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Things to Consider When Choosing a Bank
- Location: Look for a branch near your home or school.
- Services needed: Checking or savings accounts, safe deposit boxes, overseas wire transfers, foreign currency conversion, etc.
- Accessibility: Saturday banking hours, availability of ATMs.
- Requirements: Minimum balances (initial and maintained), monthly fees.
- Interest rates: For invested funds
Common Types of Accounts
Checking account: Useful if you have bills to pay on a regular basis (credit card, phone, rent, utilities). There is usually no minimum balance required but no interest earned either. A monthly fee may be charged. Some checking accounts earn interest but usually require a larger opening balance. A check book is typically provided to be able to write checks for certain transactions. The ability for online checks may depend on the bank's services or online platform's software.
Savings account: Can sometimes earn interest but cannot be used to write checks. If opened at the same bank as a checking it can be easy to transfer money between a checking and savings account.
Banks’ Customer Identification Programs (CIPs)
U.S. financial institutions are required to verify the identity of individuals who opens a bank account through a Customer Identification Programs. Below is the minimal information a bank must obtain from you before allowing you to open an account:
- Your name
- Your date of birth
- Your street address – not P.O. Box
An identification number An identification number can be one or more of the following:
- A taxpayer ID number (Social Security number or individual taxpayer ID number)
- Passport number and country of issuance
- Alien identification card number
- Any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.
What to Bring When Opening an Account
- Money to deposit into the account
- Your passport and one other form of identification
- Printed I-94 Arrival/Departure Record
- Form I-20 (F-1 status) or Form DS-2019 (J-1 status)
- Local mailing address: Be sure you know all address details (street name and number, apartment number, city, zip code). Bring proof that this is your address, like a signed lease or a letter you have received there.
- Your mother’s maiden name (your mother’s family name before she was married) or some other family name. This name is used as a security check when you contact the bank with questions.
- Taxpayer Identification Number – Required by some but not all banks. The following are acceptable to use:
- Social Security number (SSN)- if you have applied but not yet received your SSN, bring your receipt
- Individual Taxpayer Identification Number (ITIN)- issued by the IRS to those not eligible for an SSN.
- Form W-8 BEN (for those not eligible for an SSN or ITIN)
Automated Teller Machines (ATMs)
Most banks offer ATM bank cards which enable you to use ATMs to access your account at any time. You can request an ATM card when you open your account or later if you decide you would like one. You will choose a private code called a personal identification number (PIN) to type into the machine each time you access your account. There are ATMs located on Babson’s campus in Reynolds Campus Center and Olin Hall.
ATMs on Campus:
Santander Bank, Reynolds Campus Center, 1st floor
Citizen’s Bank, Olin Hall, Lower Level
International Banking Services
Larger banks tend to offer more comprehensive international services: wire transfers, international drafts, foreign currency exchange, and foreign traveler’s checks. It may take longer to complete such transactions at smaller banks.
Debit cards allow you to pay for goods and services directly from your bank account, reducing the need for cash. You can request a debit card when you open your checking or savings account or later if you decide you would like one.
Requirements for obtaining a credit card and interest rates charged on unpaid balances vary among banks. Keep in mind that it is common to have a checking or savings account with one bank and a credit card with another.
Most international students find it difficult to get a credit card in the U.S. because they have not established a credit history and because they are not U.S. residents. For newly arrived students, you may want to try using a "secured credit card". These cards offer some of the conveniences of a credit card, except that you secure your credit card with a deposit that becomes your credit line. The best part is that your secured card is reported as a regular credit card on your credit report. Check with your bank on the secured credit card. Because getting a major credit card is very difficult, international students should take every opportunity to establish a good credit history. For international students who have been here a little longer, obtaining credit cards becomes a little easier once they have established some sort of credit history.
- Do shop around. If you get a solicitation in the mail, on campus, on the Internet or at the local bank, compare rates and fees. The credit card industry is very competitive so interest rates, credit limits, grace periods, annual fees, terms and conditions vary. Check out www.creditcard.com or www.bankrate.com to compare rates.
- Do read the fine print on the credit application. The application is a contract, so read it thoroughly before signing. Watch for terms such as "introductory rate" and periods that expire.
- Do ask questions. You are the customer and the bank is providing a service. If you don't understand something, ask.
- Do be wary of anyone who claims they can "fix" your credit. The only thing that can fix a credit report is time and a positive payment history.
- Do promptly open and review your bill every month. This helps you pay your bill on time and protects you from identity theft and unauthorized charges.
- Do be careful with your credit card. Keep it secure. Always have your bank's phone number available in case your card is lost or stolen.
- Do view credit as an investment in your future. By using credit wisely, you can build a good credit history.
- Do order a copy of your credit report annually. Your credit report is like an academic report card -- it evaluates your performance as a credit customer. It needs to be accurate so you can apply for other loans such as a car or a condo.
Credit Card Don'ts
- Don't feel pressure to get a credit card if you don't want one. A credit card may not be right for you. Don't be afraid to say no to salespeople. It's okay to walk away.
- Don't pay your bills late. Late payments can hurt your credit rating.
- Don't spend more than you can afford. A credit card is not magic money; it's a loan with an obligation to repay. Realize the difference between needs and wants. Do you really need that CD or pizza? If you charge these items and only pay the minimum, you could be paying for them months from now.
- Don't apply for more credit cards if you already have balances on others.
- Don't ignore the signs of credit trouble. If you pay only the minimum balance, pay late or use cash advances to pay living expenses, you might be in the credit "danger zone."
Establishing Credit History in the U.S.
What is credit history?
Your credit history is the record of how you have paid borrowed and repaid debts. This information is obtained from one or more national credit bureaus. Your credit report may include information about your previous credit performance, current level of indebtedness, length of credit history, types of credit in use, pursuit of new credit, accounts in collection, defaults, bankruptcies, lien, judgments, charge-offs, and other applicable information. A creditworthy person is one who has a positive credit history and meets other requirements as determined by the lending institution.
Why is credit history important?
Having a good credit history will be a central part of making a successful personal and financial future for yourself in US. Your credit history can help open doors to you or keep them locked. People and businesses will use this record of how well you kept your previous payment agreements to judge whether they can risk making a similar agreement with you. Cell phone companies, landlords, lenders, insurers, even possible employers often make decisions about your future based on your credit history. It is a good idea to check your credit report frequently. Except under certain circumstances, there is a small charge for this service. The three primary credit bureaus are Equifax, Experian and TransUnion. Use caution when requesting a copy of your credit report. Never give personal information to someone unless you initiated the contact, on the telephone, by mail or on the web.
What goes into credit history?
Many factors are considered and put into a mathematical formula. These may include:
- If you pay your bills and loans on time
- How much money you owe o How long your accounts have been open
- What types of credit you use o How often and how recently you have applied for credit
- Collection notice and judgments (records of non-payments / disputed payments)
Establishing Credit History:
- Open a bank account. Open a bank account and use it responsibly. This is the first step in establishing a financial history. This will not appear on your credit report, but bank account numbers are often requested on credit applications.
- Put the utilities in your name and pay the electric, gas, telephone and cable TV bills on time.
- Apply for a credit card. To avoid being denied credit, apply only for those cards whose requirements you are likely to meet. Department store or gas credit cards are usually easier to obtain than a bank-issued card with a Visa or MasterCard logo because the balances do not generally revolve.
- Before applying, make sure the creditor reports account activity to the credit bureaus. As the purpose of obtaining the card is to establish credit, you want to choose a card that will help you do that. If you want to get a Visa or MasterCard, ask at the bank or credit union at which you have your account.
- A secured card is an option. If you have trouble qualifying for a credit card, you may opt to apply for a secured card. These cards have credit limits based on a required deposit made by you into a savings account. You use the card just as you would any other credit card.
- DEPARTMENT AND GASOLINE CREDIT CARDS: Since gasoline credit cards are not revolving (cannot carry a balance forward month-to-month), often they are easier to obtain than regular credit cards. Similarly, some department stores offer revolving credit for a specific purchase and this is sometimes easier to establish. It is also a great way to establish credit.
- CO-SIGN: One way is to piggy-back onto someone who already has a good credit history established and is willing to co-sign. If you are fortunate enough to know of such a person, you are not only well on your way to establishing credit, but you are very fortunate indeed. But be aware that any default of o credit on your part affects the credit of the co-signer. People who care enough about you to co-sign, do not deserve a bad credit incident through no fault of their own. Once the co-signing has occurred, you simply make payments on or before the due date. In time you will have established a credit history. If you want to accelerate the issue, payoff the debt in full when the first bill arrives but not before. Completion of the full billing cycle is important for a "pays on time" report card to be established. This will not only make your creditor happy but your cosigner as well. The next step is to ask the co-signer to repeat his generosity (if necessary). Then: create a debt, wait until the first bill comes, pay it off in full. Keep repeating until you no longer need the co-signor. Credit history is now established.
Tips for Keeping Good Credit
- Make Payments on Time - It sounds so simple, but life is hectic and things do slip our minds. Establish a routine for paying your bills and keep to it. Mail payments a week before they are due so they arrive on time. Those late fees can add up.
- Pay What You Owe - Of course it is best to pay the entire amount due each month, but at least pay more than the "Total Minimum Due." Never skip a payment.
- Do Not Overextend Yourself - Keep your "available balance" in mind. It is the difference between your credit limit and your balance due. Having an "available balance" means there is credit available in the event of an emergency and you can avoid incurring "Over Limit" charges. Before applying for a new credit card or loan examine your spending and work out a realistic budget. This will allow you to pay your bills and still live comfortably.
- Limit the Number of Credit Cards - Limit the number of credit cards you acquire to help limit your debt exposure and simplify your record keeping. Be aware that excessive credit inquiries over a short span of time may be interpreted as an indicator that you need more credit due to experiencing financial problems.
- Set your own credit limit and start to establish a savings fund for emergencies,
- Use credit wisely - Ask yourself the following questions before purchasing with credit: Is this something I really need, and do I need it now? Do I have the ability to repay? How long will it take me to repay? How much will it ultimately cost me?
- Be aware of the terms and costs when shopping for a student credit card.
- Review your statements carefully and immediately inform your credit card company, in writing, if you notice an error on a billing statement.
- Review your credit reports periodically and check for inaccurate, incomplete or outdated information. Dispute this information, in writing, with the credit bureaus.
- Be honest. If you can't pay your bills on time, contact the creditor and explain the situation. Creditors will often work with you to come up with an alternate payment arrangement.
- Always think ahead. Be proactive, not reactive, about your finances. Plan for different obligations now and after graduation.
- Be organized by filing your statements in a separate folder.
- Keep a list of your credit card account numbers and phone numbers in a safe place in case a card is lost or stolen.
- Report your card as lost or stolen as soon as you notice it's missing.
- Immediately inform your credit card company of an address change.
- Maintain a savings and checking account o Establish your telephone bill under your name. Remember, you are responsible for additional people on your telephone bill.
- Develop a steady work record.
- Avoid opening joint accounts with a friend or significant other.
- Protect your account numbers, personal identification numbers (PIN's), and social security number. Do not let others use your cards and don't use your cards to pay for other people's purchases!
- Try not to graduate with credit card debt. If you do, make sure you will be able to afford that debt in addition to other new expenses (i.e. student loan payments, rent, utilities, etc.).
- Be sure to pay your student loans as agreed. This long history of paying your bills on time will also help you build a credit history and improve your credit score.
Writing personal checks may be new for you. In the U.S., you may pay bills (utility bills, rent, credit card bills) by personal check. You can also often buy things in stores by check (as long as you have a picture identification with you, too). Although on-line bill paying or debit/credit card payments are becoming more popular, personal checks are still used occasionally.
Remember to write down the amount of every check you write, and subtract it from the amount of money you have in the account. Your checkbook will have a place to keep this record. The exact amount of money you have may be difficult to track because of services fees being subtracted and/or interest being added.
Watch carefully, though, because if you write a check for an amount you do not have (called an “overdraft” or a “bounced check”), you will have a penalty fee. This is true even if you have plenty of money in another type of account in the same bank. Some banks offer reserve credit (or overdraft protection)—they will cover the amount of the bounced check and charge you interest for this “loan.” However, it is often difficult to get this protection if you do not have income or a credit history in this country.
Safe Deposit Boxes
Most banks offer safe deposit boxes to protect your valuables. If you have irreplaceable items or important documents that you would like to secure in a safe deposit box, you can rent a box on an annual basis through your bank. The box is kept in the vault of the bank and is protected by bank security. You will have a key to the box but will only have access to your valuables during banking hours.