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Banking in the United States
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Asterix Offline
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Banking in the United States
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Banking in the USA


I was just browsing through the Edulix forums and I found that there is hardly any information on how to open and maintain a bank account in USA .Since this will be an important part of our academic life I thought I'll just post some information which I gathered during my brief onsite opportunity in Chicago

Seniors/Mods If this information is a repetition of something already posted I am sorry about that ,A search query yielded no results so I thought I'll write it down


How to open a Bank account in USA


1) Go to the bank in person (Do check out all the available banks in your area and choose one which seems best suited to your purposes)
2) For most banks you will need your social security number to open an account, however some banks like Chase do allow you open an account using your passport
3) You need to provide certain details to the bank such your date of birth, an US address and an US phone number
4) After getting the initial identification work done you will be asked to choose the kind of account you want. There are basically two types of Accounts


1) Checking account: This is going to be your primary account where you will be depositing all your money and your debit card will be linked to it. This account rarely earns interest and if you want a checking account which earns you interest then you may have to go for a premium checking account which will have higher minimum balances. Further more the interest rate offered by the premium checking account is really low about 0.10 % so its not even worth upgrading to a higher account for the sake of a few cents of interest. Further more there are different types of Checking accounts available and you must choose the one which suit your purposes best.

The following information about different types of checking accounts is from the net so don’t give me credit for that Smile

1. Basic checking -- This is for people who just use a checking account to pay some bills and perhaps use a debit card to pay some daily expenses. Some basic accounts require direct deposit or a minimum balance to avoid monthly "maintenance" fees. You may be limited to a certain number of checks per month; exceed that number and you'll pay a "per item" fee for each additional check you write. You don't want to maintain a high balance in these accounts because you won't be paid interest.

2. Free checking -- For most people, this is the best checking account. A good definition of a free checking account is "no monthly service charges or per-item fees regardless of balance or activity." In other words, write all the checks you like and keep your balance as low as you like without worrying about paying a fee. Free checking doesn't mean you won't have to pay any fees. If, for instance, you bounce a check, you'll pay a non sufficient funds fee.

3. Interest-bearing -- Usually requires a minimum balance to open, and you may need to maintain an even higher balance to avoid fees. For example, a bank may require just $100 to open an account, but will charge $10 in service fees each month if you don't maintain a $1,500 balance. Interest usually is paid monthly, but these accounts pay a notoriously low interest rate. For most people it's simply not worth maintaining the required balance.

4. Joint checking -- An account owned by two or more people, usually sharing a household and expenses. Each co-owner has equal access to the account. Most types of accounts, whether it's basic checking, savings or money market, allow for joint use. Good bookkeeping is essential with all checking accounts, but especially so with joint accounts. An overdrawn account usually results in steep fees for non-sufficient funds.

5. Express -- Designed for people who prefer to bank by ATM, telephone or personal computer, this account usually boasts unlimited check writing, low minimum balance requirements, and low or no monthly fees. The catch is you pay a fee for using a teller. You might get one or two free teller visits per month and then have to pay a fee for subsequent visits. These accounts are especially popular with students and younger customers who are on the go and don't want to spend a lot of time on banking transactions.

6. Lifeline -- This is a "no-frills" account meant for people who have a low income. These accounts usually have monthly fees ranging from zero to $6; require a low, if any, minimum deposit and balance; and allow the user to write a certain number of checks per month. Lifeline accounts are required by law in Illinois, Massachusetts, Minnesota, New Jersey, New York, Rhode Island and Vermont. In those states, minimum terms, fees and conditions are set by law, not by individual banks.

7. Senior/student checking -- Many institutions offer special checking deals if you are a student or if you're age 55 or older. The perks vary from bank to bank, but may include free checks, cashiers and traveler's checks, free automated teller machine use, better rates on loans and credit cards, or discounts on everything from travel to prescriptions.


2) Savings Account: This is an OPTIONAL account which you can open if you want to earn some interest .However all saving accounts do have a minimum balance of about $300.So if you feel you are going to have a lot of money lying about and you want to let it earn some interest then go for this .But be warned that the interest rates in US are pretty pathetic (about 1-2 % ) so don’t expect to get gigantic returns Smile




5) Once you are done with choosing your account you will be asked to verify your details such as name/address/social security number and so on
6) You will then be asked to asked to choose your debit pin number in a electronic keypad
7) There !! You have a bank account. You might be asked to make a initial deposit of a certain sum of money to your account within a day or so
8) Your debit card along with your cheque books will be sent to your house address within 15 days or so
9) A lot of banking in US is done online,so ensure you get the online banking details from the banker before you leave and customize it as soon as possible and ensure your online banking details such as are kept safe as losing it can be disastrous
10) Once you get your SSN (assuming you opened the account with your passport or student Id) ensure your SSN gets linked to your bank account.This will help in maintaining your credit history.


Some things you should be aware of



Routing Number

A routing transit number (RTN), or routing number, is a nine digit bank code, used in the United States, which appears on the bottom of negotiable instruments such as checks that identifies which financial institution it is drawn upon. This code is also used by the Automated Clearing House to process direct deposits and other automated transfers. So when you deposit a cheque you would have to not only provide your checking account number but also your routing number to ensure that your account is credited correctly


Minimum Balance

When you are opening the account the banker may say that your checking account has no minimum balance but ask him what exactly he means by that. Most Checking accounts have no minimum balance provided there is some activity on the bank account during each statement cycle (22 Business days) such as 5 debit card transactions or one deposit in it.If you don’t have any activity then you might be slapped with a service fee which may range between $6 to $20 .However some accounts don’t charge a service fee if there is no activity on your account provided your account Balance is above a certain amount which can range between $1000 to $5000 or even more. So be sure to ask the banker about all these details such as

 Service fees
 Minimum Balance in case of no activity
 How long is a statement cycle
 What activity must take place in the account to ensure there is no service fees charged



Special Fees


There are quite a few fees which may be charged but may not be mentioned explicitly. Some of them are as follows :


1) Monthly fees : May be charged if your account balance is lower than a certain amount or the required number of transactions was not done
2) Early closing account : Usually comes into the picture if the account is closed within 90 to 120 days
3) Using an ATM other than your Bank ATM : There is usually a transaction fee charged If you use a Chase debit card to withdraw from a Bank of America ATM or vice versa or any other bank
4) Transaction fees to transfer the Money : If you are trying to transfer money online from one US account to another you may be charged a fee .This fee may be a percentage of the money transferred or a flat rate
5) Bank closing fees : Generally there is no fees if the account is closed after the minimum duration such as 90 or 120 days but some banks may charge a closing fees .Check with the bank customer care before closing your account to ensure you are not slapped with that fee
6) Non Sufficient Funds : Assume you have $500 in your account and you decide to write a cheque of $550 ,Not only will the cheque be rejected but you will also be slapped a penalty of $25
7) Overdraft fees : Most banks allow you an option of overdraft that is you can write a cheque for a higher amount than what you have in your account ,the cheque will not be rejected but the bank will pay the excess part .You will not only have to pay the excess part back to the bank at a high rate of interest but you may also incur some fees for it.
8) Fees for New Cheques : Some Banks may charge you for a fresh Cheque book or more Cheque book leaves
9) ATM/debit card replacement : Lose a card and you may get one new card a year for free if your bank is nice, but you'll pay for any beyond that.


What is Overdraft Protection?



I had mentioned overdraft fees in point No 7 of the previous section but here is an explanation I had found on the net

If you have overdraft protection on your account, the bank will cover the check (or pay the money) for you. Let’s assume that you write a check for $100 and you don’t have $100 in the bank. The bank might allow the check to clear, and simply expect that you pay back the $100 later. Of course, there are limits. You’ll find different limits on the dollar amount that an overdraft protection plan will cover. Also, you may have your privileges revoked if you frequently write checks in excess of your available balance Most banks charge for overdraft protection. They do this partly to keep you from abusing the service. Also, it creates a source of revenue for the bank. Make sure you know what the charges will be if you’re going to add an overdraft protection feature to your account. Typically it will be similar to the Non-Sufficient-Funds fee.

Next, there may be interest costs. Depending on your overdraft protection plan, the amount of your overdraft might be considered a “loan”. In that case, the bank charges interest until you repay. Paying interest in this way is typically less expensive than paying a flat fee for each overdraft that hits your account.

Special Privileges

Some banking Mangers conveniently forget to mention special privileges you may be eligible for so that they can provide you with an account which will give the bank a chance to gather more revenue from you. During my Onsite deputation in US I was working for a large investment bank and when I opened an account in that bank I was not informed that since I was working for that bank as a consultant I was eligible to open a Premium Checking and savings Employee account which would have no service fees ,no minimum balance and a higher rate of interest. It was only later I found out that I was eligible for this but it was pretty frustrating that I had lost out on some interest and other privileges because I did not know this .To cut a long story short I eventually upgraded my account to the Premium one but there was nothing I could do about the interest lost
On the same lines you may be eligible for special student accounts which might have special benefits ,so when you do go to open an account ,ask about them. If you are lucky you may end up with an account which has no minimum balance, no transaction fees and no service charges .So be aware of your rights and privileges

Finally do not hesitate to ask questions to the bankers or the customer care about the fees or other questions you may have .That is your right and may save you a lot of headaches and perhaps even quite a bit of Money




I hope this write-up is useful to future and current aspirants. I wanted to write a bit about credit history but I am not very knowledgeable about it. I would really appreciate it if any of the seniors who have been in US for a while and have a good idea about it could write up a bit on it as since most of us will be working in US after our MS and that is a very important part



Moderators if possible can this be made a sticky ? I am not sure about the exact procedure as to how a sticky is made


I posted this in the Ask any question forum as I was not sure which was the correct place to post it. Moderators please move to the appropriate forum as you deem fit



Thanks


Mervin

Banking in USA || Infobank ||My Visa Interview || MS in times of recession || Posting Guidelines

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If you have any queries about the MSIM program in the University of Washington,post them in the University of Washington thread in the MIS forum
(This post was last modified: 11-11-2008 09:29 PM by Asterix.)
08-05-2008 03:52 PM
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Good work.
08-05-2008 07:16 PM
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Asterix Offline
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Thanks Nile,It would be nice if some other seniors also added some more info to it since I am sure I missed out some important points

Banking in USA || Infobank ||My Visa Interview || MS in times of recession || Posting Guidelines

" Could u please send me ur LOR's and SOP? " - Dont send me silly PM's like this..


If you have any queries about the MSIM program in the University of Washington,post them in the University of Washington thread in the MIS forum
08-05-2008 07:29 PM
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Well written and great info

08-05-2008 10:50 PM
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Good work Mervin! Appreciated!

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08-05-2008 11:17 PM
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Mervin,
Very informative! Smile

Kelley School of Business, Class of 2011.

Tried searching here before posting?
08-06-2008 12:41 AM
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You dont need a SSN to open a bank account. Most banks have students account which you can open with your passport. And all this info given above will be explained to you by a personal banking officer in the bank( atleast in BoA Smile )
you cant get to know all the things before you come here. you can know these bank account stuff after reaching here.

Cheers
ram

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08-06-2008 04:06 AM
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@Mervin,

That procedure was perfect!! Kudos!!
08-06-2008 04:11 AM
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good stuff....im sure this is going to be immensely helpful...

08-06-2008 06:26 AM
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Awesome stuff mate!!!

[img]http://img512.imageshack.us/img512/9546/logotopcn2mc1.jpg[/img]

http://www.edulix.com/infobank/show_prof...p?uid=7528
http://edulix.com/unisearch/user.php?uid=2405
08-06-2008 11:21 AM
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Asterix Offline
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Thanks everyone

@raam89 when I tried opening an account with BOA ,the customer care said it was not feasible to open one without a social security number,I guess they do make allowances for international students

I know the banking officer will explain most of the details to the new customers but they dont tell everything which is supposed to be known like the fees which can be charged and which might be the best account for the individual .So I thought a bit of foresight might help

Banking in USA || Infobank ||My Visa Interview || MS in times of recession || Posting Guidelines

" Could u please send me ur LOR's and SOP? " - Dont send me silly PM's like this..


If you have any queries about the MSIM program in the University of Washington,post them in the University of Washington thread in the MIS forum
(This post was last modified: 08-06-2008 11:42 AM by Asterix.)
08-06-2008 11:41 AM
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I was just wondering.. how about an account in an Indian Bank? Plenty of them have branches overseas, and I would already have an account with them too (SBI, for example). What are the pros/cons?

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06-02-2009 01:13 AM
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(08-06-2008 11:41 AM)Mervin2008 Wrote:  Thanks everyone

@raam89 when I tried opening an account with BOA ,the customer care said it was not feasible to open one without a social security number,I guess they do make allowances for international students

I know the banking officer will explain most of the details to the new customers but they dont tell everything which is supposed to be known like the fees which can be charged and which might be the best account for the individual .So I thought a bit of foresight might help
To open a student account there is no need of SSN. Also, the student account has no fee. Also univ credit unions might give you decent accounts, some may even give you credit card(like UFCU@UT Austin) without an SSN.

Ayush, holding an Indian Bank's account would be a bit of a pain. First banks/atms are really few. They probably will not offer direct transfer features and all those things, which might be useful before you get a credit card. It is pretty simple to get a Bank of America or HSBC student account when you reach here itself.Also, what advantage would you get holding an Indian bank account. If you are thinking about cost of cash transfer to/from India, I assume even Indian banks would charge that. Also, this charge is generally small, even in case of normal US banks. The only advantage maybe that Indian banks(if they do offer credit cards in the US), may not be bothered much about credit score, for issuing the card considering your Indian citizenship

PS: About the student account, I was talking about monthly fee. All other fees, like Overdraft, check(yes, that is how cheque is spelt here) bounce etc are still applicable.Also since it is a student account, there is no minimum balance or min number of transactions required.The savings account though has a min balance of $300 or a monthly transfer of $25 from BoA checking account, but no more than 6 withdrawals/transfers out of this account are allowed per month from this account in a month. Usually,any one with this has a campus edge savings for any routine transactions. Once or twice a month, you transfer funds from the savings to checking. Not like the interest is high enough that you need to keep this.

Another type of account one might want to use is the Online Savings account, like the one offered by HSBC:http://www.hsbcdirect.com/1/2/1/ might give you slightly more interest, but the cash would take two days before you get it in your checking account.You might wanna consider this or normal savings accounts if you are getting stipends.

Bottomline: If you are depositing cash in the US, don't expect to earn from interest.Just make sure you are using an account that does not have a fee. Always read the fine print. Here any catch is always in the fine print. Don't think that companies here are honest, they will slap you with fee and loot you the moment you give them a chance.

http://www.cs.cornell.edu/~hs465/
Please do not email me for Cornell related queries, ask them on the Cornell thread. If you do mail me, I may not reply. I am currently very busy, if I do not reply to PMs, please wait for a few days.
(This post was last modified: 06-02-2009 03:02 AM by harisr1234.)
06-02-2009 02:38 AM
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Hi
Thanks a lot. A very useful one. I don't even know what is mean by Overdraft in Indian banks. But now I have learnt a lot. The frustrating thing is he has lost interest for few days. Why can't we sue them for not informing us? You have said we can ask questions, how to believe that they have said all correctly and no other special student account is there. Most of us have this kind of experience like getting one kind of info through phone or website but after reaching the cinema theatre or office those people will coolly say a "NO". People of this kind, go to Hell. (SOrry I have poured out my anger & frustration).

Once again thanks for this info and some seniors who are working now please post some extra info like getting education loans in USA, as there repaying interest rates are less when compare to INDIA. Is that true? Some please help in this regard.

03-23-2011 01:19 AM
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good work.

Infobank Link: http://edulix.com/unisearch/user.php?uid=141834

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