How sanctions will affect my finances

Posted on

Can my accounts and deposits be frozen?

People have access to all their money on accounts and deposits in all Russian banks. There are no restrictions for bank customers who are subject to sanctions. But if you want to withdraw a large amount, it is better to order it in advance – there may simply not be enough cash at the bank’s cash desk.

Restrictions are imposed only on the withdrawal of currency. From March 9 to September 9, 2022, up to USD 10,000 or the equivalent amount in euros can be withdrawn from foreign currency accounts or deposits in one bank, and the rest can either be withdrawn in rubles or left in the account until restrictions are lifted.

When converting into rubles, the bank must use the official rate of the Bank of Russia on the day of payment or its own rate, provided that it turns out to be more profitable. Until September 9, banks are also not entitled to charge commissions for currency withdrawals.

It may take several days for the bank to deliver cash to your branch.

During the period of restrictions, banks issue only rubles, US dollars and euros: if you have an account or deposit in another currency, it is converted into dollars, euros or rubles at  the rate of the Bank of Russia .

This change applies to cash transactions only. If you leave money on an account or deposit, the conditions will not change – interest will continue to accrue in the deposit currency. But until September 9, you can withdraw interest that will accrue after March 8 only in rubles.

The limit is calculated for accounts and deposits in each bank separately. That is, if you have several foreign currency accounts or deposits in one bank, you can receive no more than $ 10,000 in cash in it. When foreign currency accounts and deposits are opened in different banks, each bank will issue up to $10,000 or the equivalent in euros.

If you have currency in a safe deposit box, you can withdraw the entire amount at any time.

Is it possible to change the currency?

Until September 9, you will not be able to buy cash in banks. This ban applies to both dollars and euros, as well as all other currencies, such as Chinese yuan or Kazakhstani tenge. You can exchange foreign money for rubles without restrictions.

Non-cash conversion is allowed: you can open a foreign currency account and transfer money to it from a ruble account at the bank’s exchange rate.

You can also convert rubles into US dollars, euros and other currencies on the exchange through a broker . But at the same time, the intermediary will take a commission from you.

No matter how you change non-cash money – through your bank or through the exchange, if the currency came to your account after March 8, you will not be able to withdraw it in cash until September 9. This also applies to those cases when you transfer currency from one bank to another. If necessary, this money can be received in rubles at any time or stored until the restrictions are lifted.

If before March 9 you already had an account or deposit in foreign currency and after this date you transferred your savings to a new deposit or account in the same bank, you can get cash from it in dollars. But you can withdraw in foreign currency no more than the amount that you had before March 9, and no more than 10,000 dollars or the equivalent in euros.

How will bank cards work?

Any cards of all banks work and will continue to work in Russia as usual: you can pay with them, withdraw money from ATMs and make transfers.

Inside the country, difficulties are possible only with Apple Pay, Google Pay and similar foreign services. Payment may not go through if you have linked a sanctioned bank card to them. Or if you are trying to pay in an online store or through a payment terminal that are serviced by a bank under sanctions – in this case, payment through a mobile service will not work, even if you pay with a non-sanctioned bank card. But if you enter the details of the card itself or attach it to the terminal, everything will work.

To pay by phone, you can use the Mir Pay payment service. Now more than 80 Russian banks allow you to link your Mir cards to Mir Pay.

Abroad, Visa and Mastercard cards of Russian banks will not work. They will not be able to pay for purchases in foreign online stores either.

But in some countries they accept the Mir card: in Turkey, Vietnam, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, South Ossetia and Abkhazia. There you can pay with the Mir card and withdraw cash from it in the country’s currency.

Can banks raise interest rates on my loans?

Almost all consumer and mortgage loans are issued by banks at a fixed interest rate, that is, they are not entitled to raise the rate during the term of the loan agreement. But just in case, check if the possibility of changing the terms of the loan is spelled out in your contract.

If the agreement does not provide for a revision of the credit rate, and the bank nevertheless raised it, complain to the Internet reception of the Bank of Russia.

I have lost income and cannot pay my loans. What to do?

If you have difficulties with a loan that you have issued on the security of housing, you can always apply for a mortgage holiday. That is, reduce or defer payments for up to six months.

Until September 30, 2022, it will be possible to apply to a bank or microfinance organization (MFO) for a credit holiday for any loans and borrowings. They also allow you to make a break in payments for up to six months. The lender is required to put the debt on pause if your income in the last month has fallen by more than 30% compared to the average earnings last year.

Similar holidays were already in effect in 2020 due to the coronavirus pandemic. And even if you have already used them due to financial problems related to covid, this does not deprive you of the right to holidays due to sanctions.

When income hasn’t fallen as much, or you can’t document a difficult financial situation, you can still ask for a change in the payment schedule. One option is to reduce the amount of the installment by extending the term of the loan. The Bank of Russia recommended that banks, IFIs and other creditors restructure debts to borrowers who find themselves in a difficult financial situation due to sanctions. And if they already have delays, creditors should not impose penalties and fines.

The bank began to suspend my payments and transfers, I constantly have to call back and confirm the transactions. Why is this happening?

The bank is just trying to protect you from scammers who are activated during any crisis. Scammers take advantage of the turmoil to swindle money from confused people. Therefore, financial institutions have to check transactions even more carefully in order to protect customers’ savings from theft.

You really can call from the bank to confirm the transfer or payment. But remember: a real bank employee will never ask you for confidential information – for example, full card details, including three digits on the back, an SMS code or a password to access an online bank. If they begin to lure you out of data, immediately interrupt the conversation and call the bank yourself by calling the hotline – you can see the number on the official website of the financial institution or on your bank card.

The bank can also send a notice of the suspension of the operation with a request to call back to confirm it. The problem is that sometimes such messages are sent by scammers and indicate their phone number or phishing link , which you need to follow. These instructions cannot be followed. Always contact the bank only by the official hotline phone or through the chat of the bank’s mobile application. In this case, always dial the number yourself – do not call back automatically even at familiar numbers from messages.

By what signs you can immediately calculate scammers, you will learn in the article “How to quickly recognize a scammer” .

Can I transfer money abroad and pay for goods and services abroad?

You can send up to $10,000 per month to your own or another person’s foreign bank account. If you want to transfer another currency, the limit will be recalculated at  the exchange rate of the Bank of Russia on the day of sending.

Plus, you can use international money transfer systems that work in Russia. Each system allows you to transfer up to  5,000 US dollars per month or a similar amount in another currency.

As before, payment for goods and services abroad is available: for example, transfers for studies, treatment, utilities are carried out without any restrictions on the amount. In cases where the card payment fails, you can transfer money from your bank account (provided that it has not fallen under sanctions) using the details of a foreign organization. Check with your bank first whether it makes transfers to the country you are interested in.

Can I receive transfers from abroad?

Yes, you can, there are no restrictions. But if you received a currency transfer from a foreign bank or through an electronic wallet, you can withdraw money only in rubles.

I invested money in shares and other securities. What to do with them now, do they need to be sold urgently?

Financial experts advise not to panic and not to take hasty action. During periods of “stock storms”, the most sensible strategy is to hold your assets, not sell them.

Now, trading in some instruments is temporarily suspended on the exchanges, during such a pause, you can think about everything and try to calmly make a decision. At the same time, all already purchased securities remain on the accounts of investors, nothing threatens them. You can still fund your brokerage accounts and withdraw money from them to bank accounts. And securities – to transfer to another depository or registrar , if necessary.

With regard to securities of mutual investment funds (UIFs), during periods of suspension of trading or strong fluctuations in the stock market, management companies are required to temporarily suspend the issuance and redemption of shares. The restriction is introduced due to the fact that at this time it is impossible to determine the fair value of the fund’s assets and calculate how much one share costs. As soon as the situation normalizes, you again get the right to freely dispose of the securities of the mutual fund. All information about the suspension and resumption of operations is published by the management companies of the funds on their websites.

My business has suffered due to the sanctions. How can the state help me?

If you have difficulty paying off your loans, you can restructure them. The Bank of Russia recommended that banks, MFOs and other lenders meet the needs of borrowers and, if necessary, change the payment schedule and not charge penalties and fines in case of delays.

Companies from the  list of particularly affected industries can count on credit holidays – a break in loan payments for up to six months.

There are still soft lending programs for small and medium-sized businesses. Entrepreneurs can get working loans for up to one year, as well as investment loans for up to three years at below market rates. For small businesses – no more than 15% per annum, for medium – up to 13.5%.

The revolving lending program also allows you to refinance a previously received loan.

Leave a Reply

Your email address will not be published. Required fields are marked *