Sorting out your banking and finances will always be one of the primary things you need to consider when you purchase property in Portugal – and you will need to set up a bank account before you begin your search to ensure that you can move quickly once you find the perfect property.
The first thing to know about Portuguese personal banking is that it’s not always free. Many current accounts have an admin charge in the region of €5 per month - and you will also need to pay small fees for things like replacement debit cards or counter withdrawals.
Some people moan about these fees, but the trade-off comes when you actually need help with something and realise that dealing with a regional branch is much more personal than you will be used to, and almost like a trip back in time to the UK in the 1970s. You generally have an assigned manager, and have their direct line and mobile number – and occasionally, he will call to check all is well. When you go into the branch, you will talk to them in person. You may even get a cup of coffee.
When opening a Portuguese bank account, many expats choose to remain with a familiar bank such as Barclays and Santander – but in reality, there is usually no connection between the Portugal and UK branches. The most popular local banks with expats include Millennium and BES (Banko Espirito Santo), and you will generally find that bank employees speak good English – outside of the very rural areas at least.
To open a Portuguese bank account, you will need your passport, a Portuguese fiscal number (which you can obtain at the local Financas), proof of income and proof of address. You should be able to open an account as a non-resident, as well as a resident – and you may even be able to open your account in a London branch for some banks.
The Portuguese banking system is more sophisticated than you would necessarily expect, especially when it comes to the countrywide “Multibanco” card and ATM system.
The Multibanco system is one of the most advanced in the world, and is central to the lives of most residents in Portugal. In addition to using these to withdraw money, you can pay utility bills, top up mobiles, buy train tickets and even organise fishing licences. It can be difficult sometimes when you’re queuing at an ATM, and the person at the machine is taking so long that you suspect they’re playing Solitaire on the thing—they’re just doing their regular admin, and one day they may well have to wait while you do the same.
Internet banking is widely available and sophisticated – and there will usually be an English language option, which is extremely useful.
The banking sector in Portugal was quite drastically affected by the global financial crisis, and is still in the process of recovering. This means that you will usually find that credit is hard to come by – especially when you are an expat and have no financial affairs in Portugal. Unlike in the UK, there is no credit referencing system, so the credit decisions are often made by your bank manager or “sent to Lisbon” – and you will usually need a whole rainforest’s worth of paperwork for any application, so it’s important to ensure that your Portuguese residency and tax affairs are in order. Even in these circumstances, don’t be surprised if you finally get that much-needed credit card or overdraft and only find you’ve got a limit of €500!
Cheques are still used for some things, but are usually ordered especially from the bank. Chip and PIN is in use, but you press “Enter” to confirm the amount before typing in your number, which confuses visitors. Finally, direct debits are encouraged by service providers, but are not as easy to cancel as in the UK, so many people choose to pay their monthly bills at the Multibanco machine instead—so be patient while they type in all those numbers!
Many Portuguese current accounts are combined with savings accounts - so if you sign up for one of these accounts, you may initially be disconcerted when the bank automatically moves money into your savings once you reach a certain balance. This money automatically moves in the other direction, however, should you need it - for example to pay a large bill via the cash machine.
With all this in mind, many expats hold on to UK accounts, and sometimes credit cards once they move. Generally, banks will be happy to move your address abroad, and keeping accounts like this will make it easy if you move back to the UK. However, an English account and debit card should never be seen as an alternative to a Portuguese account. The Multibanco system alone makes a proper Portuguese debit card a true essential for anyone living in the country.