Opening a bank account in the USA. Have to. Like tomorrow.

[Falconeer]

I need to open a bank account in the USA, a joint one with my partner.

I know nothing about the US American banking system, and that's why I might be asking stupid questions that seem to make no sense to you. For example, where I come from, I don't have a credit rating because it's not a thing that exists. I also don't care about having one but I mention that as an example of how many things I am unaware of. Anyway, I/we need a joint account to both our names. So I went down the road and walked into the Community Banks of Colorado and asked them how easy it would be (aparently super easy and instant), how cheap it would be (apparently as cheap as 8$ a month), and they made it sound like it's such a walk in the park that I should just do it right away and that I got the best deal at first random try. Which is suspicious.

I got one of their depliants showing what account we would be opening and I thought about asking for some generic vague opinions around here, if any of you is willing to share some knowledge.

What I know is that it's going to be a Checking account, and we don't really plan on using it much if at all. They say we are getting a Debit card and I expressed my fears about how easy to hack they seem to be, so they said that as long as we use the "Credit" option (on the "debit" card?) it's gonna be 100% safe. Uh?

Then again, the linked picture/plan would be taking advantage of my partner job position, some benefits coming from working for Vail Resorts, etc. I asked them what would happen the moment she stopped working there and they said "oh we'll figure out something" which sounds again kind of not right.

I asked about hidden costs, and they say there are none. I heard lots of horror stories about people going on overdraft overnight with their US American accounts, something that can't really happen to the other accounts I had in Italy, so while that's probably just a matter of bad management, I really wanted to make sure this bank is just holding our money for a monthly fee that doesn't fluctuate for no apparent reason. Also, even though we don't plan on using the card at all, I asked them when do the expenses/bills/purchases get taken out of the account and they said "real time". I asked: "I assume that's for Debit. What about the Credit function?" and they said "same thing". Really? Sounds suspicious again cause how would that be credit if they took the money rght away?


I think this is all for now. Thanks for reading, if you did, and for commenting, if you will. I think we are gonna do this, sounds like it's not gonna be too much of a problem considering we don't plan on using this account for pretty much anything, but I am so ignorant on the topic that I figured it wouldn't hurt to ask if I am missing something important I should ask.

And to clarify one important thing: of course my partner knows a lot more about it and I trust her, but I consider you folks as my "second and third opinion", and I am curious to see if some of the things I could learn here would check with what she seems to know,

[Samwise]

Are you able to maintain a reasonable minimum balance (i.e. savings of a few thousand dollars at least), or are you riding the ragged edge of bankruptcy?  If you're able to keep some money in the account, you should be able to get a good deal from pretty much any bank, because they'll all be happy to hold your money for you, you usually don't need to pay a monthly charge if you maintain their minimum balance, and you're never going to see an overdraft fee if you don't empty out your account.  Going through your partner's work seems like an unnecessary complication.  Last time I opened up a joint account we just walked into a Wells Fargo and said "we'd like to open a checking account, here's a check for the initial funds" and fifteen minutes later we were all set.

The "credit" vs "debit" thing doesn't make much sense to me either personally, but my understanding is that when you use the "credit" function it still comes straight out of your bank account but goes through a different transaction network which results in different fees for the store-- it's all invisible to you except that the "credit" version has extra perks (which I think come from the fact that the store is getting charged a percentage for the transaction).  Or at least it's all invisible to me.  Maybe different things happen if you use one of those transactions to empty out your account and the "credit" version ends up savaging your butthole in that instance.

[Rendakor]

My checking account is currently at a credit union, and they prefer me to pay as credit instead of debit; I'm allowed 5 total debits a month (either paying as debit or ATM withdraws) and after that they charge me a $1 fee each time.

Are either of you setting up direct deposit? If not, an $8 monthly fee actually sounds kind of shitty; getting an account with no monthly fee shouldn't be too hard. Also make sure to opt out of "overdraft protection" as some banks call it; what they mean is that if you swipe your card to pay for something you can't afford, they'll allow the charge and then fuck you with fees. Make sure that if you have insufficient funds, the purchase is declined.

If you're never going to use the account, why bother?

[Tmon]

The big plus of not choosing the debit option is that your pin number never goes through the store's point of sale system which means that if/when the store's systems are hacked all they get is your card info. They can still use the card info to make charges but because they don't have the pin the charges will go through the regular Visa verification and fraud systems.  Visa fraud is very good at detecting atypical use and will shut the card down and call to verify the charges in what can be an amazingly short time.  It also means that you will get the charges refunded quicker and with far less hassle.  The times that my card has been compromised or stolen I've been notified by Visa Fraud within an hour of the charges being made and my bank had refunded my account on same or next business day.

[Falconeer]

Thanks for all the comments.

I have a counter-question to this:

Are you able to maintain a reasonable minimum balance (i.e. savings of a few thousand dollars at least), or are you riding the ragged edge of bankruptcy? 

The concept of "bankruptcy" is almost alien to me. I assume it means you get to a 0-to-negative balance, but assuming you don't ever get to zero, is that a problem at all? The way they made it look at this one bank is that it doesn't really matter how much you have on your account, 10$ or 10000$, as long as you can pay for the monthly fee which would be zero if she keeps depositing some salary directly to it. Again, this is a problem of coming from a different culture, but "bankruptcy" sounds very menacing to me. So yes, let's say that we keep a couple of hundred dollars there just to keep the account alive, is that a bad thing for reasons I am missing?

To answer Rendakor, we need to bother because at some point I might need to prove in the USA that I have some money and it's a million times harder to prove it if that money is on a foreign account.

Thanks for the tips and explanations about Debit vs. Credit. And the one about "Overdraft Protection".

[Merusk]

So I went down the road and walked into the Community Banks of Colorado and asked them how easy it would be (aparently super easy and instant), how cheap it would be (apparently as cheap as 8$ a month), and they made it sound like it's such a walk in the park that I should just do it right away and that I got the best deal at first random try. Which is suspicious.

You seem to think it's supposed to be hard to open an account and are suspicious about why they were rushing you. I guess it must be hard to open one in Italy, but it's not in the US.  Your info, some form of ID and your good to go.  It's suuuper easy in the US, and that's why they were rushing you. Because you can walk down the street and get an account anywhere, and if you hunt you'll get one with a better deal or a better perk for joining.

Perk? Yes, perk. Free checking, Free checking with a bonus of a few hundred for your first direct deposit, etc. (Offers vary by the amount deposited, of course.)  Google will assist you here.

There's no need for a monthly fee if you use the account regularly, none.

[Abagadro]

Ya, don't pay for a checking account. There are plenty of places that will give you free checking without needing much of an average balance. Look for deals and banks looking to sign you up.  They are marketing to you, not the other way around.

[lamaros]

What is all this bankruptcy stuff? Italy has bankruptcy...

[Falconeer]

Yeah, but it's not a word (or its translation) you would ever bring up when talking about a single person having not too much money on their account.

You only use it for a business or a person that got severely crushed by huge debts over a long amount of time. For example, if I am not mistaken, "bankruptcy" (bancarotta) in Italy is a felony, not an "option" when deep in debt. That's why

Are you able to maintain a reasonable minimum balance (i.e. savings of a few thousand dollars at least), or are you riding the ragged edge of bankruptcy?

sounds alarming to me.

[Samwise]

I meant it in the more colloquial sense of having zero assets, i.e. you're living paycheck to paycheck and in constant danger of bouncing a check for $10 because you only had $5 to your name when it got cashed.  That would be where you get fucked on bank fees.  If you always have more money in your account than you'd spend in one shot, there's no reason to be concerned about overdraft fees because you're never going to overdraw.

[lamaros]

I think they changed it so it wasn't as much of a 'crime' anymore?

Perhaps not used as idiomatically because of the historical association though.

[ajax34i]

Credit rating is for loans, which do involve banks but don't have much to do with a (checking/savings) account.

Checking account = you put money in the account, and you can write checks (to take money out / pay for things), and you can usually go all the way down to 0 balance left.  Typically used for day to day grocery buying and stuff like that.

Savings account = you put money in it, and there's usually a minimum balance that they expect you to leave in there, and they pay you some interest on it (as if you had invested in stocks poorly).  This is more like "here, hold this money for me for a few years."  This is why we're asking if you can maintain a minimum balance of 2500 or whatever; you'll pay fees if you go under, with this type of account.

They give you a checkbook that has checks you can write and sign to pay for things, and deposit slips that you can use to deposit into the account.

Using your account card as a credit card = you have to sign the payment slip (often on a video screenpad).
Using your card as a debid card = you have to put in a 4-digit pin code.

Either way, something gets stored in each vendor's computer system, but technically the guy waiting in line behind you has an easier time seeing and memorizing your pin than memorizing your signature.

As far as "we'll work something out" you are entitled to take your money out and put it in another bank whenever.  Write a check to yourself, or walk into the bank and ask them for a cashier's check or to give you cash.  If you have a checking account they just do it, if you have a savings account there may be a fee because you're breaking that "minimum balance of 2500" rule, but it probably won't be a lot.  If both your names are on the account then they'll need both of your signatures to close the account, but as far as emptying it out either of you can do it.

[Soln]

As someone who immigrated to the U.S. I can confirm that you will have zero credit. 

[KallDrexx]

That's the case for going to any country.  When I moved to Australia I had no credit either.

[Samwise]

When I applied for a mortgage the broker asked me in complete seriousness if I was an illegal alien.

[Merusk]

Credit rating is for loans, which do involve banks but don't have much to do with a (checking/savings) account.

Your credit, however, CAN be so god-awful and terrible that banks won't give you an account. This requires a LOOOOOOT of fuck-ups on your part, however.

[Chimpy]

The reason they say to use the cards as credit is that they get processed through different systems. In the credit card system, you are not liable for fraudulent charges if your card is compromised. With the debit system, you are pretty much liable regardless. Yes, the money usually is taken out of your account right away in both cases but in the case of using it as credit you have a much easier time of getting reimbursed if your number is comprised.

I believe the reason some banks tell you to use credit instead of debit is that processing fees for credit card purchases are paid by the merchant whereas debit processing is paid by the bank and merchants pay nothing.

[Trippy]

As others have said you and your partner are not getting a good deal with that "Work Perks" account you describe. To have an account with no monthly fees it's usually a certain minimum balance (like $1500) or direct deposit. E.g. here is what Bank of America offers:

https://www.bankofamerica.com/deposits/checking/personal-checking-account.go?js=y

The debit card thing is confusing. Technically what the person told you is correct as the debit card that belongs to either the Visa or MasterCard network has "zero liability" fraud protection *however* the charge on that card is deducted directly from your account (usually the next business day) instead of going against your credit like on a real credit card.

Even though these cards have zero liability, because the money is deducted quickly you can still run into issues if your card is used fraudulently. E.g. let's say your partner mailed a check in for some payment and before that check is processed somebody steals your card info and drains your account and then the check is processed which subsequently "bounces" cause you now have no money in your account. You won't be liable for the fraud part but you will be liable for any check reprocessing fees from that bounced check.

If you use your account for these sorts of payments using your debit card like you would a credit card (e.g. to make online purchases) is extremely risky if you keep a low balance. Again you are protected the actual fraud but you are not protected from the fallout of having all your legit payments fail either cause of fraud or you not keeping track of your balance and letting it fall to 0 legitimately.

So I would actual recommend the opposite of what Tmon is recommending which is to only use the card as a debit card meaning on point-of-sale terminals where you have to enter in a PIN or just use it withdraw money from ATMs. Yes people can still steal cards from hacking PoS terminals (and there have been a rash of them here in the US including from some major retailers like Home Depot and Target) and stealing PINs but that's a lot less common than stealing debit card numbers and using them with "signature" or "card not present" (e.g. online or mail order) purchases.

[Abagadro]

Also, if you want to get advanced, get a credit card with cash back and pay it off every month. You can actually make money using one if you are disciplined.

[Samwise]

Also, if you want to get advanced, get a credit card with cash back and pay it off every month. You can actually make money using one if you are disciplined.

I finally started doing this just to make sure I'd have robust credit for future refinancing adventures.  I got the card through my bank, and set it up so that the credit card bill gets paid straight from my checking account each month; then I put all my auto-payable bills on the credit card.  Presto, automatic credit machine!

[Ragnoros]

Others went into more detail. But yes, bank accounts in the US are easy to open, requiring only a small initial deposit and some ID and generally hassle free. Takes 10-30 minutes. If they want a monthly fee look elsewhere. If you don't like the idea of a debit card just destroy it or keep it at home.

Only real place you can get screwed is if you spend more than you have in your account, in which case they will charge you $20-50 (depending on bank and laws) for EACH transaction that you don't have the money for. AKA, bouncing checks. Simply don't spend more than you have in the account, and it will never matter. As for "hidden" fees, for the most part, banks are required, and do a reasonable job, of presenting the fees up front and in that little box, and unless you find an amazingly crappy bank they won't randomly hit you with something huge for not using the account or whatever.

Most banks will give you some bonus for setting up direct deposit with your paycheck. Chase gave me $300 for opening an account and doing so.

If you need/want to establish credit, that is another conversation, but Samwise describes an easy method.

I am honestly curious how banking works in Italy that is so different than the US.

[Trippy]

I am honestly curious how banking works in Italy that is so different than the US.

I don't know about banking in particular but the bureaucracy in Italy is legendary for its terribadness.

[Abagadro]

Probably have to do it through the post office or some nonsense like that.

[Bungee]

Also, if you want to get advanced, get a credit card with cash back and pay it off every month. You can actually make money using one if you are disciplined.

I finally started doing this just to make sure I'd have robust credit for future refinancing adventures.  I got the card through my bank, and set it up so that the credit card bill gets paid straight from my checking account each month; then I put all my auto-payable bills on the credit card.  Presto, automatic credit machine!

This is why us Euros really don't get all the credit card craziness of the US, this is the default way we get and pay credit cards. They HAVE to be linked to a bank account which is billed every month- at least in the majority of Europe (I really don't know of any exception tbh).
Also, we wire our money. Screw checks.

Sorry, continue...

[IainC]

Also, if you want to get advanced, get a credit card with cash back and pay it off every month. You can actually make money using one if you are disciplined.

I finally started doing this just to make sure I'd have robust credit for future refinancing adventures.  I got the card through my bank, and set it up so that the credit card bill gets paid straight from my checking account each month; then I put all my auto-payable bills on the credit card.  Presto, automatic credit machine!

This is why us Euros really don't get all the credit card craziness of the US, this is the default way we get and pay credit cards. They HAVE to be linked to a bank account which is billed every month- at least in the majority of Europe (I really don't know of any exception tbh).
Also, we wire our money. Screw checks.

Sorry, continue...

It depends where in Europe. In Germany, your credit card is linked to your bank account and every month on a fixed date your credit balance is automatically paid in full. In France and Spain, your credit card is also linked to your bank account and every time you buy things with the card, the funds are immediately debited from your account. You can't spend money you don't have. In the UK, it works more like the US system, cards are separate to a bank account (even if issued by your bank) and you can pay all, some or none of the balance every month then pay interest on whatever is outstanding.

[Bunk]

Realizing how the US system worked was a bit of a shock to me. In Canada, we've typically always kept cards separate. You get a Debit card from the bank that withdraws directly from your account, you get a credit card from the card company, sometimes sponsored by your bank, sometimes not. You charge things to the card and then they send you a bill, the longer you take to pay it, the more interest you accrue. You can keep wracking it up until you hit a limit based on your rating.

The big change happened with the advent of Visa Debit Cards. Essentially, the banks tied your credit card to your bank card. These have been around for a while in the US and now recently in Canada. The problem with the US version is, you can use it practically anywhere like a credit card, but it comes out of your account immediately, often whether or not you have the funds. If you don't have the funds, they let you purchase those new shoes just fine, they just start hitting you with overdraft fees. Essentially, credit cards tied to your account are a completely misnomer, as they give you no real credit at all. In Canada though, even though is tied to my bank, its tied to a totally different account from my checking, and still functions as a traditional credit card would.

I've supervised billing/collections for a company with predominantly US customers for years. The frequency in which people get in trouble due to automatic payments coming out of their bank account via a Visa debt is quite scary. Several years back I had a lady overdraft on a bill by $10 and not notice. She accumulated a $20 overdraft fee every night. She noticed when it was around $200. So now she had to pay her bank $200 immediately (because of a $10 overdraft), or they would continue adding another $20 to the bill nightly. It was insane.  I'm pretty sure some of the banking law changes in the last few years may have fixed that issue. I hope.

[HaemishM]

I'm pretty sure some of the banking law changes in the last few years may have fixed that issue. I hope.

Yes, it did. And the credit card companies and banks are trying everything they can to roll that shit back.

What used to happen in the 2000's was that banks could charge an overdraft fee for every single overdraft - i.e. you could overdraft your account by 1 penny and you'd get hit with an overdraft fee, another charge hits and you get another overdraft fee. And banks didn't tell you this shit was happening, BTW. They'd just inform you by mail of it a few days later (because snail mail is slow) and oh, by the by, here's another fee tacked on every single day for not having a positive balance in your account - for which they might also charge an overdraft fee. So for $10 in overdrafts, if you didn't notice, you could rack up $200-$400 in fees without even blinking. During this whole time, whether or not your debit card worked or didn't was purely up to the bank. So again, if you didn't notice you'd gone over, you might not be denied the ability to purchase things with your debit card even though you had a negative balance.

And then for fun, banks started altering the order in which they paid transactions. So let's say you had $20 in the bank, and 4 transactions for $5, $5, $5 and a whopping $200. The 3 transactions for $5 came into the account first, which meant if they had been paid in the order in which they were received, you'd only overdraft once for $195. However, the bank would hold the 3 transactions for $5 until they were able to pay the $200 one, which meant you actually had 4 overdrafts instead of 1, and the bank charged you the overdraft fee for all 4 transactions despite the fact that 3 of them should have been paid when you had money in the bank. Where the bank should have charged say $20 for one transaction over, they made $80 off of you without you having any ability to unfuck that shit.

The law was changed so that you could only be charged ONE overdraft fee per day and they couldn't charge you a daily "Your account is negative" fee. Also, they couldn't reorder transactions to maximize fees. And they had to inform you of what type of overdraft protection you had. You could get the kind that would pay everything even if you went negative, but you had to opt-in for that - otherwise, you're on standard overdraft which means you won't know for sure whether your debit card will pay beforehand if you are close to the edge of empty. They also weren't allowed to charge an overdraft fee if the amount over is something less than $10 I think.

I've worked with banks as clients, and when this law got passed, they literally panic-shat their britches. Even more "reputable" banks were making something like half of their revenue in these kind of shitheel fees. The 2000's really made bankers more hated than fucking lawyers for a reason.

[pxib]

For a little while there my bank was sending me two letters a week saying WATCH OUT! NEW GOVERNMENT REGULATIONS MEAN THAT IF YOU DO NOT OPT INTO OUR "OVERDRAFT PROTECTION" PLAN YOU MAY NOT BE ABLE TO SPEND MORE MONEY THAN THERE IS IN YOUR ACCOUNT. YOUR DEBIT CARD WILL LITERALLY STOP WORKING WHEN YOU REQUEST MORE FUNDS THAN YOU HAVE! IMAGINE YOUR EMBARRASSMENT! PLEASE JOIN OUR "OVERDRAFT PROTECTION" PLAN AND PROTECT YOUR ABILITY TO OVERDRAFT!

Then the deadline hit and they gave up.

[Trippy]

Also, if you want to get advanced, get a credit card with cash back and pay it off every month. You can actually make money using one if you are disciplined.

I finally started doing this just to make sure I'd have robust credit for future refinancing adventures.  I got the card through my bank, and set it up so that the credit card bill gets paid straight from my checking account each month; then I put all my auto-payable bills on the credit card.  Presto, automatic credit machine!

This is why us Euros really don't get all the credit card craziness of the US, this is the default way we get and pay credit cards. They HAVE to be linked to a bank account which is billed every month- at least in the majority of Europe (I really don't know of any exception tbh).
Also, we wire our money. Screw checks.

Sorry, continue...

We have those kinds of cards here in the US too*. They are called "charge" cards and the balance has to be paid off every month unless you want to pay a large fee. American Express is the most well known example.

* Except for the mandatory bank account linkage, that's optional here

[Bunk]

Yea, see that's what the rest of the world has always called a credit card because it actually gives you credit.

[schild]

Banks in Italy are fucking weird. That's all I have to say about that.

[Rendakor]

I'm pretty sure some of the banking law changes in the last few years may have fixed that issue. I hope.

Yes, it did. And the credit card companies and banks are trying everything they can to roll that shit back.

What used to happen in the 2000's was that banks could charge an overdraft fee for every single overdraft - i.e. you could overdraft your account by 1 penny and you'd get hit with an overdraft fee, another charge hits and you get another overdraft fee. And banks didn't tell you this shit was happening, BTW. They'd just inform you by mail of it a few days later (because snail mail is slow) and oh, by the by, here's another fee tacked on every single day for not having a positive balance in your account - for which they might also charge an overdraft fee. So for $10 in overdrafts, if you didn't notice, you could rack up $200-$400 in fees without even blinking. During this whole time, whether or not your debit card worked or didn't was purely up to the bank. So again, if you didn't notice you'd gone over, you might not be denied the ability to purchase things with your debit card even though you had a negative balance.

And then for fun, banks started altering the order in which they paid transactions. So let's say you had $20 in the bank, and 4 transactions for $5, $5, $5 and a whopping $200. The 3 transactions for $5 came into the account first, which meant if they had been paid in the order in which they were received, you'd only overdraft once for $195. However, the bank would hold the 3 transactions for $5 until they were able to pay the $200 one, which meant you actually had 4 overdrafts instead of 1, and the bank charged you the overdraft fee for all 4 transactions despite the fact that 3 of them should have been paid when you had money in the bank. Where the bank should have charged say $20 for one transaction over, they made $80 off of you without you having any ability to unfuck that shit.

The law was changed so that you could only be charged ONE overdraft fee per day and they couldn't charge you a daily "Your account is negative" fee. Also, they couldn't reorder transactions to maximize fees. And they had to inform you of what type of overdraft protection you had. You could get the kind that would pay everything even if you went negative, but you had to opt-in for that - otherwise, you're on standard overdraft which means you won't know for sure whether your debit card will pay beforehand if you are close to the edge of empty. They also weren't allowed to charge an overdraft fee if the amount over is something less than $10 I think.

I've worked with banks as clients, and when this law got passed, they literally panic-shat their britches. Even more "reputable" banks were making something like half of their revenue in these kind of shitheel fees. The 2000's really made bankers more hated than fucking lawyers for a reason.

This happened to me when I was younger; I overdrafted with a $3 purchase of snacks and got up to like $500 in fees by the time I found out. It hurt my credit a lot because I just told the bank to go fuck themselves so they sent it to a collection agency. Eventually they gave up because I was 18 with no assets but it was hard rebuilding credit from that.

[Falconeer]

Wow lots of useful info here, I haven't even had the time to read it all yet but I'll definitel do it before the end of the day. Thanks!

Anyway, part of my doubts were coming from the fact that I am not a US citizen so I didn't even know if it was possible for me to open one. And lots of the other things you say, as pointed by others, work differently in Italy. So, very educational thread for me, thanks!

[Ironwood]

When I applied for a mortgage the broker asked me in complete seriousness if I was an illegal alien.

It's the dark Mexican skin you have, right ?

 

[Samwise]

When I applied for a mortgage the broker asked me in complete seriousness if I was an illegal alien.

It's the dark Mexican skin you have, right ?

 

I'm sure it was a little of that (pinche gringas, amirite?) but mostly my complete lack of credit history, coupled with having a more sizable down payment than most first-time buyers and apparently having all the rest of my paperwork in order.  It just didn't add up for her.  She also asked (lowering her voice) if I was involved in some kind of organized crime.  Seriously.