How to set up an American bank account
As part of our study in America section we show you how to open an American bank account as well as the best (and cheapest) ways for UK students to spend and save in America.
It’s always best to research what you’ll plan to do with your money when going abroad, especially if you are deciding to study there or stay for a lengthy period of time.
Due to exchange rates and transferring costs your money can lose a small percentage of it’s value when moving/spending it abroad. This guide’s here to make sure you lose as little as possible.
Banking in America isn’t scary at all, however it is an unfamiliar system which you need just a little time to get your head around.
How to choose a bank in America
Do you even need to open an American Bank account?
The majority of UK students planning to study in America will need an American bank account.
Once you’ve set one up you’ll find it a lot easier (and cheaper) to transfer your money across the Atlantic.
You could find that it’ll also make it easier to spend money in the USA as you’ll have an American bank card.
Location is important
In America opening an account with a bank that is on campus is important (unlike for UK student accounts), especially in because the college campuses are crazily massive and sometimes a drive away from the nearest city.
If you have any issues or customer complaints you’ll want to be near to your banks local branch.
At the beginning of the year, when you’re still settling in, this is an inconvenience which you’d rather avoid.
What type of account is best?
The easiest way to choose an account is to go into the branch itself and sit down with an advisor, tell them your situation and they can help you through the options (although keep in mind that they are sales men).
They will most probably offer you the college account, which most banks seem to offer if you are studying there.
Once you know what type of overall account will be best for you, you need to consider if you will need a savings as well as a checking account (similar current accounts do in the UK) generally doesn’t pay interest.
We’d definitely recommend opening a checking account as well as a savings account. The best plan of action is to then transfer large sums over from the UK into your savings account and then transferring money from there into your checking/college account as and when you need it.
Extra benefits & things to look out for
There’s a few other things to look out for when choosing your American bank account.
- Look out for extra perks & freebies (although don’t let them completely suck you in)
- Check for restrictions on transfers (either from abroad or between your savings and college/checking account)
- Some American banks require that you have a minimum amount in there at all times. If you go below this you could be charged
- ALWAYS check the full T&Cs and compare as many options as you can.
Transferring money to your American account
If you do choose to open an American bank account, then there is a new option which can help reduce the transfer costs from your English account.
Transferwise is a website which allows you to transfer money with a charge of just £1!
This is incredibly cheap in comparison to the fees that your bank will probably charge you. It also offers competitive exchange rates.
However, if you choose to transfer more than £300 the charge does go up, increasing ever so slightly the bigger you make the amount.
What other options do I have?
If you are not so keen on opening an American bank account and want to spend little by little then an international cash card may (like this one from STA) be the best option.
You apply for one and then transfer as much money as you want onto it. It is free but the downside is that the exchange rates are very poor in comparison to other options such as Transferwise.
If you do go for this option the initial cost is £22, however this includes a £10 top-up. That is a one-off price, and once you’ve paid it, if you transfer online, the transactions are free.
As well as free online transactions, alongside the card, there is an ‘eccount’. This is an online account where you can have the option to keep your money, instead of having all of it on your card.
The ups and downs of a cash card
- Really easy to use
- Cheap initial costs
- Don’t have to pay a fee for transferring money from your UK accounts
- For security, you can ask for an additional card. This can be useful for if you lose your card, and need a replacement immediately.
- You miss out on the Disney themed debit card.
- The exchange rate is extremely poor (transferring anything over £20 is still cheaper on Transferwise).
- It takes around 4 days for transferred money to be received on your card. This means that you need to plan ahead!
- If you lose your card it could take a few weeks for a new one to be delivered, again leaving you stranded if it’s your only form of banking in America. So it might be a good idea to have both an american bank account and a cashcard.
If after all of that, you are unsure which option to go with then it’s best to compare. Check out the STA Travel card page where you can calculate the rates as well as the Transferwise page where you can do the same. It will help you work out which is better for you.
What about your English account?
Before we start we need to mention that you should NEVER use your UK debit card in American as the fees will be through the roof.
It’s a good idea to go into your local branch and let them know that you will be studying abroad.
However, if you leave it till after you arrive in the states, depending on which bank you’re with, some do not have the ability to actually make a note of this on your account. Namely, Natwest.
This isn’t too much a problem if you get all your American banking sorted, and don’t need to use your English debit card. However, if you do have days when you’ve left it too late to transfer money or you don’t have access to a computer then most banks allow you to use your debit card.
Hopefully, this will help anyone travelling to America next year!
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