A bank account is needed to transfer and store money, receive cash from an ATM, pay for goods non-cash and convert one currency into another. We will figure out how to open and close an account, what banking secrecy is and why keep money in gold.
What is a checking account?
A checking account is an account that a bank opens for an individual and which is not intended for operations related to entrepreneurial activity.
The bank can use the money that is in your checking account, but at the same time, it guarantees your right to dispose of it freely. For the use of your money, the bank may pay interest and credit it to your account (to the same or another that you specify). The bank’s services for making transactions with money on the account are usually paid.
The interest income on the current account is usually low, usually it does not exceed the rate on demand deposits. To accumulate money, it is more profitable to open a bank deposit or use other financial instruments.
Nobody can write off funds from your account without your consent. However, there are times when the law allows this. For example, if a seizure is imposed on money and other valuables on the accounts and deposits of the client. An arrest can only be imposed by the court, and the amount that it determines can be debited from the account only on the basis of a writ of execution.
What is bank secrecy?
The bank guarantees the secrecy of the bank account – no one, except you (or your representative), can receive information about transactions on the account. However, the law allows for cases when a bank provides this information to state bodies and organizations, for example, courts, tax authorities, bailiffs, etc.
How to open a bank account?
To open an account, you need to come to a bank branch with documents (as a rule, you need n ID, if you have one), write an application and conclude a bank account agreement with the bank.
How to close a bank account?
To close an account, you need to submit an application to the bank to terminate the bank account agreement. Within seven days after receiving this application, the bank will give you the balance of the money from the bank account in cash (or transfer it using a payment order).
There are times when a bank terminates a bank account agreement on its own initiative. For example, if within two years there is no money on the client’s account and he/she does not carry out any operations, the bank has the right to refuse to execute the contract. In such cases, the client receives a notification letter from the bank – and 2 months after the warning, the contract is considered terminated (if no money has been received on the client’s account during this period).
Types of accounts
Accounts differ depending on the assets they are accounted for.
You can open:
- dollar account;
- currency account;
- impersonal metal account.
You can open dollar accounts in any bank that has a permit (license) from the Bank of America to work with individuals – such a bank participates in the deposit insurance system (DIS).
Foreign currency accounts can be opened in a bank that, in addition to a license to work with individuals, also has a license from the Bank of America to carry out foreign exchange transactions.
Individuals’ money deposited in dollar and foreign currency bank accounts is insured in the deposit insurance system (DIS) – just like funds in deposits.
What is an impersonal metal account?
You can also store your monetary assets in metals, for example, in gold, silver, platinum or palladium. The “cashless” storage of precious metals has advantages over real gold bars under the pillow.
Why keep money in metals?
An impersonal metal account is an alternative to trading on the stock market. Your income will depend on market quotes for metals: the higher the cost of precious metals, the more money on your account in dollar. If you are familiar with this market segment, then an impersonal metal account is a good way to increase your assets for you. It is more convenient to buy and sell metals by bank transfer. Why?
- It’s cheaper. If you buy bullion for dollar or currency through a bank, you will not have to pay VAT for the purchase. But if you just buy an ingot and do not store it on an impersonal metal account, then you will be charged 20% VAT as for the purchase of goods;
- It’s safer. You don’t have to transport bars and check their authenticity. The risk of losing the bars lies with the bank, not you.
How to open an impersonal metal account?
You need to submit an application for opening an impersonal metal account in a bank that has such a service. In this case, you will buy the metal of your choice from the bank at the proposed rate. It is not possible to transfer a metal account from another bank; metal transfer operations are possible only within one bank.
What do you need to remember about compulsory medical insurance?
- The impersonal metal account is opened for accounting for precious metals that the depositor bought from the bank;
- The account is called impersonal because it does not include specific bars of gold, silver or platinum, but their weight in grams;
- Nevertheless, the amount of grams of precious metal accounted for in the impersonal metal account can be taken at the current rate in kind (ingot), if it is provided for by the agreement. As a rule, the bank asks to notify in advance in which form you prefer to collect your funds;
- If you close an account and ask the bank to issue the metal in the form of a bullion, you will have to pay VAT;
- The bank may charge you interest for servicing the deposit. But most of all, the service is free, the bank receives its share for working with the account due to the difference in the purchase/sale rate of metal;
- Income from compulsory medical insurance is subject to personal income tax, but if your account is more than 3 years old, you are exempt from paying tax;
- Money in the equivalent of precious metal on compulsory medical insurance is not insured in IRPF;
- Interest may be charged on an impersonal metal account (if it is provided by the agreement). But income on such deposits is not guaranteed because it depends on price fluctuations in the precious metals market.
How to open an account in a US bank for a non-resident individual?
When you come to the USA, no matter whether it is tourism, child-birth, or the green card you won, one of the main questions that will arise immediately upon arrival is whether it is possible for a non-resident of the USA to open an account in an American bank? If yes, how easy is it to do? What are the restrictions on financial transactions for non-residents? And what to do first – find an apartment or go to the bank to open an account?
What do you need to open a US bank account?
To open an account with an American bank, you need 2 identity documents, as well as proof of your address in English.
2 documents are, as a rule, a passport, and an international driver’s license. But with the confirmation of the address, the situation looks a little more complicated.
Many people know that when opening an account in America, you need to confirm the address, but few people know that for many banks such confirmation can be an extract from the bank of your country since an American bank employee needs confirmation of ANY of your address, that is, the address is not must be American – the main thing is that it should be written in Latin letters. If you need to open a US bank account immediately upon arrival, then in advance, while still in your country, be puzzled by a document confirming your address. This method will be much faster since it will take you more time to confirm your address while in the United States.
Such confirmation can be a bank statement in English, which contains the address of the account holder. In most banks, automated systems translate only the text of the statement, leaving the address as it is. Therefore, immediately pay attention to that the address is written exactly in Latin letters.
For example, you have an account in the Ukrainian representative office of some large and well-known international bank, whose brand will not raise doubts among the American teller. You contact your bank with a request to make you such a statement, and it may well serve as an official confirmation of your address in Ukraine. Over time, you can easily change your address to an American one, and in many banks, this can be done remotely through your personal account.
As for the confirmation of your address in America, then 2 mailings to your American address of residence can serve as such confirmation, but it is important to note, this cannot be a hotel or a rented mailbox. For almost all banks, including the largest and most prestigious ones like Chase or Wells Fargo, it will be enough to provide bills or statements from utilities, mobile operators, medical institutions, or any correspondence from any government authorities. “Simpler” banks can be satisfied with a loyalty program card received by mail from any company related to financial turnover, for example, Shell, and often just any official letter. In some banks, instead of one of the letters, you can also show a contract for renting an apartment. But more recently, neither Chase nor Wells Fargo, for example, have considered a lease a proof of address.
What is the best bank to open an account with?
Accounts can be opened in absolutely any bank. But it is better to open an account in a bank that has good Internet banking and which you plan to use for a long time to create your “relationship history”. This is not a credit history yet since a credit history can only appear for a person with an American SSN (social security number), but this is already an important stage on the way to the emergence of trust in you from American business.
All banks charge a certain commission for servicing accounts – from $5 to $15 per month depending on the package you connect and the number of debit cards you have. If you keep a decent amount in your accounts, the service, including cards, can be free. The amount of these amounts must be specified in each bank. Usually, it is enough to keep a total of $1500 in accounts, but in some banks, the rates are set for each account separately. It is important to note that this is not an irreducible balance – you can use this money. This is the minimum balance at which no service commission is charged. That is, if at least one of the days in a month the balance is lower even by a cent, the bank will take a monthly commission for that month. It is also worth paying attention to the cost of additional services and comparing banks by this criterion. Some of the important parameters you should note: the cost of servicing cards, the cost of a transfer in the United States (usually about $20-25 per transaction), the cost of international transfers ($45-55 per transaction), as well as the cost of incoming payments (yes, there is such a thing, and a commission for an incoming payment can be from $15 for an internal transfer to $60 for an incoming foreign payment). Some banks also offer to switch to a completely digital workflow and give a discount on such services since the bank does not spend money on sending statements by regular mail.
In banking systems of any state, there are periodic changes in owners, leading to a sharp drop in shares, and in some cases even bankruptcy is possible. Therefore, give preference to only the largest banking structures, do not be tempted to save or earn extra money in little-known banks. The largest and most common banks in the United States are Chase, Wells Fargo, Bank of America, Citibank and TD Bank. An additional bonus, by the way, will be that foreign payments in these banks will be processed much faster since these banks have a very wide network of correspondent relations around the world.
What is the best account to open?
It makes sense to open two accounts at once – the main account for ser-vicing (checking) and the accumulative one (saving). For the account for servicing, you will make a card for yourself and, if necessary, for your family members (if you open independent accounts for family members, the bank will also need to provide confirmation of their addresses). Place the funds in a savings account, and keep the required minimum on a service account linked to cards – this way your money will be safer. The package that you connect may already include 2 cards, for example, an additional card for your other half.
When we talk about cards, we only mean debit cards. A credit card even with a $400 limit is already a loan, and in order to get it, you need at least a small credit history.
All accounts in the USA, by default, are opened only in dollars, and only dollars can be credited to these accounts. Please note that many accounts are closed by default for transactions outside the United States. That is, in order to receive money to this account or pay from it to other countries, you need to connect a certain package of services. Basically, if you do not plan to pay from this account outside the United States, such a package may not be needed.
You can replenish your American account from any of your other cards of world payment systems. That is, being physically in the USA, you go to a bank branch and from your card, for example, Visa or MasterCard of the bank of your country, transfer money to your American card (this operation is called “Cash advance”). Of course, the bank from which you are withdrawing money can charge you a commission for this, as if you were withdrawing money from an ATM. As a standard, 3000-4000 dollars per day can be deposited into an American account, and this will be the simplest transaction. You don’t need to send money from your country to the US for this. But you can also, by opening an account here, in the future, send money simply by the details.
Can you make money by placing your money in an American bank?
We want to warn you that American banks do not pay practically any interest on deposits. This fact often becomes the object of fraud, when, under the guise of assistance in opening a bank account, you may be offered participation in a dubious investment project, allegedly giving good annuals in foreign currency.
The income accrued by American banks, the so-called “Interest rate”, for regular (checking) and even saving accounts is 0.01 percent per annum. That is, as long as you do not use any long-term investment instruments, the interest charged by banks on ordinary accounts will practically be zero.
In general, the overall picture looks like it is unprofitable to keep large sums in American accounts for a long time, it is much more interesting to invest in the real sector of the economy, for example, to invest in American real estate. If you do not have enough funds to fully pay for the property you are interested in, you can try to apply to your bank for mortgage consideration, it is better to do this after you have started the movement of money on your American account.
We have described the general scheme for opening an account in an American bank, but each situation is unique, and you may need assistance in the process of opening an account, at least with a transfer.
Tags: account, banks, funding issue, money