Paying Bills and Stage Payments
Having been in banking for 33 years I wrote this article.
If you purchase a property in Cyprus you will set up a bank account in Cyprus to pay bills. Direct Debit is recommended.
Opening a bank here is easy – just show passport and deposit some money & that’s it.
Cyprus banks today are like UK banks about 30 years ago, everything depends on individual circumstances rather than computerised scoring systems. Get to know your local bank manager and make him a friend.
Many use Laiki,Hellenic or Bank of Cyprus all of which have on-line facilities that are accessible from the UK. There are a number of ways to go about making international transfers from a major UK Bank and each have pros and cons. From 2006 you have use the IBAN system and quote a Swift Code. The transfer fees are usually GBP25 for a standard transfer taking up to 7 working days and GBP40 for an urgent transfer taking 2 working days. If converting from GBP to CYP then you also pay a smaller exchange commission of 0.125%. But many people prefer the flexibility that making a transfer from their UK bank to an account in Sterling in Cyprus and then choosing when to convert to CYP.
Another way is to use a currency brokerage, most of which advertise “no charges”. This is nonsense of course, there is no such thing as a free transfer in the financial world. It is just that the charge is hidden in the exchange rate. You will need to do some shopping around as rates can vary considerably. Cyprus banks make higher charges than currency brokers but in general you still gain after paying their charges. This is because you get better rate from Cyprus banks. However, I would suggest that you open an account with different currency exchange brokers many people have more than one and some have four. When you wish to exchange money phone your brokers for rates.
Banks post their branch rate daily on their website. Do not accept the first rate offered. Some people prefer to send a sterling cheque to their sterling account in Cyprus. Cypriot Banks commonly charge CYP 13 for cheques up to GBP3000. In this instance the process is called “Negotiation”.The bank takes a gamble on it being OK and give you local value instantly.The funds are made available to you but “with recourse” meaning if the cheque bounces,may be for tecnical reasons(made out wrongly) or for lack of funds,then the bank debits it back from your account plus charges/interest for the time they “lent” you the money.There is no time limit on the cheque being “cleared”. Clearly your own cheque is unlikely to bounce and this is the best way.
Cheques over £3,000 have to be referred back to UK bank before clearing – so it takes a bit longer. (Simple way to overcome the problem is to write multiple cheques under this amount.) In this instance the process is called “Collection”. You do not receive value until the UK bank advises the collecting bank in Cyprus the cheque is paid. Used more often for large amounts or cheques from unknown sources or where release of goods etc is dependent on the cheque being paid. Cheques take about 15 working days to clear. Interestingly some “Banks” previously building societies may take even longer for a cheque to clear.
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