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No doubt you would like to try to estimate how far your euros will stretch and how much money (if any) you will have left after paying your bills.Inflation in Italy in 2003 was around 2.4 per cent and the country has enjoyed a relatively stable and strong economy in recent years. Salaries are generally reasonable and Italy has a high standard of living, although the combined burden of social security, income tax and indirect taxes make Italian taxes among the highest in the European Union (EU).

Anyone planning to live in Italy, particularly retirees, should take care not to underestimate the cost of living, which has increased considerably in the last decade. Italy is a relatively expensive country by American standards, and it’s one of the most expensive countries in the EU, although there’s a huge disparity between the cost and standard of living in the prosperous north and central regions of Italy, and the relatively poor south.

Luxury and quality products are expensive, as are cars, but wine and spirits are inexpensive. Food costs almost twice as much in Italy as it does in the US, but is similar overall to most other western European countries, although you may need to modify your diet. However, you should be wary of cost of living comparisons with other countries, which are often wildly inaccurate and usually include irrelevant items which distort the results.

It’s difficult to calculate an average cost of living in Italy, as it depends on your circumstances and lifestyle. It’s possible to live frugally in Italy if you’re willing to forego luxuries and live off the land. Shopping for selected ‘luxury’ items (such as stereo equipment, electrical and electronic goods, computers, and photographic equipment) abroad can also yield significant savings.

A list of the approximate minimum monthly major expenses for an average single person, couple and family with two children is shown in the table below. If you work in Italy, you must also take into account social security contributions and income tax. The numbers in brackets refer to the notes following the table.

NOTES

1. Rent or mortgage payments for a modern or modernised apartment or house in an average suburb, excluding major cities and other high-cost areas. The properties envisaged are a studio or one-bedroom apartment for a single person, a two-bedroom property for a couple and a three-bedroom property for a couple with two children.
2. Doesn’t include luxuries or liquid food (alcohol).
3. Includes electricity, gas, water, telephone, pay (satellite) TV and heating costs.
4. Includes all entertainment, restaurant meals, sports and holiday expenses, plus newspapers and magazines.
5. Includes running costs for an average family car, plus third party insurance, annual taxes, petrol, servicing and repairs, but excludes depreciation or credit purchase costs.
6. Includes ‘voluntary’ insurance such as private health insurance, household, third party liability, travel, car breakdown and life insurance.

There are three kinds of bank in Italy: ordinary commercial or credit banks, co-operative banks (banchi popolari cooperative) and co-operative credit banks (banche di credito cooperativo).

As in other countries, co-operative banks were established to provide loans (particularly home loans) to their customers. Co-operative credit banks are rural and artisan savings banks funded and owned by farmers and craftsmen. They comprise the largest number of banks (over 500) in Italy, but because their average size is very small they account for just a tiny percentage of total deposits. The Banca d’Italia is owned by the public sector banks and is the only bank permitted to issues notes in Italy.

There are some 900 banks (banche), around 200 of which are large (grandi), including around 50 branches of foreign banks (mostly in Rome and Milan). The remaining 700 or so are primarily local banks with few branches. The number of banks in Italy is continually decreasing as banks merge or are taken over.

The Banca Nazionale del Lavoro, Cassa di Risparmio, Banca Commerciale Italiana, Banca di Roma, Banco di Napoli and Banco di Sicilia all have nationwide branch networks. The top ten banks hold some 35 per cent of total bank assets. Creditwest, a joint venture between Credito Italiano and the British National Westminster Bank, has around 30 branches in Rome, Milan and Naples. The post office serves as a savings bank for many Italians and foreign residents, although non-residents aren’t permitted to open a post office account.
Opening hours

Bank opening hours vary according to the bank and town, and are generally from 8 or 8.30am until 1 or 1.30pm and for one to one and a half hours in the afternoon, e.g. from 2.30 or 3pm until 4 or 4.30pm, Mondays to Fridays. Some branches in major cities also open from 9am to noon on Saturdays. On the day before a public holiday, banks usually open only in the morning. Offices at major airports and railway stations have longer opening hours for changing money and cashing travellers’ cheques, and there are also exchange bureaux in major cities and resorts with extended opening hours.
Charges

Italian banks have traditionally levied some of the highest charges in the world, although they’ve been reduced in recent years. The interest rates charged by many Italian banks are still exorbitant, particularly for business and consumer loans. The interest rates levied on credit cards are also excessive. However, lenders are now required to publish the highest rates they charge and the market average, so that borrowers can make comparisons. Shop around and compare rates before signing any contracts or taking out a loan (banks must also publish their conditions).

Italy has traditionally had one of the least efficient and most ponderous banking services in Europe, where even the simplest operation was inordinately complicated and time-consuming. However, banking has become highly automated in recent years, although Italian banks still lag behind those in many other European countries in terms of efficiency, customer service, and the range and quality of services provided.

On the other hand, Italians banks are quite safe and most deposits are covered by a Bank Deposit Insurance Fund (Fondo Interbancario di Tutela dei Depositi). Branches of EU banks operating in Italy can join an Italian deposit guarantee plan and increase the amount of financial protection they offer clients above and beyond the protection provided by their home country’s guarantee plan. If a bank from a non-EU country is licensed to operate in Italy, the Italian branch must be part of the Italian deposit guarantee plan unless they’re members of an equivalent foreign plan. The maximum amount reimbursed to each depositor is limited to the very precise figure of €103,291.38.

You can open a bank account in Italy whether you’re a resident or a non-resident. If you’re a non-resident, you’re entitled to open a non-resident account (conto estero) only. Only foreign currency or imported euros can be paid into a non-resident account, which pays higher interest than resident accounts.There’s no withholding tax on interest earned on deposits in non-resident accounts, as there is for resident euro accounts (when withholding tax is deducted at source). If you’re a non-resident, it’s possible to survive without an Italian account by using cash, travellers’ cheques and credit cards, although this isn’t wise and is an expensive option. If you have a second home in Italy, you can have all documentation (e.g. cheque books and statements) sent to an address abroad. Some Italian banks also provide written communications in English.

You’re considered to be a resident of Italy (residenti valutari) if you have your main centre of interest there, i.e. you live or work there more or less permanently. To open a resident’s account you must usually have a residence permit (certificato di residenza) or evidence that you have a job in Italy.

It’s best to open an Italian bank account in person, rather than from abroad. Ask your friends, neighbours or colleagues for their recommendations and just go along to the bank of your choice and introduce yourself. You must be aged at least 18 and provide proof of identity, e.g. a passport, and your address in Italy (a utility bill usually suffices). Before choosing a bank, it’s wise to compare the fees charged for international money transfers and other services, which can be high.

If you wish to open an account with an Italian bank while abroad, you must obtain an application form from a branch of an Italian bank (either in Italy or your home country). You need to select a branch from the list provided, which should be close to your home or place of business in Italy.

If you open an account by correspondence, you must provide a reference from your bank, including a certificate of signature or a signature witnessed by a solicitor or lawyer. You also need a photocopy of the relevant pages of your passport and a euro draft to open the account. It isn’t recommended to close your bank accounts abroad even when you’re living permanently in Italy, unless you’re absolutely certain that you won’t need them in the future. It’s cheaper to keep some money in local currency in an account in a country that you visit regularly, rather than pay commission to convert euros. Many foreigners living in Italy maintain at least two accounts: a foreign account (possibly offshore) for international transactions and a local account with an Italian bank for day-to-day business.

All banks provide credit and debit or ATM cards (called Bancomat cards) to obtain cash throughout Italy and also abroad, usually via the CIRRUS and NYCE networks. However, it’s unwise to rely solely on ATMs (called Bancomats) to obtain cash, as they often run out of money or are out of operation. Note also that daily withdrawals with a debit card are generally limited to €300.

Cheque Accounts The normal bank account for day-to-day transactions in Italy is a cheque (assegno) or current account (conto corrente/interno). Non-EU residents need Italian residency and a fiscal code to open a current account. Couples can open a joint account (conto corrente cointestato) and some banks have special accounts and deals for children, pensioners, students and women.Always shop around and compare fees and benefits before opening an account. When opening a cheque account, you should request a debit (Bancomat) card, which can be used to pay for goods and pay bills throughout Italy. You receive a cheque book (libretto di assegni) and your debit card, which you must usually collect in person from your branch, around two to three weeks after opening an account. Interest is paid on cheque accounts quarterly, although it may be as little as 0.5 per cent.

Many banks offer accounts where the balance above a sum of your choice (e.g. €2,500) is automatically invested in mutual funds. There’s a fee of around €1 for a cheque book containing ten cheques, although some banks issue them free of charge, and a fee for each cheque you write (which is around €0.80 or more when charges, duty and insurance are included).

Current account charges vary according to factors such as the number of cheques you write and the average balance maintained and may be negotiable. Charges are higher for non-resident than resident accounts. Each entry on your bank statement costs you between €0.80 and €1.50, although most banks allow you 100 free operations per year (which includes every withdrawal made with a debit card).

Cheques (assegni) may be crossed (sbarrato) or open (non-sbarrato). Cheques require endorsement on the back before they can be paid into an account. Note that open cheques are freely negotiable and even crossed cheques can be endorsed to a third party (up to €10,350), although you can write not transferable (non trasferibile) on the back of a cheque to prevent it from being endorsed. Cheque guarantee cards (carte di garanzia) are available in Italy, but few people accept personal cheques even with a guarantee card and you’re unlikely to be able to use your cheque book with businesses outside your local area, except utility companies and other businesses you deal with regularly.

To obtain cash at a bank counter, you must complete a form or write a cheque made out to yourself (me medesimo, usually written as m.m., or me stesso), which can usually be done only at your own branch. All cheques must be written in Italian and not in English and in blue or black in. When writing the amount in words, no capitals are used and all words are connected. When writing figures in Italy (or anywhere in continental Europe), you should cross the down stroke of the number 7 in order to avoid confusion with the number 1, which is often written with a leading upstroke and resembles a seven to many non-Europeans. Like other Europeans, Italians write the date with the day first followed by the month and year; for example, 1.9.04 is 1st September 2004 and not 9th January 2004. The conventional US form 1/9/00, with the month first and slashes between the digits, is unknown and must never be used!

Most banks now have tellers who can cash cheques, thus eliminating the previous two-step operation where you presented the cheque/form at one counter and were given a receipt to take to a cash desk (cassa) to obtain your money.

It’s illegal to bounce cheques (assegno a vuoto) in Italy, for which you can be banned from holding a bank account and prosecuted. You should also take care not to become overdrawn, which can be expensive (overdrafts may be possible for a hefty interest rate). Post-dating cheques is also against the law, and all cheques can be presented for payment on the day they’re written irrespective of their date.

The time taken to clear cheques (after which the funds are credited to your account and start earning interest) varies from two days for a cheque drawn on the same bank to a week or longer for a cheque drawn on a different bank. You can stop payment of a cheque only when it has been lost or stolen (not simply because you’ve changed your mind), when a report must be made to the local police.

Bank statements (estratto conto) are issued monthly or quarterly (you can usually choose) and contain your account details such as your bank, branch and account number at the top. This information is required when payments are to be made directly to or from your account, e.g. by standing order (ordine di pagamento) or direct debit (domiciliazione). Regular bills (such as utility bills) are best paid by direct debit, for which there’s a charge of around €0.80. If you’re a non-resident, it’s recommended to keep an emergency amount on deposit for unexpected (or unexpectedly high) bills. Bills can also be paid in cash at banks by completing a payment slip (richiesta di bonifico).