When most people think about offshore or international banking, they don’t think about opening a US bank account as a non-resident. In fact, the US isn’t an obvious place for most people to open an account.
Most foreigners and non-residents think that banking in the US can cause issues with taxes and privacy.
And if you’re not familiar with banking in the US, you might also think that opening an account there is incredibly difficult.
After all, the US government is known for being tough on foreigners, non-residents, and immigrants. Just getting a visa to the country is daunting, intense, and heavy on paperwork. One word out of place and you’re rejected!
So, it’s not surprising that most non-residents think that opening a US bank account is just as difficult.
Here’s the big secret: opening a US bank account as a non-resident is incredibly easy… if you have the right information. In fact, the US is one of the easiest places in the world to open a bank account as a foreigner.
But, buyer beware, not all US banks are created equal and you can waste a lot of time and money trying to open accounts if you go to the wrong ones!
In this article, we’re going to walk you through the entire process of how (and why) to open a bank account in the US as a non-resident.
If you’re looking for the answer to any of the following questions, you’re going to want to read this article…
Now, if you’re looking to find a way to open a US bank account from overseas (or open a US bank account online), your options are going to be extremely limited. While rare, there are special exceptions and circumstances where this is still possible. We’ll share more insights on this below.
Let’s start by taking a look at the pros and cons of opening a US bank account as a non-resident or for anyone falling into the above categories.
For non-US citizens, having an account in the US can be an incredibly valuable part of your international banking stack.
Here’s a quick look at some of the benefits that non-residents can get when banking in the US:
Here are some other reasons why non-residents and foreigners want to bank in the US:
The US boasts one of the most well-connected financial systems in the world. As a customer of a US bank, that means fast, efficient, and cost-effective banking. And that in itself can be a huge benefit, depending on the volume and value of transactions you send each month.
Funds originating from the US are also received by other countries with less scrutiny. For instance, banks, regulators, and other clients trust transfers coming from US accounts more than those in other countries, like Malta, Panama, Lebanon, or Cambodia. That’s because the US is perceived as a reputable jurisdiction with strict banking compliance, an advanced banking system, and tough banking regulators. Thus, there’s an assumption that customers coming from US banks are vetted more carefully.
All things considered, the US has a generally strong reputation, and that carries over to individuals who bank there. If you have an account in the US, your money is typically accepted faster and easier than other countries.
One of the most obvious benefits to banking in the US is the ability to access USD-denominated payment processing solutions. While this applies to individuals and entrepreneurs with business more than anyone else, they have benefits for individuals, solopreneurs and freelancers as well.
With a US bank account, it becomes significantly easier to access payment processing options and fund EMI accounts. This makes selling to the US market and receiving payments from customers in the US and around the world much easier.
By using US banking and payment solutions, you can dramatically decrease your transaction costs, collect payments faster, access a wider market, and (with a US account) move money in and out of US platforms with ease, such as Amazon, Adsense, Paypal, Ebay, and many more.
Unlike many countries around the world, opening an account as a non-resident in the US is not an issue. You just need to know which banks will accept you, which branches to apply at, how to avoid the pitfalls, and what to do if you run into a banker that tells you they can’t open for foreigners.
Generally speaking, US banks are more open to having non-residents as customers than other countries (e.g. Hong Kong, Singapore, Panama). And this attitude towards non-residents is a major reason why the US has become the largest “offshore” banking hub and tax haven in the world.
All these things combined have made the US a beacon for non-resident money. And it’s no surprise, there are major benefits to banking in the US for non-US citizens.
We’ve discussed many times before why we don’t think deposit insurance should be a only factor driving you to bank in a certain jurisdiction.
And while most deposit insurance schemes around the world would collapse if there was a major financial crisis, it doesn’t hurt to have deposit insurance in place in case your bank gets in trouble.
The Federal Deposit Insurance Corporation (FDIC) offers one of the longest standing and most generous deposit insurance schemes available. And in addition to covering the deposits of US citizens, it also covers the deposits of foreign non-residents equally.
The FDIC commits to insuring up to US $250,000 per account holder, per bank. Again, the FDIC doesn’t have enough money to prop up the US banking sector in a time of crisis, but if a single bank goes down, you should be just fine.
While the US forces every other country to share information with them about the banking activities of US taxpayers abroad via FATCA, the US doesn’t reciprocate.
This means that US banks don’t share information about non-resident account holders with tax authorities in their respective home countries because the US hasn’t signed on to the Common Reporting Standards (CRS).
And as long as the USD continues to be the world’s banking currency and the US continues to be the epicenter of the world’s financial system, the US will continue to have the leverage they need to force everyone else to open their books.
Before you get too excited about banking in the US, this article is not a blanket endorsement for US banks.
Most US banks are in poor financial health, have bad financials, and make risky investments with their depositors money. Not exactly a sign of success and stability.
Below is a breakdown of the disadvantages of US banking for non-residents. After understanding both the benefits and disadvantages, you’ll be able to determine if the US is a good banking option for you.
As mentioned, you shouldn’t keep your life savings to the US banking system. The reason for that stems from the poor financial health of the banks themselves.
Banks in the US tend to be over-leveraged, under capitalized, and have a significantly higher risk tolerance when compared to their international peers. As a depositor, this should concern you.
When choosing a bank, you want an institution that operates conservatively, doesn’t put your deposits at risk, and keeps enough cash on hand to maintain adequate solvency and liquidity to protect itself (and your deposits) from financial ruin. In general, banks in the US don’t do a great job of that.
The US also has a very high rate of bank failure. Between 2008-2015, over 500 US banks failed. That’s the highest bank failure rate in the developed world. Compare that to other places like Singapore that has never had a bank failure, ever.
In addition to not being home to the best banks, the US bank accounts have very low interest rates. And while they haven’t dipped into negative territory like Europe, they aren’t offering you any meaningful performance.
Unlike a lot of the international banking options that we discuss at GlobalBanks, the banks in the US tends to focus on a single currency, USD.
If you are looking for multi-currency options, there are much better and more cost effective solutions abroad. But when it comes to USD banking, the US is obviously one of the best options.
If you are planning on using your US account for international transfers or foreign currencies, you will find that the fees can be significantly higher than those available in Europe or Asia, depending on the currency.
Banks in the US have started to get more particular about US address requirements and what types of “proof” are considered acceptable. Some US banks will even reject virtual office and mail forwarding addresses, while others won’t take a second look.
While this might not seem like a major obstacle, it can quickly become an expensive problem if you are a non-resident opening an account. Knowing the requirements, sensitivities, and account opening quirks of each bank before you apply is key.
Having the right information going in can make the difference between opening an account in 30 minutes and leaving the US without a bank account.
There are several other account opening challenges and pitfalls that non-residents need to know before applying for US bank accounts. We’ll cover all US account opening strategies for non-residents in detail in our upcoming US Non-Resident Banking Report.
In this report, we will also share which US banks are non-resident friendly, which to avoid, which are incredibly picky, the best strategies, special opportunities, and all the account opening quirks (and benefits) in between.
While you will be required to show up in person in order to open an account at almost every US bank (Note: we found a few special exceptions), that’s not what we’re talking about here. In addition to account opening, many US banks have strict requirements about showing up in person for a range of different procedures.
Sometimes, this can include unlocking your bank account, if it is ever locked or frozen for security purposes. For example, it’s not uncommon for certain US banks to require a customer to come into a branch and present an identification document to verify their identity, in order to unlock their account.
If a bank sees anything that looks like fraudulent activity, identify theft, abnormal transaction behavior, they might require you to physically come into the branch to verify your identify, again. Something as simple as logging into your account from a high-risk country or from multiple different countries without a VPN can trigger this.
For non-residents who live outside of the US, having to fly to the US to prove your identity is a massive inconvenience. Plus, it’s expensive. But, with some banks, there’s no way around this if you want to unlock your account.
So, knowing which banks do not require a “second round” of in-person identity verification to unlock your account is extremely useful. If you live abroad, avoiding these banks can save you money and a lot of headaches.
Another con is that some US banks may require you to physically come into the branch in-person in order to make an international transfer. Again, for non-residents with US bank accounts who live abroad, this is incredibly inconvenient.
Now that you know the benefits and disadvantages of banking in the US, it’s time to get down to the process of actually opening an account.
Like the rest of the world, account opening in the US isn’t as easy for foreigners, as it is for US citizens and residents. But it’s still possible. If after reviewing the benefits and disadvantages, if you still feel that a US bank account is for you, this is what you’ll need and how you can go about opening an account:
Generally, here’s what you need to open a personal account in the US as non-resident:
Some banks will have different requirements. Other banks will refuse non-residents. Others will only take you if you have an SSN or ITIN. Others will want to see even more documents.
That said, to open a US bank account as a non-resident, you need to arm yourself with the right information and prepare. One of the most important things you can do is identify which banks and branches are actually open to non-residents and won’t waste your time.
More specifically, you need to know their account opening quirks for each, what alternatives documents they will accept (since you can’t provide some of them as a non-resident), and what problems and challenges you’re going to face when applying at each bank.
In most instances, the information that you’ll find on the internet is either incredibly generic or painfully outdated. That’s why it’s important to either use the premium information, tools, and contacts available to GlobalBanks Insiders or contact each bank individually and speak to bankers that you are planning to meet with. Though this second option can be very time consuming and challenging, especially if you don’t know what you’re looking for.
Even though the US is a welcoming to non-resident account holders, there are still a lot of costly mistakes that non-residents make when trying to open US accounts.
And if you don’t successfully open an account at one bank because of that mistake, you’ll have to find another bank, travel to another branch, and re-apply.
For this reason, we recommend identifying multiple banking options beforehand. If after opening your first account, you no longer want to visit the other banks, that’s fine – but at least you have backup options available, if you don’t get your first choice.
Here are some of the most common mistakes that we see people make when applying to accounts in the US.
One of the most common mistakes non-residents make is applying for an account at the wrong bank. Knowing which banks accept non-residents is critical to getting an account open. Knowing which banks don’t know require ITINs and SSNs is equally important. Don’t assume that every bank in the US opens accounts for non-residents without ITINs, because they don’t.
As a non-resident, it’s likely that you are not going to have the same documentation that a resident will be able to provide. For this reason you need to confirm with the bank before hand whether or not they will accept your documents. GlobalBanks Insiders will receive a full list of the commonly accepted documents in the US Non-Resident Banking Report, but to do this on your own you should check with each bank before applying.
As mentioned above, one of the central aspects of account opening in the US is each bank’s specific requirements surrounding the address and proof of US address. Again, this varies bank to bank. Some are pickier than others. And you’ll want to understand the specific nuances that each bank has before applying so you don’t waste time. You can do this by calling the bank and speaking to the specific person that handles new accounts, as most customer service representatives won’t know the correct answer.
When considering where to bank in the US, the options are endless. Think about how many major cities, banking hubs, and local branches there are to choose from. Typically, banking in a foreign country usually means banking in one of the country’s major financial centers. In smaller countries, that might mean simply banking in the country’s capital. In larger countries, you might have a choice of two or three cities. But when it comes to banking in the U.S., you have the widest selection imaginable.
So how do you choose?
Well, if you’re a non-resident or tourist, where you apply is typically going to depend on which city you are visiting or transiting through. Then, you can narrow down your selection to banks from there.
If you are planning to fly to the US just to open a bank account then your considerations are different. Depending on your nationality, your business, and the cost of flights, the best options for you might differ.
Typically, if you’re coming to the US with the sole purpose of opening a bank account, choose a location that is familiar with your nationality. For instance, Latin Americans may want to focus account opening in Florida, while Canadians may want to focus on opening accounts in Michigan or New York State.
We talk about all the specific nuances of account opening in the US in our upcoming US Non-Resident Account Opening Report, which will be available to all GlobalBanks Insiders in the GlobalBanks Library.
If you are already a GlobalBanks Insider and you want to get started now, you can begin by reviewing the US banks available in the GlobalBanks Database and reading up on the account opening strategies, contact information, and customer reviews that are already available in each profile. And, if you still have questions, ask our analysts using the chat function on the site.
If you are not yet a GlobalBanks Insider and you would like to learn more about our premium membership click the following link.
Or you can learn more for free by joining the Offshore Banking Letter…
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