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Which bank is best for Americans in Switzerland? 

Americans in Switzerland face additional hurdles when banking in Switzerland. Here's what you need to know.

A person pays with a card. Card payments are still relatively uncommon in Switzerland
What banks are best for Americans in Switzerland - and which ones should they avoid? Local readers weigh in. Photo by energepic.com from Pexels

As we reported in our previous article on the topic, regulations put in place by the United States has made banking difficult for those located abroad, including in Switzerland.

The situation is particularly precarious for Americans, with many banks refusing to open accounts for US citizens.

To get the lowdown on where to keep your money as a foreigner living in Switzerland, we asked our readers for their inside tips.

Here’s what you need to know.

Not American? Then check out the following link. 

EXPLAINED: Which banks are best for foreigners in Switzerland?

What banks are available in Switzerland?

While there are a myriad of financial service options available in Switzerland, the Swiss banking sector is divided into three loose categories: big banks, cantonal banks and the new players.

The big banks are the major retail banks in Switzerland. This includes UBS, Raiffeisen, Credit Suisse, Migros Bank and PostFinance.

The cantonal banks are, as the name might suggest, banks that are in particular cantons. There are 24 cantonal banks in Switzerland (i.e. in all cantons except Solothurn and Appenzell Ausserrhoden).

Cantonal banks are only open to residents of those cantons.

The new players include ‘neobanks’ like Neon, CSX (subsidiary of Credit Suisse) and Yapeal, among others, along with more traditional newer banks like Valiant.

What are the rules for Americans banking in Switzerland?

The most important among them is the Foreign Account Tax Compliance Act (FATCA), which was passed by Congress in 2010 and went into effect on January 1st, 2014. It requires foreign banks to report to US tax authorities (IRS) all the assets that belong to US citizens – whether living in America or abroad.

The question of which Swiss bank is best for Americans is one we’ve been asked before by readers, although the experience people have tends to differ dramatically.

Some readers have told us it was almost impossible.

“I’ve been ‘bank shopping’ here since I arrived eight months ago, but nobody wants to open an account for me once they find out I am American”, Terry, who is married to a French citizen and lives in the suburbs of Geneva, told The Local.

One reader, Sue*, got in touch with us to say that she eventually renounced her US citizenship in order to be able to have banking freedom in Switzerland.

READ MORE: Why are Americans being turned away from Swiss banks?

Prior to that, she had “no financial independence” and was forced to rely on her husband.

“I was Swiss but had no rights, because I was also an American, to hold my own bank account without depositing very large amounts to purportedly justify the additional work by the bank to do all the necessary reporting to the U.S,” Sue said.

Sue said she was told she needed to deposit “a six figure sum” in order to have the account opened – and eventually decided to give up her US citizenship.

Another reader, Georges, who was born in Switzerland, did the same.

Other readers however have said that while it isn’t easy, Americans need to shop around to find the right account.

Sofia, in Geneva, said the problems for Americans getting an account were “not nearly as drastic as the article portrayed (speaking as an American living in Switzerland (since) 2011)”.

A wall of open safety deposit boxes

Opening up a bank account in Switzerland can be incredibly complicated. Photo by Jason Pofahl on Unsplash

Which bank is best for Americans in Switzerland?

One which ranked highly was Swiss online bank Neon, which is one of the wave of neobanks which have grown in popularity recently.

READ MORE: How to open a bank account in Switzerland

Neobanks offer many of the services of a regular bank – including an IBAN for transactions, credit or debit cards and online payment options – but there are no branches or locations.

Their fees also tend to be much lower than traditional banks. Mikołaj, from Zurich, said Neon came out on top as it was “completely free” with “service in English”.

Shahram, from Zug, told us that Neon was the best option for people “who want to save money and only need online banking”.

Another bank which several of our readers recommended was UBS.

Steve recommended the UBS Family Account for its visa debit and Apple Pay links, as well as the functionality of its app.

Sofia, in Geneva, also recommended UBS.

Shahram said UBS was particularly good for foreigners as their “transfer rates to move money abroad tend to be more competitive”.

“It has a good network in Switzerland and abroad”.

Bob recommended Credit Suisse, saying it was “modern, English was spoken by all bankers and (it has) very good e-banking”.

Simon, from Chur, was the only reader to recommend a cantonal bank. After looking around, he eventually went with the Graubundner Kantonalbank.

“I looked at several, UBS and Post Office, but the most friendly and accessible were the Kantonalbank. We were immediately assigned a manager, and he was super helpful. More so than UBS and Post Office,” he said.

“Of course you must be present to open the account. The fees are also reasonable.”

Simon also told us that the internet banking portal was good “better than HSBC in the UK”.

Which banks will open an account for Americans in Switzerland? 

Several other American readers also told us UBS was the best option for Americans in Switzerland. While the fees were high, they would offer to open an account without a minimum deposit. 

Sofia told us there was just more paperwork for Americans.

“UBS does still have American clients (you have to visit in person at the main branch in your city and sign documents about FATCA compliance), Post Finance will also open accounts, and so do some of the cantonal banks. It’s far from impossible,” she said.

A UBS banking logo on an overhead walkway in Switzerland

Local readers were polarised by UBS, with some recommending it and others saying it was not worth it. Opening up a bank account in Switzerland can be incredibly complicated. Here’s what you need to know. Photo by Jason Pofahl on Unsplash

Bob told us that Credit Suisse would open accounts for Americans, provided you waive the right to bank privacy in order with IRS regulations.

“(Credit Suisse are) pretty good at getting the annual form sent to the US IRS right. Just waive the bank privacy, fill out a US W-9, and no problem being a US citizen if you have a CH residency permit. Private bankers are very responsive.”

Eric, from Lausanne, pointed to UBS’ special accounts for Americans as a reason to sign up.

“UBS – (has a) separate bank for Americans and also one of the only ones (to offer banking to Americans),” he said .

“They are expensive like every bank but do not have minimum requirements like some of the other banks. Also, if you have a partner that is not American they have to have a separate account for you”

Travel: Six ways to save money while visiting Switzerland

Jeremy also told us that he was able to open an account with UBS once he received his Swiss residency documentation.

“I am an American and moved to Switzerland recently.  I did not have a problem opening an account once I received my B-permit.  This said, the FACTA requirements are an annoyance, requiring additional paperwork.”

Nick, an American who lives in Bern, however said he was turned down by UBS – along with Credit Suisse – who told him he would need to wait for over a year before he could open up an account.

“Local banks won’t touch Americans due to (American) regulations,” he said.

He went with Valiant because it was the “Only bank that would open an account for me.”

Which bank should foreigners avoid in Switzerland?

If you want to avoid paying high fees, several readers told us to avoid the big banks like UBS and Credit Suisse.

Mikołaj said to avoid UBS as it was “absurdly expensive”.

One American reader, Jeremy*, told us UBS told him he needed to deposit a minimum of CHF2 million in order for the bank to waive its high fees – an amount that he did not have.

“All the banks charge annual fees and provide no interest to konto (account) holders. Yet, these very same banks report astonishing profits year-after-year.  There are no credit unions.  The people that appear to profit are the people that are already rich. Us average blokes cannot get ahead.”

Whether English was spoken is another factor. Although most Swiss banks have English portals on their websites, readers told us there are often problems communicating with banks in English.

Steve told us this was a problem at cantonal banks.

“If you don’t speak German then the smaller cantonal banks can be a pain but they are getting better”.

Shahram also said cantonal banks “were limited” and may not be ideal for foreigners.

Simon said foreigners may face issues with cantonal banks as the banking apps only work on Swiss mobile phones.

*Persons appearing with an asterisk had their names changed at their own request.

This report has been put together as a guide only and The Local has not received any juicy kickbacks from these banks, nor do we endorse one organisation over the other. 

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COST OF LIVING

EXPLAINED: How inflation is increasing housing costs in Switzerland

Property is not exempt from inflation. Here's how costs are on the rise in Switzerland.

EXPLAINED: How inflation is increasing housing costs in Switzerland

First, the (somewhat) good news: The inflation rate in Switzerland —  2.6 percent  — is significantly lower than in neighbouring France (5.4 percent) and Germany (7.8 percent), as well as throughout much of Europe.

But even with the relatively low inflation, prices of many consumer products have been rising, with economists forecasting further hikes.

READ MORE: Seven products that are becoming more expensive in Switzerland

While you might notice the impacts of inflation when you buy groceries, consumer goods, food and petrol, inflation is also making a mark on the housing market.  

How is the housing market impacted by this phenomenon?

The impact on housing is indirect, which can be likened to the ‘domino effect’ — as the price of construction materials derived from petroleum, such as plastic, have risen, so has the cost of newly built houses and renovation work on existing properties.

Rents and mortgages are also impacted, although there the mechanism may be a bit complex to understand by non-experts. 

As Vincent Leroux, president of SVIT Romandie, the Lausanne-based section of the Swiss Association of Real Estate Economics, explained to Tribune de Genève (TDG), the “central bank have a particular mission to control inflation”.

To do this, it has the option of raising its key rate. When it does, the interest rates of financial institutions follow and rise in turn. The purpose of the maneuver is to reduce the use of credit, and to slow down the level of consumption and the upward trend in supply prices. But, if interest rates go up, rents can go up – as can the interest cost of a mortgage. 

EXPLAINED: How to save on your mortgage in Switzerland

This is the general picture, but what happens if you are a tenant?

All tenants are, or will soon have to, pay higher rents, according to Pierre Stastny, a lawyer at The Swiss Tenants Association (ASLOCA) in Geneva.

The determining factor is when the lease was signed and what the reference rate — weighted average interest rate for mortgages in Switzerland, announced by the Federal Housing Office each quarter — was at the time.

Those who rented their properties at a time when the reference interest rate was low could see their rents increase by 3 percent, Stasny said.

Those who contracted a lease whose rent is indexed to inflation will also see their costs rise.

This is because “the lease law authorises landlords to add 40 percent of the inflation rate to the rent”, Stasny pointed out. “But if the lease is signed for five years or more and the contract contains an indexation clause, the landlord can then pass on to the tenant the entire inflation rate.

How are homeowners affected by inflation?

According to Stéphan Mischler, director of mortgage and real estate platform MoneyPark, it depends on whether you are a first-time buyer, whose mortgage loan is in progress, or non-first-time buyers, who have settled their mortgage.

The former group is most at risk, money-wise.

“With inflation, the ten-year fixed interest rates, which are most often chosen in Switzerland, have started to increase: they have doubled and currently vary on average between 1.8% and 2.5%, compared to around 1% a few months ago”, Mischler told TDG.

“As a result, this doubles the interest cost of a mortgage for those who are currently looking to buy their home or for those who have recently taken out a mortgage.”

However, current owners could also be affected if they have to renew their mortgage in the near future.

Logically, this chain of events will also have repercussions  on potential buyers, as they may not be able to afford higher mortgage rates.

Other housing-related costs have risen in Switzerland as well. For instance, energy, including gas and electricity used by households, will  take a bigger chunk out of an average family’s monthly budget.

READ MORE:  How Covid, Ukraine and energy costs are changing Swiss spending habits

What exactly is inflation and what causes it?

Simply put, it is an increase in the prices of consumer goods and services, causing some loss of purchasing power. In other words, while our wages mostly remained the same, the cost of living went up, and is expected to continue to increase for at least the foreseeable future.

This trend started in mid-2021, as world economies recovered from the Covid pandemic, and Switzerland rebounded better than many other countries. However, with many supply chains still disrupted and struggling to meet consumer demand, prices began to rise.

The situation has worsened since Russia’s invasion of Ukraine on February 24th, which also slowed down or shut down altogether the production and supply of some essential agricultural and energy products, leading to higher prices.

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