Are you planning to relocate to the U.S.? Whether you want to make the move for work, to study or simply to pursue the American dream, at some point you’re going to need a bank account.
Unfortunately, opening a bank account in the U.S. is quite difficult, mainly because of tough laws to prevent money laundering. However, with some preparation and a little patience, you can still make it happen. Here’s how to go about it.
If you’re already residing in the U.S., you can open a bank account either in branch or online. That said, if you’ve arrived recently, an online application will probably be refused, for two reasons.
First of all, because you’re new to the country, you’ll have a very limited credit history. This makes it difficult for the bank to verify your identity, which is a legal requirement.
Secondly, you may not fit neatly into one of the categories set by the bank, which makes it harder to satisfy its requirements.
When you apply for a bank account in person, it’s usually easier to deal with any difficulties as they arise. It’s also useful to start building a face-to-face relationship with your new bank, as you never know what you might need in the future.
Banking rules and regulations can be quite different from state to state, so account opening requirements may vary depending on which part of the U.S. you’re moving to.
Ideally, you should speak to a customer representative before setting an appointment to open your account. This will give you a better idea of what documents and information you’ll need to provide for your application to be successful. However, broadly speaking, you may be asked for the following documents:
- Your passport, identity card or driving licence;
- Your social security number;
- Documents to prove your physical address (PO boxes are not acceptable); and
- Immigration documents.
Your passport and immigration documents are fairly straightforward requirements, but obtaining proof of address and a social security number will need some work.
Different banks may require different documents as proof of address. Documents that are likely to be accepted should include a lease agreement, a recent utility bill and a recent bank statement.
If you’re a student, you can also prove your address by showing a copy of your enrolment form and providing details of your school. In order to obtain a social security number, you will need to fill out an application. Unless there are any difficulties, you should receive your new social security number within two weeks.
Your nationality will also play an important role. It will probably be much easier to open a U.S. bank account if you’re British, Canadian, Australian or from an EU country.
Once your application has been accepted, you'll need to make a deposit in order to activate your account. This is normally a straightforward process.
However, depending on the amount of the deposit and the method you use (if you do it by wire transfer, for example), you may be asked to provide documents to prove your money is not related to criminal activity or terrorism.
Documents you can use to prove your money’s origin include tax returns, payslips and, in the case of investments or other income, a statement of account.
If you have an account with one of these banks, they can help you set up a bank account before you arrive in the U.S. In fact, even if your bank doesn’t have an office or branch in the U.S., it may still be able to help you if it has a correspondent banking relationship with a U.S. bank.
The procedure for opening a U.S. bank account remotely may vary from country to country, so it’s a good idea to speak to a customer representative at your local branch, either in person or by phone. This will give you a better idea of how the process works and what documents you’ll need to provide.
Many banks also offer so-called international bank accounts in U.S. dollars. These accounts are offered by your bank in your home country, so your local rules apply. This makes them much easier to open, especially if you’re a non-resident or new to the U.S. Most banks will let you open an international account online.
Unfortunately, international accounts often have stringent requirements, so they may not be the right choice for you.
You may need to make a large (20K+) initial deposit and keep your credit balance at a certain level at all times. This can make it expensive to open and maintain your account.
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As you can probably imagine, the U.S. banking industry is huge. There are thousands of banks in the US, which can make choosing the right one for your needs quite confusing.
The four largest banks in the country are JP Morgan Chase, Bank of America, Citibank and Wells Fargo. Here’s what they have to offer.
JP Morgan Chase is the largest bank in the U.S., and the sixth largest bank in the world.
It has more than 15,000 ATMs and over 5,000 branches across the country; and all its accounts have free online banking, mobile banking and a visa debit card as standard.
It also offers a tailored student account and business banking services. The student account is free for up to five years. However, in order to qualify, you have to be between 17 and 24 years old and prove you’re a student.
The business accounts start at $10 a month, but the fee can be waived if you keep at least $1,500 in your account. You’ll also get a business debit card and up to 500 fee-free transactions a month.
Bank of America’s basic bank account costs $12 a month, but it’s free if you pay in at least $250 each month. Whether you’re planning to work or study in the U.S., it’s likely you can easily meet this minimum amount.
You’ll also get a visa debit card, which comes with liability protection as standard. This ensures you’re refunded if your card is lost or stolen and used to make purchases without your permission.
Bank of America doesn’t have bank accounts specifically for students. However, the monthly fee will be waived if you’re a student under 23.
There are also two business bank accounts to choose from, depending on the size of your business. These accounts include a free business savings account and tailored online banking that integrates with accounting software.
Citibank’s basic bank account is unique because you don’t need to make a minimum deposit in order to open it.
You’ll also get some extra features, including protection against unplanned overdrafts and special access to thousands of concerts, movie screenings and other events.
Citibank no longer has a dedicated student account. However, it does have a range of business accounts. These accounts have unplanned overdraft protection, a number of free transactions each month and better rates on loans and other lines of credit.
Wells Fargo’s bank accounts start at $10 a month, reduced to $5 a month if you’re a student aged 17 to 24. You’ll get a visa debit card, free online bill payments and free online and mobile banking.
While JP Morgan Chase, Bank of America, Citibank and Wells Fargo are the four biggest banks in the US, some other banks are also worth checking out.
The Bank of Internet USA is an entirely internet-based bank, which means it doesn't have any physical branches. It’s unusual because, unlike many other banks, it offers up to 0.71% interest on your account balance. In addition, it has no monthly fees, no ATM fees and no overdraft fees. You can apply for an account online. However, you’ll need a social security number, a valid U.S. address and a US driving licence or state ID.
Capital One is another great option to consider. They have over 40,000 free ATMs across the U.S. and no monthly fees or minimum deposit amounts. More to the point, you can earn up to 0.9% interest a year. If you’re a U.S. resident, you can apply for an account here. Of course, it’s always a good idea to look at what different banks have to offer before you commit to a bank account. You can compare bank accounts online here and here.
There are a number of costs you need to consider when opening a bank account in the U.S.
Most U.S. banks charge a monthly fee. However, this can often be avoided if you deposit a minimum amount each month or keep a given amount of money in your account at all times.
It’s also a good idea to register for paperless statements and correspondence, as some banks will charge a fee to cover printing and postage expenses.
Withdrawing money from an ATM is free in the U.S. if you use one of your bank’s ATMs.
However, many banks will charge a fee if you withdraw money from another bank’s ATM. Other banks only offer a limited number of free withdrawals per month.
On the bright side, some U.S. banks do not charge fees when you withdraw money whilst overseas. Citibank, for example, has its own ATMs in many international locations. If you’re a Citibank customer, withdrawing from these ATMs is free.
You should always withdraw money in the local currency when overseas, as otherwise you may be faced with a very unfavourable exchange rate. Incredibly, some banks also charge a fee if you use a human bank teller. If you plan on visiting a branch often, you should seek out an account that does not levy this charge.
Many U.S. banks require you to keep your account open for at least 90 days before you can close it down. Close your account before this period expires and you can expect to be charged a $25 early closure fee.
Finally, don’t forget the cost of international transfer fees.
Many U.S. banks will charge you expensive fees both to send and receive money. You will often also be faced with an unfavourable exchange rate, which makes your international transfer all the more expensive.
As a general rule, banks rarely offer the best deal on international money transfers. It’s always a good idea to look elsewhere.
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