If you recently settled in the United States, opening a bank account can feel intimidating, especially if there are language barriers.
But not to fear!
In this article, we’ll guide you through opening a bank account in the U.S., with a special focus on the five questions you should ask before signing on the dotted line.
First, let’s cover the basics, including what documentation is required and the types of bank accounts that you can choose from.
Opening a Bank Account as an Immigrant
For most immigrants, the process of opening a bank account is the same as for any American.
Most banks require:
- Official identification document: required by law, you’ll need to provide one or two approved documents that verify your name and date of birth, such as a passport, driver’s license (foreign licenses accepted), birth certificate, consular ID, or municipal ID.
- Proof of address: your driver’s license or any official identification with your street address will work, or even a lease or utility bill.
- An SSN or ITIN: it’s a common misconception that you must have a Social Security Number to get an account. Most banks accept an Individual Taxpayer Identification Number (ITIN), or any other valid government-issued ID that can prove your nationality or residence, such as a passport or foreign driver’s license.
- Opening deposit: typically between $25-$100. Your opening deposit and minimum balance can vary from bank to bank, so check the specifics of the accounts you’re considering.
Opening a bank account is relatively quick once you’ve provided documentation and made your opening deposit. Many banks can issue you a temporary debit card right away, while others may take up to a week to mail you a card.
Can Undocumented Immigrants Open a Bank Account?
Yes! As long as they meet the basic requirements mentioned above, undocumented immigrants can get a bank account without an SSN.
Most banks accept a municipal ID or ITIN instead of an SSN.
An ITIN is an official identification number issued by the IRS (Internal Revenue Service) for immigrants to pay taxes and receive benefits, like opening a bank account.
ITINs are available only to non-U.S. citizens who are ineligible for a Social Security number. To apply for an ITIN, go to the official IRS website, fill out the W-7 form, and follow the instructions.
Here’s a list of banks that don’t require an SSN:
- Chase
- Wells Fargo
- Bank of America
- Self-Help Federal Credit Union
- Latino Credit Union
- Marcus by Goldman Sachs
Large financial institutions like Chase, Wells Fargo, and Bank of America ask for two pieces of documentation and proof of a valid U.S. street address. All three banks accept ITINs as identification, as well.
Types of Bank Accounts to Consider
There are many kinds of bank accounts to choose from, with varying requirements, interest rates, and other specifications.
1. Checking Account
These accounts give you easy access to your money for daily transactions, while keeping your cash secure.
Many accounts have options to avoid the monthly service fee or minimum balance requirements, so read the fine print.
2. Savings Account
Earn interest on the money you don’t plan on spending right away. The interest rate is low, but it varies considerably, as does the compounding frequency, so shop around before you decide.
As this type of account is not intended for daily use like a checking account, there are often limits on the number of transactions you can make. Typically, you won’t receive a debit card or be able to write checks.
3. Money Market Account
Like a savings account, an MMA allows you to earn interest on your money, usually at a higher rate, but with a larger minimum balance.
MMAs can also have tiered interest rates, with higher returns on larger balances.
Also, the minimum balance required, limits on transactions, compounding frequencies, and interest rates vary, so consider your options here.
4. Certificate of Deposit Account
This type of account allows you to save money at a fixed interest rate for a pre-set period of time. This can range from just a couple of months to several years.
CDs typically offer higher interest rates than a savings account because the money invested is inaccessible to you for the terms of the CD (early withdrawals come with significant financial penalties).
5 Questions to Ask When Opening a Bank Account
It’s important to know what you’re signing up for when opening an account for the first time.
Here are five questions you need to ask before you decide on an account.
1. What Features Does the Account Offer?
Banks offer a range of valuable financial services to entice you to open an account with them.
Carefully consider the financial obligations, including requirements like minimum balances and transaction limits, the penalties or charges for not meeting them, and monthly service fees.
Then, consider the perks that would benefit you the most. Do you want to avoid monthly fees, ATM fees, and minimum balance requirements? Or, maybe your priority is finding the most attractive interest rates, or credit card rewards like cash back.
Explore available features and benefits carefully before deciding.
2. What Documents Are Required for Opening the Account?
As mentioned, banks and credit unions can vary in the types of identification and documentation they accept.
Opening a bank account could be more challenging if you don’t have the typical identification, like an SSN or ITIN. It’s helpful to call or check online for your preferred bank’s list of required documents.
Many banks and credit unions offer translation services to help with language barriers. Most banks make their website available in several languages and often have multilingual staff who can answer your questions over the phone.
3. Are There Any Fees or Minimum Balances?
Many banks charge fees for not maintaining a high enough balance, and they can also charge for certain types of transactions, using the ATM, or exceeding your withdrawal limit.
Ensure that you can comfortably meet these requirements before you agree to them. Otherwise, you could accumulate fees, and lose accrued interest and other member benefits.
4. Are There Withdrawal Limits?
Many banks place specifications on the number of transactions and withdrawals you can make.
Banks limit withdrawals for a couple of reasons. First, to ensure they have enough cash reserves to cover all of their customers’ transactions. And most importantly, to protect your money against someone doing serious damage if they get ahold of your debit card or account number.
For example, most banks limit how much cash you can take out of the ATM daily–usually between $300 and $1000.
You need to know if your bank account has these limitations, because exceeding them will result in hefty fees.
5. Is the Account Insured by the FDIC?
If a bank fails, the Federal Deposit Insurance Corporation (FDIC) protects depositors of insured banks in the U.S. against the loss of their funds.
In other words, if your bank goes under, the FDIC takes the loss, and your money is protected.
It’s easy to validate your potential bank on the FDIC’s website. Also, a bank’s physical branch should display a placard indicating that they’re covered by the FDIC.
How Much Should You Keep in Your Account?
The amount of money you keep in your bank accounts depends on the type of account.
Here are some basic guidelines:
- Checking account: plan to keep about one to two months’ worth of living expenses, plus a 30% cushion for unexpected expenses.
- Savings account: aim to keep enough to cover an additional three to six months’ worth of living expenses. This allows your rainy-day fund to earn interest while staying accessible.
- Money market account: ideally, put six to twelve months’ worth of expenses into your MMA. This is an excellent way for your cash to earn higher returns without making it inaccessible.
- Certificate of deposit: CDs are ideal for short-term financial planning, like a downpayment on a home, so consider your objectives first. Plan on investing enough money to give you the desired amount for your goal once the CD has come to term.
Most importantly, remember to consider your financial goals, and then open an account that helps you achieve them.
Moving Forward
No matter what your dream of financial freedom looks like, having a bank account will be a necessary part of it.
A bank account keeps your money safe while offering a host of economic opportunities, like earning interest, getting cashback and other rewards, and saving on fees when cashing checks or using the ATM.
At uLink, we’re committed to providing immigrants with the tools and information to find financial freedom: by helping you send money to your loved ones across the globe in a safe, reliable way.
With our great exchange rates and fees as low as $0, you can affordably send money to family and support those who need it most back home.