Managing Money
Currency
Exchange
Banking
Debit
Cards and Credit Cards
Credit
History, Credit Rating and Credit Checks
Other Options
Tipping
The basic unit of U.S. currency is
the dollar ($1). Coins are minted in denominations of one
cent (penny), five cents (nickel), ten cents (dime), twenty-five
cents (quarter), and fifty cents (half-dollar). There are
also one dollar coins (a silver one named after Susan B. Anthony,
an early women’s rights activist, and a golden one featuring
Sacajawea, a Native American heroine) but these are infrequently
used, except as change in subway and train ticket machines
and postage machines. Bills (paper money) are printed in $1,
$2, $5, $10, $20, $50 and $100 denominations. Be careful—all
U.S. bills are the same size and color! Be wary of counterfeit
(fake) bills, especially at bars and clubs—make yourself
familiar with the special features (such as watermarks and
distinct texture) of authentic bills so that you will know
how to spot counterfeit money.
Currency Exchange
Before you open a bank account, you will probably need to
exchange currency or travelers’ checks in order to get
yourself started. As you know, exchange rates fluctuate daily.
Many major banks, as well as companies like American Express
or Thomas Cook, offer currency exchange services. Outside
banking hours, you’ll have to use a private exchange
office. Be sure to ask about the rate and any commission charges
before you change money. You will need to present identification,
such as your passport, each time you exchange currency.
If you bring a bank card from your home country, be sure
to find out any service fees before you use it in the U.S.,
as there could be an unwelcome surcharge.
In order to arrange for transfers of funds from your home
country to the U.S., you can either request a bank draft to
be forwarded through the mail (but it may take up to three
weeks for this money to clear and become available to you)
or request an electronic transfer of funds directly into your
U.S. account. You will most probably be charged a fee for
both services.
For a quick currency converter, check out www.xe.com.
Banking
Most students opt to open a local bank account in order to
avoid carrying large sums of cash or travelers’ checks.
A bank account is also useful in helping you keep track of
funds more closely.
Because service and fees vary from bank to bank, you should
research the banks in your area to find the one that best
suits your needs. Some banks offer special student accounts
with lower service charges than regular accounts, or your
school may have a special arrangement with a local bank. Ask
at your school’s international student office, and take
advantage of these services. Some banks require that you have
a Social Security number in order to set up an account. Others
will require you to show your passport and either a second
ID, proof of address, or a letter from your school. Check
with your local bank to find out which supporting documentation
you should bring to open an account. Banks that have an arrangement
with your school are more likely to accept your school ID
in place of a Social Security number when you set up your
account.
Banks are generally open from 9 a.m. to 4 p.m. on weekdays,
but increasingly you will find branches that are open early
or on weekends. Almost all are closed on federal and state
holidays. Most banks have automated teller machines (ATMs)
that allow you access to your account 24 hours a day, seven
days a week. Most banks now also have online banking, allowing
you to access account information, transfer funds between
accounts, pay bills and make inquiries.
Question To Ask When Deciding on a
Bank:
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Does the bank offer any special student accounts? |
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What are the monthly fees? |
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Do I have to keep a minimum balance in my account? |
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Is there a limit on the number of transactions I can
make per month? |
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Does the bank charge an extra fee for use of ATMs that
are not their own? |
Once you decide on a bank you will need to choose what type
of account(s) you wish to open. The following is a basic overview
of the two main types:
Savings Accounts
Savings accounts enable you to earn interest on funds that
you don’t need right away. The rate of interest will
depend on the bank and the type of account you have chosen.
When you open your account, most banks will begin to send
you a monthly statement that will detail all your transactions
and any interest you have accrued. Some banks, however, will
issue you with a passbook instead, in which your deposits
and withdrawals are recorded. You must bring the passbook
with you each time you wish to make a deposit or withdrawal.
The interest you earn on your money will usually be recorded
in the book four times a year (quarterly).
You can withdraw money from your savings account in cash
or in the form of a bank check. You can also generally transfer
money from your savings account to your checking account as
needed. Deposits to your account can be made in cash or by
check, but you may have to wait 5–20 days to withdraw
money deposited by check (depending on the size of the check
and where it originates). Be sure to ask how long it will
take checks to “clear” (be processed by the bank)
before you open an account.
Checking Accounts
Checking accounts enable you to withdraw your money frequently
in the form of:
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checks to pay bills and/or send payments in the mail |
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cash for daily expenses |
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a debit card with which you can purchase goods and services
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Checks are an easy way to pay expenses such as rent, the
telephone bill, and other household expenses. Banks often
return “cleared” (processed) checks or photocopies
of them to you; these give you proof of payment if a question
arises about whether a particular bill has been paid.
A checking account can help you keep track of how you are
spending your money. You must keep a careful record of every
check you write, all deposits that you make, and every cash
withdrawal. At the end of each month, your bank will mail
you your cleared checks (or photocopies) and a statement that
summarizes all your deposits and withdrawals for the month.
Get in the habit of “reconciling” or comparing the
monthly statement from the bank with your own records, to
make sure they match. Remember that checks can sometimes take
a while to clear. Be sure to deduct any service or check fees,
and to add any interest you have earned. If you discover a
discrepancy between the bank’s records and your own,
take your checkbook and statement to the bank.
You will often be asked to show a photo ID if you are paying
by check at a store. If you write a check without sufficient
funds available in your account to cover it, your check will
“bounce.” Don’t do it—you will be fined
by your bank and probably also by the company to which you
wrote the bad check, and your credit rating will suffer. This
makes it doubly important for you to keep careful records
of all your transactions. For information on your credit rating
and credit history, see pages 21–22.
Always write checks in ink, never in pencil. Always be careful
to sign your checks and date them correctly (remember to use
the American style of writing dates in the order month/day/year).
The following diagram illustrates the correct way to write
a check.
How to Write a Check
It is a good idea to have your address printed on your checks
when you initially order them; your phone number is not necessary.
Checks generally include a line at the bottom for a “memo.”
This is a good place to write your account number when you
are paying a bill or to include a note about what your payment
is for.
When someone else writes you a check you need to “endorse”
it for payment to your account by signing your name on the
back in the appropriate section. Note that writing “for
deposit only” (and your account number) on the back prevents
others from cashing your check in the event that it is stolen.
ATMs
Automated Teller Machines, more commonly called ATMs, are
a service that most banks provide, offering you banking privileges
24 hours a day, seven days a week. Each bank with which you
have an account will issue you an ATM card and ask you to
choose a personal identification number (PIN). Most ATM cards
also double as debit cards. Customers are not limited to using
ATMs at their own banks. The symbols on your card (NYCE, Cirrus,
Visa) indicate the various systems through which you are able
to access your bank account—look for ATMs with matching
symbols.
By “swiping” your card at an ATM and entering your
PIN into the machine, you will be able to perform the following
transactions:
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Withdraw cash |
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Make deposits of cash and checks to your own account
(only at branches of your own bank) |
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Transfer funds between your accounts |
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Obtain your account balance |
Always be sure to obtain a receipt and make note of all ATM
transactions in your checkbook in order to keep a record of
your balance at all times. Note that some ATMs outside your
home bank may charge a service fee of $0.75 to $3 that is
automatically deducted from your account. You will be informed
of this fee before you complete your transaction; try to avoid
using ATMs that charge extra fees, as these can add up quickly.
As a rule, ATMs located in commercial stores such as deli’s
or bars have a significantly higher surcharge than ATMs at
bank branches.
Use of ATMs is very convenient; however, be very careful
when using these machines. Even though many ATMs are located
in well-lit lobbies with doors that automatically lock behind
you, avoid visiting ATMs alone late at night. Never give anyone
else the opportunity to use your card, even if they offer
to help, and be sure that no one can watch you enter your
PIN number. Make sure you always exit your account and collect
your receipt after you have completed all transactions. Put
away your cash, card, and receipt immediately, before heading
back to the street.
Debit Cards and Credit Cards
Debit Cards
Debit cards are linked to your checking account and can often
be used in place of a credit card. Payments made with a debit
card are deducted from your checking account balance, either
immediately or within 2–3 days. It is important to retain
your receipts in order to track what you have spent and know
if a charge is still outstanding. Debit cards with a credit
card logo can be used in most stores, online and over the
telephone. Debit cards without a credit card logo will require
you to enter your PIN at a store terminal, and cannot be used
online or over the telephone. Although you can usually use
your debit card to withdraw money from your savings account
at an ATM machine or to transfer money from your savings to
your checking account, remember that your debit card is only
linked to the funds in your checking account when you use
it to make a purchase. So, make sure you have enough money
in your checking account before using your debit card.
Credit Cards
Credit cards such as Visa, MasterCard and American Express
enable you to buy goods and services on “credit”
simply by signing a receipt saying that you promise to pay
the amount of the sale. In order to get a credit card, you
must apply through your bank or another institution that will
examine your financial records and assign you a “credit
line,” meaning the maximum balance you can carry on your
card based on your income. (As a full-time student, you are
unlikely to qualify for a large credit line.)
Shop around for a credit card. You may find yourself showered
with offers of credit cards, some requiring payment of an
annual fee, others “free.” Interest rates and penalties
vary. Ask lots of questions and compare offers before deciding
which card to get. Some American Express cards require you
to pay in full each month; however you may carry a balance
on your Visa or MasterCard as long as you pay the minimum
payment each month. But be careful! You will be charged a
hefty interest rate that varies from company to company on
the charges you carry over. It is very easy to accumulate
finance charges on your card and end up being unable to make
the payments. And if you miss one or more payments, your card
is likely to be canceled. Use credit cards with discretion!
In addition to the convenience, you may find it necessary
to obtain a credit card in order to establish a credit history
(a record of on-time bill payment which can help you qualify
for further credit for “big-ticket” items, such
as a car or a mortgage). Also, keep in mind that in order
to rent a car, for example, you must have a credit card. Another
good reason for having a credit card is in case you find yourself
in an emergency situation. In an emergency, a credit card
can be used like your bankcard in an ATM to obtain fast cash
(although at a high interest rate).
You should be extremely cautious when using your credit card
(or debit card) online. It is important to check that you
are using a “secure site” that guarantees the privacy
of the transaction and the safety of your credit card number
before you pay for something over the Internet. Do not send
your card number by email or enter it on an unsecured site.
If you do so, you risk having your card number stolen and
misused by thieves operating over the Internet.
If you bring a credit card from home you should make sure
that it is possible to pay your bill from here, or make careful
arrangements for someone in your home country, such as a relative,
to transmit payments every month for you.
Keep all receipts from your credit card purchases and reconcile
them with your statement each month. Always make sure to completely
fill out and sign all credit card (and debit card) payment
slips, and to keep them as records of your purchases. If you
pay for a meal or other service with a credit card or debit
card, you may receive a payment slip with a price, a space
for entering a tip, and a space for entering the total price
(original price + tip). Always fill out these spaces before
signing a payment slip of this kind, or you risk someone entering
a higher tip or higher total than you may wish to pay. If
you do not wish to pay a tip using your credit card, simply
put a line through the space for a tip on the payment slip
and enter the original price in the space for the new total.
For information on obtaining a credit card:
www.ftc.gov/bcp/conline/pubs/credit/choose.htm
If Your Credit Cards Are Lost or Stolen:
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American Express (Amex)— (800) 221-7282 or www.americanexpress.com |
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MasterCard—(800) 622-7747 or www.mastercard.com |
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Visa—(800) 847-2911 or www.usa.visa.com |
Credit
History, Credit Rating and Credit Checks
Your credit history is a track record that shows
you have been able to pay back loans and pay your bills in
a timely manner. Landlords or brokers, banks or other companies
may insist on running a credit check on
you before they agree to rent an apartment to you or offer
you other services.
There are three major credit bureaus (Equifax,
Experian and TransUnion) that track your ability to pay back
loans and bills. Every time you pay, or fail to pay a bill—whether
from your school, your bank or your phone company—this
information becomes available to the credit bureaus. When
a company runs a credit check on you, they contact one of
these bureaus to find out how good or bad your record is.
If your credit rating is good (for example,
over 600 on a scale of 300-900), it means you have a track
record of repaying loans or paying bills promptly. Your credit
rating suffers when you pay a bill late or don’t pay
it at all. It can also suffer for other reasons—like
having too many credit cards at once, or going into overdraft
on your checking account.
From the point at which you first establish credit in
the U.S., it takes time to secure a high score on your credit
rating. This means you are only likely to benefit from establishing
credit if you plan to be in the U.S. for a couple of years.
In the meantime, even if your credit record back home was
good, landlords or companies may decline to do business with
you until they have a way of guaranteeing your reliability
through a standard credit check.
There are several ways of establishing credit and then building
and maintaining a good rating in the U.S. Speak with a bank
representative about secured credit cards and other options
when you open a bank account. Always make sure to pay your
school, utility and other bills on time, and to reconcile
and close your accounts before you leave the U.S.
There are ways around not having a credit history in the
U.S. You can avoid the services that require a credit check—for
example, by subletting rather than leasing your own apartment
or by using university housing. In some cases, landlords may
agree to let you sign a lease if you have a guarantor—someone
with a good credit rating who will take responsibility for
your rent if you fail to pay it. Others will require a large
deposit, or ask for several months’ rent in advance.
Other Options
Travelers’ Checks
These checks are especially useful to cover your temporary
living expenses before you’ve established your bank account,
or your expenses while traveling, as they are accepted virtually
everywhere around the world. You must keep a record of each
check number, separate from the checks; in the event that
your checks are stolen, your report of these numbers will
enable you to receive replacement checks. Travelers’
checks can be purchased at most banks for a small service
fee.
Safe Deposit Boxes
Safe Deposit Boxes are available at most banks. For a small
fee, you can rent a box in which to store valuables, such
as official documents, valuable jewelry, etc.
Money Orders
Money orders serve the same purpose as checks, but do not
require a checking account. You can purchase these with cash
at a post office, and also at large supermarkets or other
stores in your neighborhood, for a small fee. Money orders
can be written for any amount you wish.
Check Cashing/Financial Services
Locations
These are independent companies that accept cash payments
for household bills. They can also cash certain checks for
you if you don’t have a checking account. These services
usually charge a large fee, however, and should only be used
in emergency situations.
Tipping
Tipping for service is a standard practice throughout the
United States, especially in restaurants and bars where
tips are not so much a “bonus” for waiters and bartenders,
as an expected part of their income. In New York bars, a dollar
tip per drink is a good rule of thumb. In restaurants, the
usual tip is 15% to 20% of the (pre-tax amount) of the bill.
Because New York City adds an 8.625% tax on all purchases,
a handy trick for calculating the amount of the tip in a restaurant
is to double the tax. Remember that the size of the tip should
be based on the service provided. You are not required to
tip 15% for service that was inadequate, but on the other
hand, it is expected that you will tip extra when you receive
special service. If you eat out in a group of eight or more
people, some New York City restaurants automatically add a
15%–20% tip, also called a “service charge”
or “gratuity,” to your bill. Always check your bill
to see if a service charge has been applied before you add
a tip.
There are other service providers who are commonly tipped.
For hairdressers and taxi drivers, a 10% to 15% tip is appropriate.
Movers are generally also tipped. For bellhops and porters,
a tip of a dollar per bag is standard. For more info, visit
www.tipping.org.
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