Banking on the Future – Immigrants guide in the USA
Most Americans who pay bills, save or invest money, pay taxes, or plan estates, do so through a financial institution such as a bank, credit union or savings and loan.
Banking saves you from having to keep or carry around a large amount of cash, which can tempt thieves. Banking also provides convenience, and most financial institutions allow you to earn interest on your money.
Types of Institutions
Banks, credit unions, and savings and loans all have the same basic services. Before choosing an institution, compare what each has to offer and pick the one that best serves your needs.
Banks in the USA are local, statewide or regional. The system may seem complicated if you are accustomed to large, national institutions. Banks are for-profit businesses and will charge a fee for services such as checking accounts, debit purchases, and other conveniences. Make sure to get a listing of the fees banks charges before opening an account.
Credit unions, on the other hand, are nonprofit, cooperative financial institutions owned and controlled by the people who use its services. They exist to provide a safe, convenient place for members to save money and to get loans and credit cards at reasonable rates. They provide all the services of a bank, but usually with fewer fees. The disadvantages of belonging to a credit union are limited locations and limited conveniences, such as online banking or ATM services.
You may join a credit union only if you are part of a group that has one, such as a company, profession or school. There are also credit unions that are formed by different nationality groups, each with its own set of guidelines for membership. For example, Polish & Slavic Federal Credit in Brooklyn, N.Y., is federally chartered to serve the needs of people of Polish and Slavic origin and their relatives who are members of the Polish & Slavic Center.
Savings and loans generally offer services that help customers invest and save. They usually don’t offer the same conveniences like banks, but they sometimes offer better interest rates on loans and some interest-bearing accounts.
Choosing Bank Services
Most Americans have a checking and savings account. Checks are the most commonly used method of transferring money from one location or from one person to another. Checking accounts are used for holding money that will be spent paying bills, while savings accounts earn interest and are used for overdraft protection. Banks also provide loans, credit cards, investments and a slew of other services that vary bank to bank.
Smart consumers do some comparative shopping before selecting a financial institution. You can start by requesting information from nearby banks and credit unions. In your research, you will want to find out about a bank’s:
- Correspondent relationships – You will be able to get some services more easily from a bank that has a correspondent relationship with a bank in your home country.
- Services – Does the bank offer the services you want? If you are transferring money to your home country, check if your branch can handle international transactions easily.
- Convenience – bank locations, hours, ability to do transactions easily — via ATM, online banking or by telephone.
- Interest – Does the bank pay interest on the balance for checking and savings accounts? How do the rates compare to other banks?
- Federally insured – Most banks are federally insured by the Federal Deposit Insurance Corporation, or FDIC, meaning if the bank goes bankrupt, you will get up to $100,000 of your money back.
- Check clearing – What are the policies? How long does it take to clear a check?
- Pricing – Check account charges, fees for checks and services like ATMs.
- Overdraft protection – With this protection, your bank will pay for a check if you overdraw your account.
- The minimum balance – The least amount of money you must keep in the account before receiving a penalty payment.
- Other useful services – Services such as link up with savings, charge cards, debit cards, financial counseling, and safety deposit boxes.
- Personal relationship – Services such as support and courtesy.
Avoid being influenced by:
- Advertising campaigns and promotions
- Interest calculating methods on interest-bearing accounts (usually insignificant)
- Prestige (image is unimportant, service is what counts)Setting up Your Banking Services
Financial institutions will need some proof of identification that you are who you say you are before opening an account. Call ahead to ask what you need, but you may need to provide:
- Your Social Security number. You can get a Social Security card for banking purposes from the Social Security Administration (1-800-772-1213) even if you don’t have a green card to work
- A photo ID such as a driver’s license, passport or student ID.
- A bill with your current address to verify your address.
- Your signature on a card or form that will be kept on file by your bank.
Ask for the new accounts department. The bank representative will walk you through the simple procedure of opening an account.
Bringing Funds into the USA
You may electronically transfer any amount of money into the country. But if you bring more than $10,000 in currency, money orders, checks, traveler’s checks, stocks or bonds, be prepared to file a Form 4790 with U.S. Customs.
Banks are also required to report all cash transactions more than $10,000 to the Internal Revenue Service, or IRS.
Most banks will now allow you to have bills and payments automatically deducted or added to your account.