Banking and Credit

Most financial transactions are cashless these days. You will likely not be able to pay cash to buy a car or rent an apartment. Americans will also want to see your credit history before approving you as a tenant or giving you loans or credit contracts. So, among the first things upon arrival, you will need to open a bank account and start building your credit history.

Bank Account

You can choose any major bank to open an account. Some of the most popular U.S. banks are Bank of America, JP Morgan Chase, Citibank, Wells Fargo and Capital One.

To open an account, you typically need:

Two forms of ID (your passport is one; the second can be your driver’s license, state ID, employment authorization card, a visa in your passport, I-94, a Ukrainian or European bank card, a signed Social Security card or a birth certificate with certified translation),
Social Security Number (some banks do not require it to open an account), and
A proof of residence (typically, a lease or a utility bill. If you don’t have these, try offering a government letter in your name and address, such as a letter from Social Security Administration, USCIS, your health plan or social services).

The first account you need to open is called checking account. You will use this account to receive your salary and earnings and pay your bills and rent. Checking accounts often have small monthly service fees, which are waived if you maintain a certain minimum amount of money in the account or receive regular wage deposits into the account.

When you open a checking account, the bank will issue a debit card for it, which you will receive in the mail. You can use the debit card to withdraw cash at ATMs and make recurring online payments (e.g. pay rent and utility bills). You can withdraw cash any bank’s ATM using your debit card, but if it’s not your bank’s ATM, it will charge you a $2-5 fee for the transaction.

The bank may also offer you a checkbook to write paper checks from your checking account. Many organizations still accept paper checks as the primary payment method, so it is useful to have a checkbook.

Once you open an account, the bank will send you monthly statements by mail or via the banking app. A bank statement with your address on it serves as your proof of residence.

If you want to start saving money, you can also open a savings account. Savings accounts are interest-bearing and secure: you do not give your savings account number to anyone, and it cannot be accessed via a debit card. Only you can access it via your banking app or in person at the bank.

The bank may ask you to fill out a tax form, W-9 or W-8BEN. The bank uses these forms to report to the IRS interest it pays you on your accounts. W-9 is for U.S. tax residents – fill out this form if you will have lived in the U.S. for at least 183 days (half a year) in the current year. If you will have lived in the U.S. for less than 183 days in the current year, fill out a W-8BEN this year and submit a W-9 to your bank next year.

Money Transfers and Payment Systems

Domestic Transfers

The most common way to send money to another U.S.-based individual is to use payment system Zelle. It is usually accessible from your banking app. You can add a Zelle recipient in your banking app by their email address or phone number and initiate a transfer from your bank account to theirs. The other popular personal money transfer apps are Venmo and PayPal.

Beware of banking scams!

Do not send money over Zelle, Venmo or PayPal unless you personally know the recipient or you’ve already received the goods or service you are paying for. Beware of scammers that convince you to pay them by promising a quick refund and then disappear with your money!

Beware of scams where the person you met online offers to send you an e-check for something and then asks you to refund it. It takes a bank up to 3 days to deposit an e-check, and if it bounces, you will have lost the money you paid the person, and the bank may flag your account for fraud.

If you need to make payments to an organization (e.g., apartment rent, utility payments, loan payments), they typically accept paper checks, electronic checks (ACH) or debit card payments. To initiate an ACH payment, you will need to provide your bank account number and routing number to the recipient organization through its secure payment portal and authorize the payment amount. These portals typically allow you to set up automatic monthly ACH withdrawals from your bank account if the payments are recurrent.

International Transfers

If you need to send money internationally, you can do that in two ways:

Use a pay system such as Paysend, Wise, Western Union, Revolut or PayPal. Some of them do not charge fee for sending money to Ukraine.
Wire money directly from your bank account. You need to google the international wire transfer instructions for the recipient bank (including the bank account number and IBAN or SWIFT number) and provide this information to your bank.

Transfers from foreign banks to U.S. banks are done in the same way. Note, that Ukraine imposes limitations on money transfers out of the country due to the military state.

Credit History and Credit Score

In the United States, it is extremely important to have long credit history and a good credit score. Your credit history not only affects your ability to rent a house, get a credit card, or a car loan, but various government agencies use it to verify your identity and give you access to various government services. So your should start building your credit history as early as possible.

What are credit history and credit score?

Credit history, as the name suggests, is simply a history of your taking and paying off credit. Credit can come in various forms: for example, it can be a traditional loan to buy a car, a house or a new phone, or it can be a credit card where you use the bank’s money to make purchases and then pay the bank back at the end of the month.

When a bank lends you money, it reports the information about the amount of your loan or credit and subsequent payments you make on it to organizations called “credit bureaus.” There are three main credit bureaus in the U.S. – Equifax, Experian and TransUnion. These credit bureaus store your credit history tied to your Social Security Number. They also store other information about you that the banks report to them as part of your credit file, such as your addresses and employment history. Each loan or line of credit that you open helps build your credit history – in a positive way if you pay your bills timely or in a negative way if you don’t.

The quality of your credit history is reflected in your credit score. Credit score is a number between 300 and 850 that “grades” the timeliness of payments and how prudent you are with your credit.

You can check your credit score in your banking app, or in the app Credit Karma. Your initial credit score appears about 6 months after you start using your first credit card – that is how long it takes the bank to send information about your first few payments to the credit bureaus and for the credit bureaus to assess whether you are a good, timely payer. A credit score of 670 and up is considered good, so you should aim to never have your credit score drop below that number.

What affects your credit score?

If you just opened your first credit card and are making timely payments on it, your starting credit score will probably be around – 670 – good with a potential to grow better. From there, your approach to credit can make it excellent or kill it entirely. Your credit score is affected by several main factors:

Timeliness of payments is the biggest factor. For the best impact on your credit score, always pay your loan and credit card bills in their entirety by the due date.
Amount owed. If it’s a loan, the higher it is, the more negatively it will impact your score. If it’s a credit card, the higher your bill is as compared to your credit limit, the more it will negatively impact your score. It is recommended to keep your monthly bill below 30% of your credit limit to build your credit score faster.
Length of credit history. There isn’t much you can do to improve this factor other than to start building your credit history as soon as possible.
Types of credit. A mixture of loans and credit cards works best for the credit score.
New credit. The more loans or credit cards you try to open, the higher the risk you will not be able to pay off all debt, so an attempt to take a new loan or open a new credit card temporarily reduces your score a little.

To build your credit score fast, it is best to gradually open 2-3 credit cards and use them evenly so that each is utilized by no more than 30% of its credit limit, have one or two loans (such as a car loan or a student loan) and always pay your bills on time.

Why are credit history and score important?

When you apply for a new credit card, a loan, a rental apartment or a post-paid phone plan, the bank, landlord or phone carrier will check your credit history and credit score to verify your financial trustworthiness. The longer your history and the better your score are, the better your chances are to get approved on favorable terms.

But credit history is important not only for getting new credit. Government organizations use your credit history stored at the credit bureaus to verify your identity when you access government services. If you have no credit history, it will be more difficult for you to obtain certain government services, e.g. get a transcript of your tax return or buy health insurance.