To enjoy studying in the USA and feel on top of your new life abroad, there’re no two ways about it: you’re going to have to know how to handle your money.
Asking questions and reading up as much as you can is essential- you’re not stupid, and there’s no reason why you would know all of the answers already. Why should you? Improve your understanding of US banking right here right now by reading our simple guide to financial success on the other side of the pond!
When you arrive in the US you can buy or change cash into American dollars at the airport but bear in mind that there will usually be a fee for doing so. It’s also possible to buy the dollars in your home airport before you leave – just note that you can’t take more than $10,000 cash into the country with you without declaring it to customs and paying tax. However, in reality you should not need this amount of cash up front. Remember that, depending on where you are, most US banks don’t have on site foreign exchange facilities so you can’t just walk into any branch and obtain dollars.
Debits cards are very easy to use in the US as there are not many stores that have a minimum spend and cards can be used all over the country. If you’re going to be studying in the US for a year or more then you might want to consider opening a US bank account and obtaining a US debit card, as this can help you avoid fees and complications that arise from using a debit card in a foreign country. If you’re planning to use your current card then remember to let your bank know beforehand in case they put a fraud stop on your account when you start using it overseas. It’s also a good idea to find out how much you’ll be charged to withdraw cash in the US – in particular if there are any banks affiliated with yours where it might be free.
America – perhaps surprisingly – doesn’t yet have chip and pin technology so you will normally be asked to sign the receipt when you pay for something. This system has significant disadvantages when it comes to fraud so keep a close eye on your cards and statements. Another key difference is that most ATMs will charge you a fee to withdraw cash if you don’t have an account with that bank.
Credit cards are similarly easy to use across the country but you may be charged a foreign transaction fee for using an overseas card in the US, which is usually 3-5% of the cost of the purchase. Using an overseas credit card in the US can be an expensive business so many students opt to bring one for emergencies only. Obtaining a US credit card is hard for international students. If you want to apply then you need to be able to provide evidence of your incomes (source and amount), bank information and evidence of how long you’ve lived at your current address. Some businesses, such as department stores and petrol companies, offer credit cards that can be used to purchase goods only with them – be wary of these cards as they are not loyalty cards and interest rates can be high.
Depositing your money in a US bank is a good option if you’re going to be in the US for a long period of time, or you plan to stay on and work after you finish your course. Remember that most ATMs will charge a fee if your card isn’t with that bank so choose a bank that has a broad network, with ATMs on your campus and one that will be accessible wherever you choose to live and work, now and in the future. It’s also important to work out what the other charges will be for your banking – are there fees to maintain the account/have an overdraft/use online banking and what are the interest rates?
Opening an account with a US bank will require your passport, visa information, proof of enrolment at the educational institution where you’ll be studying, a minimum deposit and details of your residence in the US and also back home. Find out if the bank offers a specific student account, as this could offer discounts on fees and better accessibility. There are two types of account in US banking terms:
- Savings or deposit accounts may come with a higher interest rate but there may be access restrictions, such as a minimum balance requirement.
- Checking accounts are basically the same as a current account.
You can open both types of account and it’s then easy to transfer money from one to the other. Once the account is open then you’ll get everything you need to manage it straight away, from chequebook to PIN.
Funding your US bank account means transferring cash into it from a home account. You’ll need to speak to your chosen bank to find out whether there are fees for international transfers and converting foreign currency into dollars in your new US bank account. It may be cheaper to transfer large amounts in one go or to use a service such as Western Union or Travelex.
Once your account is up and running try and manage it to avoid going into overdraft – this is essentially where you end up in a situation where payments are being drawn against the account for more money than you have in there. Even if you issue a cheque for $1 more than you have in your account a US bank will charge you a fee – there are no exceptions made for foreign students. Penalty fees are usually $20.
If you are asked for a guaranteed cheque at any point – for example to pay the deposit on an apartment – you can request a cashier’s cheque or banker’s draft. There may be a fee for this but it is essentially a pre-paid cheque that might be required any time you’re writing a cheque for a large amount.