US Banking Basics

U.S. Banking Basics

Banking and U.S. currency are an important consideration for international students coming to the States for educational purposes. Immediately upon arrival in the U.S. you will need to have U.S. currency to pay for all of your important needs such as tuition and living expenses, food, transportation, and even your books and supplies. You will not be able to buy or purchase goods or services with foreign currency. It will be absolutely necessary for you to familiarize yourself with the banking system and the currency. A currency converter, will be a big help in determining the amount you will need to have upon arrival.

Banking
Everywhere you go in the United States you will find banks. It is not a universal banking system, yet large banks may have several hundred branch offices all with the same name. There are also some small banks that may have only a few branch offices. A variety of different services are offered, including: checking and savings accounts, traveler’s checks, credit cards, money orders, safe deposit boxes for important papers and valuables, debit cards, and more. A primary concern when selecting a bank is its location. You will need easy access to the bank, so it should be close to where you live or go to school. Hours are also an important consideration. Is the bank going to be open during times that you can get there?

It is easy to open an account at a bank, provided you have a local address. You will need your student identification card and/or a social security card, your passport, and the money you wish to deposit. The person helping you open the account will tell you all about the different types of accounts that are available to you and help you decide which is best for your particular needs.

Checking Accounts
The basic accounts are checking and savings. But there are a wide variety of each to choose from. A basic checking account allows you to deposit your money in a safe place without worry of it becoming lost or stolen. Be sure that the bank you choose is an FDIC bank, which insures its customer deposits up to $100,000 U.S. dollars. This insurance is provided by the U.S. Federal Government. When you need money, you can simply write out a check and have it cashed at the bank. This is the most manageable way to handle your money. You may also write a check against your checking account for goods and services, as the need arises.

The bank will provide you with a monthly statement so you can balance your checks, withdrawals, and deposits. This allows you to check for discrepancies; if you have questions you should call the bank immediately.

Some checking accounts come with interest earnings based on the balance in the account at certain times of the month or year. Discuss this with the bank representative.

It is your responsibility alone to maintain the accuracy of your bank accounts. While having a checking account may be a convenience, it can also become a nightmare if not properly balanced and cared for. You will need to be careful not to ‘bounce’ a check. This means that you have over-extended your account balance and there were not enough funds in the bank account to cover the check that you wrote. This action can cause you to incur high service fees from the bank and possibly the company you wrote the check out to. This can also give you an unfavourable credit rating. It is illegal in the U.S. to deliberately ‘bounce’ a check.

Many banks charge the account holder a monthly maintenance fee for handling all of the records and information. This charge shows up on the monthly bank statement. Shop around to find a bank that offers what you want, such as free (no-fee) checking.

Savings Accounts
There are many types of savings accounts to choose from, although they may vary from bank to bank and even one bank will likely offer several types of savings accounts. Savings accounts are an easy way to keep your money safe, earn interest, and still have the money accessible. On average, savings accounts earn more interest than checking accounts. Types of savings accounts include ‘passbook savings’, ‘statement’, money market’, or ‘holiday’ accounts. A savings account is used generally for money you know you won’t need for short-term expenses.

If you have a savings account, it might be wise to request ‘overdraft’ protection, in case you do bounce a check. Overdraft protection means that the bank will withdraw from your checking account. This way you will not be charged the high fees for bouncing the check. It is wise to shop around and compare bank offerings and rates.

ATM Machines
ATMs (Automated Teller Machines) are everywhere! They are a convenience that the banks provide for their customers. When you open an account at the bank, they will likely offer you a free ATM card, which usually comes to you in the mail about two weeks later. This card allows you to use the bank’s services even when the bank is closed. You will be given a Personal Identification Number (PIN), to identify you as a bank customer. Never give this number to anyone else, but keep a copy of it in a safe place for emergencies.

Each bank has its own rules as to how much money you can withdraw in a twenty-four-hour time period and what banking cards from other banks they will accept, with a small fee. This fee is charged to your checking account. If you use your bank’s local branch offices, there are usually no fees to pay.

As with your checking account, you will have to pay special attention to logging your transactions from the ATMs in your check book each month to make sure you have registered all of your transactions. You can also use the ATM to receive a ‘mini statement’ of the transactions made to your account in between times that you get your regular statements. Again, there is a small fee to get this statement, but it may be well worth it.

Your ATM card may also be used for purchases of goods and services and is easier than using a check. It works similarly to a credit card only the amount you use comes directly out of your checking account. It is important to get a receipt so you have an accurate account of the money used. If your account does not have sufficient funds in it, you will note be permitted to use your card.

Travelers’ Checks
Travelers’ checks are the most widely accepted form of currency used today. They are convenient and safe and accepted almost everywhere! You can purchase them at your bank and they come in a variety of denominations, usually ranging from $10 to $100. They are inexpensive to purchase and easily replaced if lost or stolen. To redeem Travelers’ checks, you must present proper identification, including one photo I.D.

Credit Cards
Credit cards have become the normal mode of purchasing goods and services in the United States. Nine out of every ten people carry at least one credit card. In certain instances you will be unable to make transactions without having valid credit card. These might include car rentals, hotel reservations, airline ticket purchases, and even getting telephone service. Credit cards have become an extremely convenient way to make purchases without the use of cash in hand. But wise spending habits should take precedence and cash should be used most often. Treat your credit cards with care; always keep them in a safe place when not using them because they can be used like cash by anyone who gets their hands on them.

If you lose your card, or your wallet or purse is stolen, report the loss immediately to the credit card company so you won’t be responsible for paying for charges or purchases made by another person. Remember to pay your account on time and keep it in good standing as this will reflect on your credit history in the future. Consistent late payments will allow your lender to raise your rate of interest significantly.

Transferring Funds
Many international students will bring the amount of cash they will need for tuition and living expenses in the form of a bank draft. You can also have funds transferred by wire directly into your personal bank account or to your university student account once you have become settled yourself. Some students will have a bank draft forwarded to them by mail. However you choose to transfer your funds, your sponsor will need to know the exact amount of money and transfer requirements. This information can be found at your school’s International Student Office.

Be aware that it can take up to three weeks before your transferred funds are ‘cleared’ by the bank and made available to you. A U.S. Bank in your home country is the wisest choice for having funds transferred. It usually takes less time.

Words of Wisdom
• Never carry large amounts of money with you. Carry what you need.
• Create a financial budget and stick to it!
• If you use a checking account, keep very accurate records of your transactions.
• Remember to balance your check register every month when you receive your bank statement.
• Never send cash through the mail to pay bills; use checks, money orders, or certified checks instead.
• Transfer funds from home well in advance of your needs.
• Always keep your credit cards and ATM bank card in a safe place and never give anyone your PIN number.
• Understand any requirements that your government, or home bank, may have about transferring funds.
• Never sign your name to any document unless you understand what it says!