slow. Specialist services such as Wise are widely used because they:

• offer real exchange rates

• charge low, transparent fees

• allow multi-currency accounts

Many expats use a combination of:

• UK bank for salary and bills

• Wise or Revolut for international transfers

• home-country bank for legacy obligations

9. Tax Reporting and Banking Transparency

UK banks may share information with HM Revenue and Customs and foreign tax authorities under international agreements.

Important considerations:

• interest earned may be taxable

• foreign accounts may need to be declared

• US citizens have additional reporting obligations

UK banking is transparent by design, and trying to “keep accounts invisible” often leads to complications later.

10. Common Expat Banking Mistakes

Many expats struggle unnecessarily by:

• delaying account opening

• relying on foreign cards with high fees

• misunderstanding overdrafts

• ignoring credit history building

• mixing personal and international finances without structure

Early planning avoids months of inconvenience.

Conclusion

Expat banking in the UK is highly efficient once established, but the early stages require strategy and patience. The most successful expats:

• start with a digital bank

• build credit intentionally

• separate local and international finances

• understand how banking supports residency, work, and housing

With the right setup, UK banking becomes one of the most stable and user-friendly systems many expats have experienced.