International students will likely realize quickly that people in the U.S. handle money differently than in their home country. In some ways, the U.S. is very contradictory when it comes to financial matters: On one hand, few use cash, depending more on credit and debit cards; on the other hand, many people get paper paychecks and actually still use checks to pay bills for things such as electricity, like I had to at my dorm.
I have to admit that this confused me quite a bit. I had never filled out a check, and view them as very outdated. In Germany, it is very common to use online banking instead of seeing a clerk and using checks. I do all my banking online and never have to go to a branch.
One of the first things you will probably notice in the U.S. is that Americans tend to use their debit and credit cards a lot, from buying a pack of gum at the gas station to higher-priced items. I've noticed Americans are often thrown off by not being able to use their cards at many places in Europe, and after a year in the U.S., I had gotten so used to it, too, that I was shocked I couldn’t pay a 40-euro bill at an electronics store with my credit card. Rarely will you see a person actually entering a PIN; more likely, he or she will sign a receipt.
[Find out how to build financial credit as an international student.]
Getting one of those handy cards as an international student can be quite easy. Most schools host an international student orientation before the semester officially starts. One day will likely include an event where banks come to the school – or where students visit the bank – and representatives introduce themselves to the new students.
International student orientation is a good chance to get in touch with the different banks, look at their special offers for students, get contact information and maybe already start the necessary paperwork to open a bank account. Students choose banks for different reasons, including an ATM available in the campus building and the friendliness, helpfulness and expertise of the bank representative, for example. Many of the bigger banks in the U.S. offer their services at branches all across the country, have more branches and typically offer mobile banking apps.
When opening a bank account, students will mainly open what's called a checking account, which many banks offer free of charge for students. Banks also offer what's known as a savings account, which is not meant for everyday use but – as the name indicates – to save up money. I chose not to open one and was perfectly fine without it.
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Banks also generally offer different features on accounts, such as overdraft protection, which automatically transfers money from your savings to your checking account if you have insufficient funds to pay a bill, and debit card coverage, so transactions that would drop your bank balance below a certain amount, such as $25, will be declined. These are often automated features you can set up when opening the account and change throughout your time being a customer.
The representatives who come to the school or deal with students typically know how to help international students and about what documentation they will need to open an account, such as a copy of a passport or other forms. I signed up for an account the same day, and the next day my account was active. The representative made sure to keep in touch with me via email and phone, which I really liked.
I knew I wanted to open an American bank account, because I wanted to work on campus and had to deposit my money somewhere. Of course, I could have cashed all my paychecks instead – but it can be safer to deposit them into your account.
Also, cashing a check without having an account with a bank can be costly. Depending on the type of check, you might have to pay a fee to cash a check at a bank where you are not a customer. My bank also had a very handy smartphone app that allowed me to deposit my checks without having to go to a branch.
[Learn ways for international students to make U.S. tuition payments.]
Try to send money saved in a bank account at home – or from your parents – in as few transactions as you can. Fees can be quite high, between $25 and $40 for international wire transfers, and do not depend on the amount of money you’re sending. Unfortunately, these are separate fees that students will still have to pay. There are also fees for making domestic transactions, which was new to me.
I recommend you to ask the bank representative about their banking fees. Don’t be afraid to ask specific questions, as they might be in charge of one of your most important resources abroad: your money. Try to use your bank’s ATMs as much as possible, as there are fees when using other banks' ATMs and those you see at gas stations and restaurants.
I made the mistake of not asking these questions because I thought students were exempt from all fees, which wasn’t true. By the time I found out that there were fees for domestic transactions, I had already had my bank account for a while and didn’t want to switch.