It’s important you’re able to manage and access your funds easily when you study abroad. Whilst some banks in your home country will have account options for you to access your funds overseas, these accounts often incur high transaction or currency conversion fees. Opening a US bank account can help make managing your funds easier and cheaper, and will be essential if you are receiving any sort of part-time income. Although you will have to make an appointment with your bank and go there in person to open your account, provided you have the right documents the process is incredibly straightforward. Let our breakdown of how to open a bank account in the US walk you through it.
Choosing a bank
The first step will be to choose a bank that best suits your needs. Most American banks operate on a state or city basis, and so depending on where you’ll be studying abroad you’ll have a different range of account options available to you. The biggest banks across the country are the Bank of America, the Chase Bank, Citi and Wells Fargo.
Many universities in the US have relations with local banks, or offer advice services for international students looking to set up an account. For example, Boston University has ties with local branches of Citizens Bank and Bank of America, both of which have offices on campus that are well versed in setting up accounts for students. The University of Cincinnati has a downloadable letter of verification students can have signed and take to the bank as proof of enrolment, whilst Citizens Banks has a separate section on its website specifically for student banking.
Which account is best for me?
There are two types of bank account in the US: a savings (deposit) account or a checking account. You can open both types of account with the same bank and transfer funds between them online.
Checking
A checking account is just a basic debit account that allows you to access your funds via card. There are a number of different checking account options, each with different sets of fees and some that will pay you an interest rate if you maintain a minimum balance amount. Many banks also offer checking account deals and packages to students. Some banks will charge you per transaction and others a flat monthly fee. Most students will only need a checking account to manage their living expenses whilst studying in America.
A basic checking account suits students who will only need to pay bills and a few other expenses, offering standard services at a minimal fee. With an interest-bearing checking account, you will be paid a small amount of interest on the money you have in your account. You will usually need to maintain a minimum balance amount to avoid paying bank fees.
Savings
Savings accounts are designed for students who have a minimum quota of saved funds that they will not need to use on a day-to-day basis. These accounts usually earn higher interest but often have minimum balance requirements, and usually you’ll be unable to access your funds directly via a bank card, as you are with a checking account. You’ll be able to transfer funds from your savings account to your checking account online.
International Dollar Account
Some international banks such as Barclays will let you open a 'US dollars account', which means that you will have an account with your home bank that deals in US dollars and functions like a basic US checking account. You will be able to deposit, manage and withdraw funds in USD when abroad, including online banking and taking out cash using a debit card. These accounts often charge higher account and transaction fees, but will save you from opening an account when you arrive.
What documents do I need?
Whilst some banks might require additional, specific documents from you, in general you will need to bring your passport, visa details, letter of acceptance into your host institution, proof of residence in the US (i.e. as part of your acceptance letter if you’re living on-campus, or a copy of your tenancy agreement), and the minimum deposit amount (if any). You should also bring your I-20 and your I-94 immigration forms. You will not need an American social security number to open a bank account as an international student.
American banks are required to verify your identity in compliance with the Customer Identification Programme (CIP). This means that when you open an account you’ll need to prove your name, date of birth, street address and provide an identification number. This number should be your passport number, but may also be the identification number on your home country ID card such as a driver’s licence.
You might also need to produce evidence of your credit history or demonstrate that you had a functional bank account in your home country.
Using your card
Unlike many other countries, credit and debit cards in the US do not use a ‘chip-and-PIN’ system to complete a purchase, but commonly use magnetic-stripe readers instead. This means that instead of inserting your card into a machine and typing in a 4-digit Personal Identification Number (your ‘PIN’ number), you will need to swipe your card through a card reader that will identify you based on the information contained in the magnetic stripe.
Whilst many establishments will still be able to accept a foreign ‘chip-and-PIN’ card, others might not know how to charge the card. You will always be able to use a ‘chip-and-PIN’ card to take out cash at an ATM, so you may consider either opening a US account or being more strategic with your cash withdrawals. Remember, you will usually pay a fee for using an ATM, and will definitely incur additional charges if you’re using a foreign card.
Additional Costs
There are a number of additional costs you might encounter when setting up an American bank account. You’ll be likely to pay a monthly account fee that you should consider against the interest you’re offered on your savings. Some banks won’t charge this fee if you meet minimum balance requirements.
There is almost always a surcharge for using an ATM, which on average is about US$ 2.40 per transaction. You’ll also be likely to pay monthly debit card fees, and sometimes additional fees for doing your banking online or via your mobile phone.
Extra Tips
If you choose to open a checking account, you should make sure to consider how easily you’ll be able to access your funds. Whilst most banks will give you a debit card that will let you get cash out at an ATM, you should also check if you’ll be able to bank online or from your phone, and if your bank charges fees for mobile or online banking. Some banks will also let you set up an alerts service when your balance is low, or if there’s a large deposit or withdrawal from your account.
If you’re eligible for a tax return then it’s also a good idea to fill out and submit a W-8BEN form to the bank when opening an account. This form just verifies that the purpose of your US account is to transfer funds, and is not for any business purposes.
Some promotional account offers might offer you a cash bonus up front for opening your account, provided your initial deposit is above a given amount. This is often the case with accounts that offer low interest rates. Students are advised to proceed with caution: how long are you planning on having the account for, and how high is the initial deposit requirement? If you are planning on studying in the US for a long period of time then the amount you might lose in interest is likely to outweigh the initial bonus. The conditions of this bonus will also sometimes require you to sign a contract saying you’ll keep your account with the bank for a certain amount of time. Remember: banks are businesses that deal directly with money, so everything is done with their economic interests in mind.
Now that you know what it takes to open a bank account in the US, why not start browsing courses in the US now and start planning your study abroad adventure?
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