Category:Banking-USA

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Opening a Bank Account

Under the Patriot Act, banks are required to 'know their customers' as part of anti-money laundering provisions. Most banks have adopted policies that require at least an SSN's before you can open a bank account IF YOU ARE A US CITIZEN, along with some other forms of identification and proof of residence. Citizens of other countries have different procedures, such as passport numbers or drivers licenses or other things to prove they are who they are.

However, your common bank teller, usually with a high school education and used to dealing with 99.999% US Citizens sometimes (often times) forgets that there is a slight difference between the treatement of a USC and a foreign national. If they insist on an SSN, you can ask to speak to their superiors and inform them that an SSN is NOT required for foreign nationals under the various anti-money laundering laws (and probably under their own bank's policies). It's just sometimes people forget the slight nuances. You will need an SSN for any "credit" type of product with the bank (credit card - even a secured one - loan etc) but you are not required to have an SSN until then.

If they insist on an SNN, then use another bank. Banks just need to confirm who you are, so a state ID, drivers license or a passport will do. The Banks require a real, physical address when you open an account and this can be a foreign one (ie your UK one) at first but you must be able to prove that it is your address with utility/tax bills. Once the account is opened then you can change it to a PO Box in the US or a trusted friend's if necessary.

It's worth noting that the bank's policies are set by the bank, but they are required to have a policy by the Patriot Act (which is why you'll often hear the tellers say 'because of the Patriot Act we need this and that'). Bank executives and their attorney's sat down and came up with various plans and requirements that differ from bank to bank.

Now you might think it is silly to have these requirements, but there was a very famous bank collapse (basically) in the months following the 9-11 attacks that resulted in a very well-regarded Washington DC bank (Riggs) being fined $25 million, sold and closed, and criminal investigations launched against the executives. Riggs had a niche market in Washington DC dealing with Embassy personnel from other countries and other foreign nationals (DC has many), and the subsequent scandal and prosecutions put a shudder into most banks in the US about dealing with foreign nationals (more here: http://en.wikipedia.org/wiki/Riggs_Bank).

Which Bank?

One of the first things you need to realize is that banking, while in part regulated by Washington and the federal government, is also regulated by the 50 different state governments. That means certain banks are, under state rules, not allowed to open more than a certain number of branches in that state unless their headquarters are located in that state. This means that in some places like New York City there will be a Citibank branch nearly every 500meters, but in other states there will be maybe 2 or 3 branches to cover 50 miles.

Your best bet is to do some research with people in the state and city you are going to live (and maybe even the neighborhood where you house is located). There are the big banks, such as Citibank, HSBC, Bank of America but there are also many smaller regional banks that may offer better services in a particular town.

The other thing to consider is a CREDIT UNION. These are bank-like entities but they have a limited membership, for example "Must be a member of the US military" or "Must work for this Company" or "Must be retired". Credit unions are technically non-profits and plow back their earnings into services. They often have better rates on credit cards, loans, and savings accounts than the 'big banks' who dabble in a bit of everything. The downside, as an expat, is that a credit union will likely not have much dealing with international issues, such as wire transfers and overseas ATM usage.

As is mentioned with nearly everything about the US--it's a big country. What applies to one bank in one state is not necessarily the same as another bank in another state. It is really difficult to recommend any one bank as for every person with a great story to tell about this individual person at a specific branch, there is an opposite warning about the same bank from another branch. It's really hard to accurately make a recommendation.

That said, some banks like HSBC and Citibank have affiliated / related offices in the UK and, for some customers, have plans and accounts that make dealing with a new bank easier. For example HSBC UK will do an "introduction" to HSBC USA, sometimes making credit recommendations to the USA bank that will help you secure a credit card quicker and easier than if you are just starting fresh.

BANK FEES

Watch out for finance charges for using an ATM, especially from a bank that isn't yours. Your bank can charge you for using a 'non-bank' ATM and the ATM can charge you a surchage for not being a member of their bank (double fees!). Also look out for fee's related to writing cheques, getting new cheques, online banking. Checks made out in £s that are deposited into your US $ account may also have a myriad of fees.

Using your ATM card or Credit Card overseas will likely result in a 'foreign transaction fee' in addition to a bit of a spread on the conversion rate. If you are shopping around and plan to travel extensively internationally, consult with the bank if they have a card that does not charge a fee.

Transferring money from the UK to the USA

If you need to transfer money from your account in the UK to your account in the USA, you should consider using a currency broker. There are many to choose from, each offering different fees and exchange rates.

CurrenciesDirect is based in the UK, and require at least £2000 is transferred, though transfers under £5000 cost £15. They accept payment via direct debit or debit card, and offer a regular transfer scheme, if you want to transfer money every month without having to worry about completing the paperwork, etc.

However, as a word of warning, I've found their exchange rates to be poor unless you're transferring £5k or more, when they give you the commercial rate. They also deposit the money into your US account via wire transfer rather than direct deposit, which means your bank can charge you for this (eg. Bank of America charge $20 for wire transfer deposits).

Also, to make transfers, they require you to print, sign and scan+email or fax back the document before the currency trade can take place, which is a lot of hassle, especially considering that you're being charged an extra ~ £25 on top of what you're transferring (approx £10 by the bank, and £15 by CurrenciesDirect).

My preferred broker is XETrade XETrade. Everything is done online, they offer excellent rates with no minimum transfer amount and no fees. They also use direct deposit to deposit the funds in your US account, so there's no fees involved there either. They may offer you a low trading limit to start with (eg. limiting the amount you can transfer to £1k or so per transaction), so you may need to request a raise or make multiple trades to transfer all your funds across.

Are there taxes to transfer money from the UK to the USA

People often ask "What about Taxes when I transfer > $10,000?" The confusion here stems from a *reporting* requirement (not a tax requirement) designed to combat large CASH transactions and other money laundering. In fact, there are two requirements--one for individuals who deal in >$10,000 cash and another for banks for any 'large transaction' that looks suspicious (they report it and you don't even know about it).

The personal reporting requirement applies to cash and other monetary instruments, such as a cashiers or bank check. It does not apply to electronic transfers (such as a wire).

The bank reporting requirement applies to basically anything.

It is important to point out that this requirement is NOT a formal tax reporting--it's simply a currency reporting requirement. If there are no tax issues with the money you are transferring (i.e. you already paid US or UK taxes on them), then there are no tax issues simply because you are transferring money from a UK account to a US account. If you are giving the money as a gift to someone, or it is coming from some offshore illegal account, then you have to deal with those tax issues when you file your income tax returns, not simply because you are conducting a transfer.

Building Credit

With a new social security number, it's unlikely you'll qualify for most credit cards until you have some credit history. Applying for many credit cards will affect your credit score, so you should try and avoid this. However, I've had luck with a couple of providers:

You'll get a low credit limit to start with, but as long as you use the card and make sure you pay your bills on time, this should get increased. Though there is no benefit to hold a balance on the card to your credit score, so pay it off in full each month.

You should also apply for store cards, as these are easier to get, but will also give you a low credit limit. Try and stick with applying for stores you actually shop at, as having a store card which is not used won't do much for your credit anyway, but having to many lines of credit will also detract from your score, and there is no advantage to actually using the card regarding your credit score.

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