Friday, 27 May 2011

Got my mind on my money

When I was a poor grad student making next to nothing, I kept looking forward to the day when I could use my degree to get a steady job with a steady paycheck, at which point surely I would stop having to worry about finances. Then I did the most financially complicated thing ever, and moved to a foreign country.

As I have written previously, the cost of moving to the UK was quite stressful in and of itself, but my money woes didn't end there. All of my accounts--savings, checking, credit cards, investments--were in the US. Every time I accessed money abroad, I had to pay not one, but two service fees--one to the institution that was accessing my money, and one to my own bank or credit card company for processing a foreign request. When I was using my credit card, this wasn't too bad--usually less than $1 per transaction. But when I was using my debit card, which was occasionally necessary in order to have cash on hand, I was also charged a $5 processing fee in addition to the $1 surcharge. Let me tell you, it does not take long for those $5 charges to accumulate.

Another irritating thing about using plastic abroad is that, unlike the (*ahem* backwards *ahem*) Americans, but like pretty much everyone else in the world, the Brits use a chip-and-pin setup. Each card is implanted with a chip that is linked to the 4-digit pin associated with the card. You don't need to do any card swiping or signature signing; instead, you stick the card into a machine, type in your number, and off you go. It's kind of like the protocol that Americans use for withdrawing money from an ATM, except that you do it everywhere, and for both debit and credit transactions alike. Most places that use chip-and-pin machines also have the facility to do the traditional swipe-card technique, but there are many that do not. Even where cards can be swiped, there's often a moment of surprise and confusion when you hand someone your card; I can't tell you how irritating it gets having to explain, time and time again, that I'm using an American card that only works when swiped. People often haven't been trained in how to process swipe-card transactions, and so you can stand around at the till forever while they swipe your card in various orientations through various slots in the machine. Once it finally goes through, often there is no pen handy, since nobody needs to use them anymore, so the sales assistant has to go rummage around the manager's office to find an implement allowing you to sign your name. Since arriving here, I have had to sign my name in marker, pencil, various immature shades of colored pen (pink! neon green!), and even highlighter.

Obviously, it behooves one to have a bank account at an institution within one's country of residence. This is especially true because, while you can use foreign accounts to withdraw cash and make purchases, you can't set up direct deposits or withdrawals without a local account. This prevents you from signing up for useful things like cell phone plans and magazine subscriptions, or cashing checks in foreign currency. Unfortunately, it is practically impossible to get a new bank or credit card account unless you have some sort of prior credit history, but in a delightful catch-22, you can't have a prior credit history without a bank account or credit card. I applied to, and was rejected from, several banks before I finally wrote an appeal letter and attached recent statements from each of my American accounts, showing that I did in fact have many financial resources. It is so frustrating to have absolutely no credit history in the UK, given that I have fantastic credit history in the US. With all the international business that goes on these days, how can financial institutions from different countries not talk to each other and pass this sort of information along? I would even be willing to pay a fee for this process. Luckily, the bank statements did the trick and I am now the owner of a British bank account.

Interestingly, my bank does not exist anywhere near me in a physical format. They have one main office somewhere up north, but no branches; all their customers do everything online, or via partner institutions (various other banks, or even the post office). It's quite an odd concept, but mimics my previous situation when I was conducting business with my US bank from afar. So, it's not so much of an adjustment for me, but I can see where it might feel odd to many people used to a more traditional setup.

One of the interesting things about finances in Britain is that people are so much more modern about money than we are in the US. When you've eaten at a restaurant and are ready to pay your bill, your server comes over with a little cordless handheld credit card machine and does the whole transaction right at your table. Nobody carries your card off anywhere where they can do suspicious and unknown things to it; all the business is carried out right in front of you, and in a matter of seconds. If you owe a friend money but don't have any cash to hand, you can log onto your bank account online and pay up electronically. Everyone knows their sort codes and bank account numbers, which is all you need to type in so that you can settle your debts. It's so civil.

One thing I really don't enjoy, though, is having to use a card reader in order to complete transfers or make purchases online. This is a card reader:

You have to stick your card into it, type in the associated pin, receive a code number, then type the code number into your computer in order to complete your transaction. This seems excessive to me, given that I've already supplied details that only I know in order to sign into my bank account. Isn't that the whole purpose of pin codes? If they need an extra level of security, why not just ask for a password? Why do I need to stick my card into a machine? If I happen to need to make a transfer/purchase while I am in any location other than my home, I don't have the card reader handy, which means that I can't do it. Obviously, I could carry the card reader around in my purse, but that's just annoying. And what about the 50% of the population (e.g., men) who don't carry purses?

The financial issue that has most recently vexed me is the hurdles that my American banks put up during the process of transferring money between countries. I am paid a monthly stipend by my grant institution, and since the institution is American, they insist that they pay me into an American account. Thus, at least once a month I need to take money from my US bank account and put it into my UK account. When I originally set this process up, I had to look up a bunch of information--SWIFT codes, IBAN numbers, etc.--that is used exclusively for this purpose. You wouldn't believe how far buried these details are on the websites of both UK and US banks.

Every time I make a transfer, I am charged a $35 processing fee, which I find absolutely ludicrous. It's not like I'm paying an armored guard to pick up a suitcase of dollar bills, drive it to the airport, fly it across the Atlantic, take it to my UK bank, exchange it into pounds, and then fly back home again. Everything is done on computers these days--there's not even physical money involved!--and yet I'm being charged to gain access to my own hard-earned money. On top of that, I have to experience the pain of watching 40% of the numerical quantity disappear as my large number of dollars is converted into a much smaller number of pounds.

Transfers get even more difficult if you need to move more than $1000 in one go. I had to do this a couple weeks ago in order to put all my scientific grant funding, which was in an account in the US, into an account at my research institution here in the UK. You have to get a special authorization code in order to do this, but the only way to receive it is to a) have it texted to your American cell phone, or b) sign up to receive a code-generating card (not unlike my British card reader, except it is the shape and size of a credit card). The card costs $20 and you have to wait to receive it in the mail, but this was my only option since I don't have an American cell phone. After waiting and waiting and waiting for the card, I finally contacted the bank to find out where it had been sent. It turns out that they cannot ship the cards internationally, which means that rather than sending it to the current address they have on file for me, they used my previous address, which is my parents' house. Why would they even think I would be there? Why didn't they tell me my international address would prove an issue? Because they just wanted my $20, and because they didn't want me to be able to transfer my money. Because my bank doesn't care about customers--they just care about earning money.

You might wonder why I have even stuck with my US bank rather that switching to a "friendlier" one. Well, I do actually have an account at a more local bank, and I looked into doing all this international stuff through them. But the truth is that, however else my main US bank is lacking, they are actually fairly technologically advanced. It's generally quite easy to accomplish things by signing into my account online, and if I need help they have a 24-7 chat function. At my local bank, I couldn't find any relevant information on their website, they don't appear to allow me to use online features to make international transfers, and account details are updated an an excruciatingly slow rate. It's a terrible trade-off in which I have to sacrifice one type of convenience for another.

Still, my recent international transfer debacle has stirred me into action. I did some research online and found out that the best banks for transnationals are those that operate in both countries. I suppose that's a no-brainer, but because you don't often come across those banks in the US, you wouldn't necessarily think of picking one (not to mention that I am doing all this retroactively--when I first opened my account in the US, I never imagined I would end up living in Britain one day). HSBC has often been cited as the best choice, but when I used their website to find out where their local branches are, I didn't find any in the places where I will actually be when I visit the US. I suppose it's not necessary to have a physical bank--after all, it works okay for me here in the UK--but it would be kind of nice, just in case.I cringe at the thought of what a hassle it will be to move my funds between banks. Not only will I have to finagle my money away from my current bank (doubtless they will find a way to charge me), but I will also have to change financial info in countless of online accounts that are linked to my current bank.

To me, the most amazing thing about all this financial madness is that it really seems like something that shouldn't be so hard. I can log into and buy products from other countries, or ship purchased items abroad, and I can pay for either type of transaction using a credit card from pretty much any country in the world. When I traveled to Australia, India, Brazil, Germany, you name it, I could easily make charges and withdraw money from either my UK or US account. I can turn on Skype or pick up my phone and talk with my parents in the US. We can read tweets, in real time, from people in different time zones. Surely if technology makes all these things possible, it shouldn't be so hard for me to move my own money from one account to another. If it's not the technology throwing a wrench in the works, then it's the banks. And that is something to think about.

1 comment:

  1. Great post, thanks for sharing. Credit card payment processing companies, and credit card payment processing machines can be a hassle to wrap your head around. I almost gave up on my business, glad I stuck it out.