Money Matters

No, other documents can replace a Social Security Number.

Banks vary in documents needed; however, two forms of Identification are typically needed.  Most will accept your Passport, Student ID, and/or your I-20 form.  It is best to call ahead and ask your local bank. 

You may be asked to sign this form when opening an account.  This form certifies that you are opening an account to transfer funds to support your stay in the US as a non-resident, and not using the account for business purposes. This form will make filing taxes much easier.

A Checking account should be used for daily spending (food, transportation, fun, etc.).  A savings account should be used for storing your money until it is needed for something.  A checking account will allow you to spend money with a Debit Card or Checks.  A savings account cannot.

A savings account is a good idea because it is more secure than a Checking account.  It is recommended that you only keep one to two months worth of expenses in a checking account, and the rest of your money in savings.  It is much easier for someone to find out your checking account information and steal from it than your savings account.  This is because your debit card or checks has information that a thief can use to spend your money with from your checking account.

A debit card is much safer to use compared to paying with cash.  If your debit card is stolen, the bank will refund any purchases not made by you after you have filed a claim.  If you lose your cash, the bank will not refund you.   

You should choose a bank with free accounts or student accounts.  You do not want to pay unnecessary monthly service fees for having a bank account.

You should also look for a bank that makes your life convenient.  This doesn’t just mean a bank with lots of locations.  Other factors include Online Banking, Banking by a mobile application (iPhone, Android, windows phone), and a bank that makes receiving your funds easy and less costly. Make sure to look at what wire transfer fees are applied.

An overdraft is when you spend money that you do not have.  For example, if you have 25 dollars left in your account and you use your debit card or check to buy a new shirt for 35 dollars.  This means that your account is at -10 dollars.  When your account is negative the bank will charge a fee ranging from 30 to 40 dollars.  Banks charge this fee for every transaction that takes you further negative.  You can have multiple overdraft fees per day.

There are several tools you can use to avoid an overdraft fee.  Closely monitor your account.  Use your mobile app or online banking to check your remaining funds frequently. You can also set up text message alerts that can warn you when your funds are low through your bank.

There are several forms of overdraft protection.  If you were to accidentally overdraft your checking account you can have a backup account that can pay for the purchase. This can be your savings account or a credit card.  If you use a credit card, make sure that you pay your credit card bill when it is due. This is the exact advice I needed when I was in college :)

Some other fees from banks typically include ATM withdrawal fees, wire transfer fees, and foreign transaction fees.

It is difficult for international students to have accounts at credit unions because to open an account at a credit union you must be a “member.”  Each credit union has different requirements to become a member.  This can include, being a local resident, or working in a certain industry (military, education, etc.).  Anyone can open an account at a bank as long as they have proper identification.

A credit score is a number ranging from 300-850 that represents how trustworthy you are for lending based on your previous lending history. Types of lending might include buying a house, a car, or loans to start a business.

Your credit score will follow you your entire life. If you made mistakes in the past, it could result in you not getting approved for a home loan or other important purchases. It could also result in you getting approved but at a very high-interest rate. If you have a good credit score it will be to your advantage in better interest rates and loan amounts. If you have made mistakes that is OK because you can always rebuild your credit moving forward.

It is best to start with small things. Such as a credit card with a lower limit. One of the best ways to get started is with a secured credit card through your bank. Your bank can use your relationship and history as their customer as consideration for a credit card. The secured credit card allows for you to put down cash to show your good faith in repaying any borrowing you do on the credit card.

There are five basic factors that go into a credit score that makeup 100 percent of your score.

1. Payment History (35 percent)-  How well you have paid off loans in the past.  Being late on payments will negatively affect this.
2. Amounts Owed (30 percent)- Having all of your credit cards maxed out on their spending limits will negatively affect this.  It is suggested that you keep your credit card balance at or below 50 percent of the total limit, i.e., have a credit card limit of $10,000 and owe less than $5,000 on it.
3. Length of Credit History (15 percent)- How long you have had an account for. The longer you’ve had it the better it will be for your credit score.
4. New Credit (10 percent)- This goes along with the length of credit.  If you haven’t had an account very long it can have a negative effect on your score.
5. Credit Mix (10 percent)- The variety of different accounts you have (installment vs revolving)
   • installment is a fixed amount, such as a car loan
   • revolving is something that goes up or down depending on your payment, such as a credit card

In the United States, the SSN or TIN is used to track all borrowing you have done. If you do not have one of these, there is no way for you to show your history of borrowing and paying back. In order to build or improve your credit score, you need to first have a Social Security number or a Tax Identification Number. This can be obtained for free with an application. Normally you can apply for one once you begin working. This can be as simple as a part-time job outside of school or your first full-time job once you graduate.

Yes, some banks or credit card companies will issue a credit card to foreigners without an SSN/TIN. However, this will not improve your credit. This is because your SSN/TIN is what is used to report your credit history. If you don’t have an SSN/TIN there cannot be any reporting.

Do you have a bank account in your home country? If your bank is an international bank, they maybe able to use your credit history in your home country and help you to get a credit card in the U.S.

If you open a credit card without a SSN, you will be able to accumulate credit history within that bank. But in order to build credit history in the U.S., it is very important that you update your bank once you have a SSN.

A credit card is a great tool if you use it responsibly. Typically credit cards charge very high-interest rates. Typically anywhere from 9.99 percent to over 25 percent. Imagine if you owed $15,000 on a credit card that had an annual percentage rate of 25 percent! If you took 12 months to pay off that $15,000 it would cost thousands of dollars in interest. This is why some people do not like credit cards. However, if you use it and pay off the balance each month, you will not be charged interest. Certain credit cards also give you rewards. Such as cashback, or airline miles. This is a great way to get free rewards for purchases you were going to have to make anyway.