Banking

Exchanging Currency - Using Debit Cards - Credit Cards - Choosing a Bank - Opening an Account - Other Factors - Overdrafts - Cashier's Check - Transferring Money

Exchanging Currency

You can exchange money at the airport on your arrival.  However, bear in mind that you will be charged fees or that the company may “charge” you by giving you a lower exchange rate. You can check the latest exchange rate using the FT Currency Converter.

One key difference between US and UK banks is that many do not have immediate foreign exchange facilities. Therefore, most UK students will take some emergency funds in US dollars or exchange some pounds at the airport to cover their transportation and meals on arrival.  Beyond this, most students will use their debit or credit cards. However, if you take more than $10,000 at one time in cash (you should not need that amount of cash), you will have to declare this at customs and may be taxed. Regardless of the amount of cash you take with you, consider splitting up your money between various parts of your luggage (for example, do not put it all in your wallet or all in your suitcase should either get lost or stolen).

Also, it might be problematic if relatives send you birthday or holiday money in British pounds, as you may have to wait a long time to have it cashed and incur high fees! These fees are apparent when transferring money and withdrawing money on some ATM/cash machines.

Using Debit Cards in the US

The use of debit and credit cards are much more widespread in the US. You will rarely find that stores have a minimum spend amount, so you can use your card to buy a $1.50 coffee or $200 plane ticket.

Some students will open a US bank account and obtain a US debit card if they are abroad for a year or longer. Whether for their full studies or until they have a US account, most UK students will use their UK debit cards in the US at some point. 

Most UK debit cards can be used at US ATMs (cashpoints). Before leaving home, ask your UK bank what fees will apply to withdrawals and purchases made abroad. Your bank may have agreements with certain US banks to allow you to withdraw cash without a fee, so be sure to ask for a list of affiliated US banks.

You will also need to inform the bank of the dates you will be living abroad so they do not block your account when you begin using your card in the US. Some banks may require you to periodically call back to ensure against fraud. Explain if this is not possible and ask to extend the period you are abroad.

Even if you are able to use your existing account in the UK, you may still want to open a US account to avoid fees if you will be in the US for a year or longer. Debit and credit cards do not use a chip and pin system as in the UK, and you may be asked to sign a receipt instead. Remember to keep any US cards safe as this system is not as secure against fraud. However, keep in mind that unlike in the UK, you will be charged a fee ($2 or $3) to withdraw money from an ATM if you do not have an account there. You may also be charged by your UK bank if you use your British card in the US.

Credit Cards

As an international student, you will find it difficult to obtain a credit card with an American bank. In order to be approved for a credit card, you will need to provide your source and amount of income, length of residency at the present address and bank information. You will find that most companies accept foreign credit cards, so if you plan to buy things on credit it is a good idea to bring your existing card to the States. Most banks will charge a foreign transaction fee, which may be up to 3-5% of the cost of the purchase, so many students opt to bring their British credit cards for emergency use only.

In the US some petrol companies, department stores and other organisations offer company-specific credit cards that can only be used to purchase items from their store. These are not loyalty cards, and they often charge high interest rates, especially if the invoice is not paid within a specified number of days, so it’s important to be aware of the terms and conditions of these credit cards if you sign up for them.

Choosing a Bank

You should research several banks to determine which bank offers the best services for your needs. Most banks have main offices in the centre of a city or town. Smaller branches are usually found in other parts of a city or town and on campus at larger universities. Your international student advisor can suggest which banks are most convenient. There may even be fairs for students on campus at the beginning of the semester which representatives of local banks may attend to offer student options, so it is useful to check as they will offer advice specifically for students.

As noted above, unlike in the UK, you are charged a fee ($2 or $3) to withdraw money from the ATM (cashpoint) of another bank.  So it is important to select a bank that has an ATM or branch near campus.

Opening an Account in the US

Unlike in the UK, the US has very few banks that operate in all parts of the country. Most banks operate on a regional, state or city basis. Therefore, size and services vary greatly. If you are completing a full degree in the US or plan to seek paid employment in the US, one of the first things you should do after you arrive is establish a US bank account. Generally speaking, you will need your passport, details from your visa, proof of enrolment in the university, residence details (both at the university and in the UK) and the minimum deposit amount (cash, cheque, travellers’ cheques or bank transfer). It is also a good idea to have a statement of good standing from your bank in the UK.

Other factors to consider

Some other factors to consider include the minimum balance to open an account, minimum balance to maintain the account, fees for overdrafts, online banking and interest rates. Also see if the bank you have chosen has a student option. There are two types of accounts in the US:

Unlike in the UK, you can open a new account, get cheques and set your PIN in one appointment. If you have a savings account and a checking account at the same bank, you can easily transfer funds from one to the other online. Unlike in the UK, you will not pay a fee to open and hold an account.

Overdrafts

If you write a cheque for more money than you have in the bank, you create an “overdraft.” Unlike in the UK, US banks charge a penalty fee (usually around $20) for having an overdraft of even $1, and do not make exceptions for students. The tricky thing is that if you are paying by debit card, you may still be able to withdraw the money but will incur a penalty for that withdrawal, so be sure to continually monitor your account.

If you pay by personal cheque, the bank will charge you a fine of $10 to $25 or more for each overdrawn cheque. The bank will also return your check, unpaid, to the person or business to which you wrote the cheque. If the payee is a store or business, that payee may also charge you $5 to $20 for the trouble the bad cheque has caused, and they may not accept your cheques again. It is also illegal to issue a “bad cheque” (a cheque for which there is not sufficient money in the account) on purpose.

Cashier's Check

A cashier's check/banker's draft is best used for making payments when the recipient demands that the check be guaranteed (deposits on rental housing or utilities are examples.) A draft is basically a pre-paid check made payable to a person or organisation. There may also be fees for this service.

Transferring Money from the UK to the US

A major concern for international students is how to transfer money into their US bank account from the UK. Think about the prevailing exchange rate and how to get your money into the US cheaply and speedily. Ask your bank for advice on the best transfer method and any potential transaction fees. If you are charged a set fee each time you make a transfer, it would be cheaper to transfer large amounts at once.

You may also receive cash advances with your US credit card from any ATM machine, as long as you have a PIN (Personal Identification Number). The major bonus of using this system is that cash is instant and accessible, and the only limit is on the credit card; however, interest is charged immediately.

You may want to look into private companies such as Western Union or Travelex that arrange international money transfers.

Finally, make sure that you send the details of your bank account home as soon as you know them. This will make transferring money easier and swifter.