Opening a US bank account can be a little tricky for expats who don’t have a Social Security Number, but it’s not impossible.
If you know what you’re doing, and what banks need from you, it can be one of the easiest parts of setting up life in the US. From starting early to ensuring that you have the right documents, we’ve got you covered with everything a new expat should know on opening a US bank account for foreigners.
Take a look at our comprehensive check-list to make opening a US bank account for non-residents simple.
HOW TO OPEN A US BANK ACCOUNT (NON-RESIDENT)
If you’re wondering, “Can a foreigner open a bank account in the USA?”, there’s no law stating that ‘non-resident aliens’ can’t open a US bank account. However, banks and financial institutions may deny their applications for other reasons.
The USA Patriot Act, brought into effect after the September 11 terrorist attacks on New York’s World Trade Center, puts more onus on financial institutions to collect personal information from its customers. This means that whether you’re a resident or not, the banks need to have quite a lot of your information for you to open a bank account.
This is why they will ask for a US address to connect with your checking, savings or credit accounts. You will also be asked to provide your Social Security Number, but if you don’t have one there are ways around that rule. Let us take you through the dos and don’ts of opening a non-resident US bank account.
START BEFORE YOU MOVE
Question: can a foreigner open a US bank account from their home country? Thankfully, the answer is yes. Actually, the easiest way to get your first US bank account up and running is to open an account with a US-based multinational financial institution that has branches in your home country.
The earlier you open it the better because they’ll have more of your financial history to draw from when you arrive in the States. This makes it easier to get an American bank account for foreigners as all your previous financial information can be used in your favour.
Some of these banks also offer free transfers between your accounts in the two countries.
Atlas Wealth Management provides financial advice to Australian expats that can be quite handy when making the big move. Its Managing Director, Brett Evans, suggests you go into your Australian branch to chat about your move and opening a new US account before you leave, as some US branches aren’t as clued-in.
“This can be the case if you have an Australian Citibank account, though our experience shows that not all US Citibank branches are aware of this and clients have experienced problems in the past which usually need to be escalated and are then resolved,” Mr Evans said.
Because of this, it’s always a good idea to set some form of plan in motion at the bank in your home country.
He went on to say, “HSBC in the past also provided this convenience but we have noticed in the last year or two that they have been operated more on a solo basis with very little benefit of account portability between jurisdictions.”
HOW TO CHOOSE A US BANK
If you haven’t had the time to open an account at home, there are plenty of US banks and financial institutions that will take your business.
It’s very important to do your research before you choose the financial institution you wish to open your US account with. With so many different options, it’s a good idea to know your financial needs and find a bank that suits them.
You’ll most likely need a checking and savings account to start with but be warned, interest rates are so minute here that they’re almost non-existent. So, it may not be wise to bank on a fast-growing savings account to get you through your stay in the US.
Mr Evans recommends sitting down to think about what you’ll need from your financial institution before committing to one.
“We normally recommend clients deal with the larger institutions if there is the need to access their accounts in other states (due to travel inside of the US) as well as the ability to conduct national and international transactions,” Evans said.
Mr Evans went on to state, “With the rise in popularity of currency exchange brokers, the requirement of being able to conduct online international fund transfers with your bank isn’t as important anymore because more often than not you can get a far cheaper exchange rate with a currency broker than your bank.”
He said the only exception ATLAS has seen is for money transfers between US and Australian Citibank accounts, which offers “quite competitive rates”. Although he still recommends checking with a third party provider before committing to a transfer.
“The other problem that we have seen with clients working with the smaller banks is that when they have travelled overseas quite often the smaller US banks will restrict or remove access to funds, whereas the larger banks are well structured to handle these types of transactions.” It’s wise to double-check these factors, especially if you are banking with a smaller institution.
FINDING THE BEST US BANKS FOR NON-RESIDENTS
What should you look for in a financial institution before opening a US bank account with them? The easiest way to compare accounts is to use comparison websites such as NerdWallet.
Here are some key areas to look at when you research where to open a US bank account.
- The fee structure: Some banks charge fees for transferring money between accounts more than the set limit, monthly account-keeping fees, and a host of other charges.
- Online portal/Mobile banking: The US banking system seems to be stuck back in the early 90s – maybe even the 80s. Some financial institutions don’t offer these options, or the option to open a US bank account online.
- Bill paying: Some banks, such as Wells Fargo, allow you to pay bills through your online account. But be warned that not all banks have this facility and this could affect the timing of your payments.
- Person-to-Person money transfers: Forget about it. For the most part, they don’t happen here, which can cause some inconvenience in your daily banking and brings me to my next point.
- Cheques: Or checks as they’re called here. You’ll be writing them for bills, rent, or just to pay people back for things. Find an institution that doesn’t charge you a fortune to print cheque books which will save quite a bit in the long run.
- Credit Union v. Bank: Don’t discount credit unions when you’re doing your research. If you’re worried about ATM fees, some offer free transactions at certain other banks’ ATMs.
CHECKING AND SAVINGS ACCOUNTS: WHAT’S THE DIFFERENCE?
The two most common US bank accounts that you’ll open when you arrive are checking and savings accounts. They’re pretty self-explanatory, but it doesn’t hurt to know exactly what they’re traditionally created and used for.
A checking account is the one you’ll work out of for daily transactions. It’s the account that money will be withdrawn from when you make debit purchases in person or online. It is also the account that any checks (cheques) you write will come out of. It’s important to remember the time it takes for a check to be cashed when planning your budget.
It’s important to check whether there are minimum monthly balances required or service fees attached to this account. It’s also a good idea to know exactly what charges are associated with this account as you will be using it often.
Opening a non-resident savings account basically does what it says on the box – it’s where you put the money you don’t want to spend. You’ll want to compare interest rates because, frankly, they are pitiful in the US so you’ll want to get the best rate possible.
Some will also require minimum balances and service fees so keep a weather eye out for that.
TYPES OF US FINANCIAL INSTITUTIONS
While many financial institutions portray themselves as a one-stop shop, there are some that offer specialized services depending on your needs. Make sure you browse around before settling on a particular institution.
Savings banks were originally established as a place for lower-income workers to save their money. There are many online-only versions that provide higher interest rates that are available in traditional bricks-and-mortar financial institutions.
On the other hand, Savings and Loans associations tend to specialize in building up savings and granting mortgages and other loans.
Credit Unions are not-for-profit organizations that have restricted membership. The parameters mean that only a specific person can join and those restrictions could extend to where you live, work or which union you’re a member of.
WHAT YOU’LL NEED FOR OPENING AN ACCOUNT
When looking at how to open a bank account in the USA, it’s important to know exactly what documentation you’ll need to make the process smoother. You don’t want to be stuck without something vital, especially when you’re new to a country.
Financial institutions are legally required to collect personal information from you to verify your identity before opening a US bank account. The easiest way for them to do that is to get your social security number (take a look at these instructions on getting your SSN).
If you haven’t been issued one yet, or your visa doesn’t allow one, you need to show two other forms of photo-identification instead. It’s important to remember that one of them must be your passport. Here are the options:
- Driver’s license issued in that state
- Proof of employment
You may be asked for your current and past addresses, past employment details and date of birth. The bank will photocopy your identification to keep in its records, so remember to keep an eye on your original documents.
Other forms of ID include:
- An overseas debit card
- Work Visa
- Student ID
You’ll also need to bring:
- A copy of your I-94
- Your visa (if it is in an expired passport)
- Document confirming your address (a bill or rental agreement)
Some financial institutions require you to deposit a minimum amount stipulated by them into a savings account that you open.
The amount will differ according to the institution and, sometimes, this can depend on the account in question. You may be asked to provide ‘proof of funds’ to show that you have the required amount to deposit. A recent bank statement should suffice as proof.
GETTING A CREDIT CARD
Getting approval for a credit card can be much more difficult in the US, mostly because you likely don’t have a credit history in the country to back you up.
But that shouldn’t stop you from trying altogether. A credit card is an important part of building your credit history and the quicker you do it, the better for you. Read more about building your US credit history here!
So if it’s going to be more difficult, how do you go about it?
WHAT IS A SECURED CREDIT CARD?
No doubt you know the drill – you need a credit card to build your credit history, but without one, it’s almost impossible to do.
There is a way to get a credit card though and it’s relatively pain-free, you just have to keep an eye on your spending for the first six months or so.
Secured credit cards are issued to people with little or no credit history or those with bad credit.
Secured credit cards generally work by getting a cash deposit from you and then using that as collateral in case you don’t pay your bill. This can be ideal in the early months of your time in the US.
If you place a $500 deposit on your secured credit card, your ‘credit’ limit is equal to $500. To be clear, that money is held by the issuer so that if you don’t pay your bill somewhere down the line, they can use your deposit to cover themselves. That money does not automatically go towards covering your purchases, so it’s important not to rely on that amount.
Once you’ve built up trust with the issuer, you’ll get your deposit back and if your credit rating is good enough, later on, they’ll offer you an unsecured credit card.
WHAT IS AN UNSECURED CREDIT CARD?
If the secured credit card system doesn’t seem right for you, try unsecured credit cards instead.
You’ll usually be approved for a low limit (between $200 and $500) but you won’t need to put down a deposit. This can be ideal if you’re wary of using a deposit.
An unsecured credit card basically works like a normal one. Be warned that since they pose a greater risk to financial institutions, they also tend to have the highest rates and fees associated with them. Be sure to find out exactly what the rates and conditions of an unsecured credit card are.
USE YOUR CREDIT CARDS SPARINGLY
Now that you’re trying to build up a good credit score and history, don’t go crazy with your new credit card. It’s important to be frugal and remain aware of what you are spending.
There are a few rules you should follow to ensure you don’t ruin your chances straight out of the gate:
- Use your credit card sparingly
- Try to spend less than 30% of the limit each month
- Pay it back in full before the due date to avoid severe consequences
UNSECURED CREDIT CARD PERKS
When you’re choosing your credit cards, be they secured or unsecured, remember to look out for the perks that are offered. These can come in very handy down the line.
Some will offer you a percentage of the cash back on what you spend during your first year, while others will entice customers with free shipping on online purchases from certain stores.
Alternatively, you can opt into monthly or quarterly benefits.
For example, Discover offers 2% cashback on petrol (gas) and restaurant purchases during the first quarter of the year. This has the potential to be extremely helpful while finding your feet in a new country. If you’re driving a lot or have a long commute, that could end up being beneficial for you.
NON-RESIDENT BANK ACCOUNT MADE EASY
All in all, that’s the Bright Lights of America guide to opening your first US bank account and credit card. We hope you have found the information helpful – from choosing a bank to deciding on what type of credit card to get and being smart with your money.
Do you have any experiences to share that will make it easier for others to get through the process unscathed? We’d love to hear them!
Have I missed something important that needs to be included in this guide?
That’s what the comments section is for! Please let us know so that we can build the best easy-to-follow guides for new expats moving to the US.
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